EPH seals Slovenské Elektrárne purchase, but Slovak government still seeking control

Mochovce nuclear power plant, photo: Peko, CC 3.0

A Czech power company has just taken a giant step to become the biggest player in the Slovak energy sector. But the Slovak government appears to have hedged its bets down the road with an option to take back control and make sure two new nuclear reactors are completed.

Mochovce nuclear power plant, photo: Peko, CC 3.0
Czech power group Energetický a Průmyslový Holding (EPH) announced its deal buy up ENEL’s 66 percent stake in Slovakia’s biggest electricity producer Slovenské Elektrárne on Friday.

The deal makes Czech EPH the most significant energy company in Slovakia with around half the shares and management of the country’s main gas pipeline company, Eustream, and the gas distribution business, a majority in one of Slovakia’s three regional electricity distributors, and now the stake in the company responsible for producing more than three-quarters of Slovakia’s electricity.

As expected, the deal takes place in two stages: half of ENEL’s stake will be handed over within the next weeks or months, after clearance from competition authorities and other regulators, and the rest when the Mochovce nuclear reactors 3 and 4 are up and running. That should be some time in late 2017, early 2018. The outstanding question was what sort of side deal the Slovak government, the minority shareholder with a 34 percent share in Slovenské Elektrárne, would seal with the Italians and Czechs.

Slovak prime minister Robert Fico has taken every opportunity to condemn the previous privatization of the domestic power producer the centre-right government headed by Mikuláš Dzurinda as ‘’daylight robbery.’

And it appears that a memorandum of understanding agreed between the Slovak Ministry of Economy and ENEL will pave the way for the Slovak government to win back control of the coveted power company.

The memorandum gives the government an option to boost its shareholding with a further 17 percent stake when the Mochovce reactors are completed. That would give it 51 percent control and EPH would be left with the remaining 49%. This is what prime minister Fico had to say last week:

“According to my information, which was discussed by the government, the government has an option in the event that ENEL chooses to sell its 33 percent stake to another firm, that we can use our position to buy a 17 percent stake to increase its stake. The Slovak government has the option to buy 17 percent in order to gain a majority 51 percent in Slovenské Elektrárne.”

For Czech company EPH, such a scenario would not represent unknown territory. It already made concessions in one deal with Fico’s government about the country’s natural gas assets and appears to be able cohabit amicably with it.