(Adds SPP reaction, analyst comments, writes through)
By Peter Laca
BRATISLAVA, Oct 17 (Reuters) - The Slovak government stepped
up its pressure on gas monopoly SPP on Friday, offering to buy
back the controlling stake from western owners and threatening a
state veto over prices as it fights against higher energy bills.
Prime Minister Robert Fico, who won a 2006 election on
promises to take better care of the poor, said the government
was preparing a formal offer to buy back a 49 percent stake that
E.ON Ruhrgas <EONGn.DE> and GDF Suez SA <GSZ.PA> jointly own in
gas pipeline company SPP.
Fico, who has earlier this year threatened to re-nationalise
the gas firm stake if the company sought to overcharge people,
was reacting to SPP's defence moves after state regulators
rejected its request for a 20 price hike on Thursday.
Fico said the government was offering the same price as the
foreign shareholders paid in the 2002 privatisation deal, which
was 130 billion crowns ($5.74 billion), or $2.7 billion in
exchange terms from that time.
"This is the first step," Fico said, adding SPP must respect
the purchasing power of Slovaks when setting prices.
"If we see other measures (by SPP) that would go against
interests of people, against interests of the state, we will
take another step," he said.
The government, which holds 51 percent stake in SPP but is
in a minority on its board controlled by foreign owners, would
change the law to give the state veto power over gas prices if
SPP submits another request for price hikes, Fico said.
The energy market regulator on Thursday rejected an SPP
request to raise prices for households by an average 20 percent,
saying SPP's reason of higher world prices was ungrounded.
Germany's E.ON disagreed, saying energy prices rose around
the world and boosted the purchase cost of natural gas.
"It is justified and in line with Slovakian regulation as
well as EU laws that these increases are reflected in gas retail
prices," E.ON said in a statement.
SPP itself has said it will consider legal action to protect
its rights after thoroughly analysing the regulator's ruling,
adding the verdict will cause it a loss of over one billion
crowns from selling gas to households this year.
E.ON also said Slovakia, an ex-communist EU member, had to
respect "basic principles of a market economy" as well as
obligations resulting from validly signed contracts.
INSENSIBLE HIKES
Fico said it was "insensible" for SPP to seek higher prices
for families when it had net profit 16.8 billion crowns in 2007.
SPP's profit comes mainly from moving around 70 percent of
the EU's total imports of Russian gas, or 20 percent of the EU's
entire consumption.
The company said EU rules did not allow subsidies of
domestic gas prices with revenues from other activities. Neither
SPP, nor E.ON had an immediate comment on the buyback offer.
Fico, who has enjoyed rising dividend revenues from state
stakes in utilities and boosted welfare spending, said the
request for gas price hike was inappropriate especially in light
of the global financial crisis that may hurt ordinary Slovaks.
"I want to tell foreign shareholders that Slovakia is not a
banana republic, where anybody can come and pick anything that
they want," Fico said.
Analysts said the offered buyback price did not appear to be
attractive for foreign shareholders, and added a state veto over
prices would be an interference with ownership rights.
"This whole issue is primarily about communication with
voters, which aims to show that the prime minister is here to
protect people against higher energy prices," said Peter Golias,
an analyst at the Bratislava-based think-tank Ineko.
(Additional reporting by Michael Shields in Frankfurt)
