The Slovak government launched the sale of the country’s three monopoly electricity distributors on Thursday in the first major step to privatise the state-owned energy sector. The Slovak Republic is required to break up its state monopolies as a condition for its desired admission to the European Union
The government is selling 49 per cent in the three distributors – Zapadoslovenske Energeticke Zavody (ZSE), Vychodoslovenske Energeticke Zavody (VSE), and Stredoslovenske Energeticke Zavody (SSE) – by the middle of next year.
In separate advertisements published in international newspapers, the government said interested parties should submit expressions of preliminary interest for the minority stakes in the three distributors by November 28.
The companies are being sold individually and the government is aiming to find three different owners for the distributors.
ZSE is the largest of the three firms. It distributed a total of 6885 GWh of electricity to its 965 000 customers last year. SSE supplied a total of 6531 GWh of electricity to its 686 000 customers, and VSE distributed 4626 GWh to 600 867.
The government said in an advertisement that it would make short lists from the preliminary bids, and auctions for the distributors would then follow.
CAIB Securities is advising the state on the sale of ZSE, while HSBC Investment Bank is advising it on SSE and BNP Paribas on VSE.
So far the government has not said how much it expects to raise from the sales, but industry sources have estimated the total worth of the minority stakes in all three firms at $300m or more.
The sales are some of the last slated by the government in its ambitious plan to privatise state assets, including the sales of country’s major banks and the ongoing sell off tenders for oil pipeline operator Transpetrol and gas distributor SPP, among others.
Last month, the government also launched a tender to find an adviser on the sale of 45 per cent in power generator Slovenske Elektrarne (SE).
Distribution of electric power in Slovakia occurs by both high voltage and low voltage grids. Slovensk�lektr�e (SE) has responsibility for the high voltage (mainly 400 kV grid, while the three regional distribution companies oversee the low voltage (110 kV) network. The existing 220 kV network will be phased out by about the year 2010.
In 1995, Slovakia’s electricity grid was interconnected with the Western European Union for the Coordination of the Production and Transmission of Electricity (UCPTE) system for long term testing. Strengthening of the grid by addition of 400 kV lines in the southwest and eastern parts of the country is needed to improve reliability of transmission from large sources, such as the nuclear power stations at Bohunice and Mochovce
The subsidiary of SE that has the responsibility of handling load dispatch across the high voltage grid is the Slovak Land Dispatch Centre (SED), located in Zilina, which has the responsibility of keeping the grid in balance, including control of electricity import and export.
Although a well-developed east-west electricity transmission grid exists, the north-south transmission grid requires further development. The Slovakian electricity transmission grid is connected to the European transmission system, including the UCPTE network and CENTREL, the new power distribution system of Poland, the Czech Republic, Hungary, and Slovakia
The government aims to close that sale by the end of June, 2002, but government and industry sources have said complications connected to the sale may prevent the state from selling SE before general elections in autumn of next year.