Slovakia’s government nods to EUR700m loan from Italy’s Enel

The government has agreed to draw EUR700m shareholder loan to be extended by Italy’s Enel to the energy utility Slovenske elektrarne (SE) to complete the construction of the third and fourth reactor blocks at Mochovce nuclear power plant, economy minister Peter Ziga (leftist senior ruling Smer) said after the cabinet session on Wednesday. Note that the new third unit will become operational in Q2’19, a slight delay compared to previous plans for a launch at end-2018 with PM Peter Pellegrini (leftist senior ruling Smer deputy chairperson) underlining that no further delays will be acceptable. The fourth unit is due to be completed a year later. Pellegrini noted that the shareholder loan will help cover the construction costs, but does not reflect an increase in costs. The premier hence said that the construction costs estimate of EUR 5.4bn is unchanged. The shareholders of SE include Enel, the Slovak state with 34%-stake, and Czech energy group EPH. EPH and Enel jointly own a 66% stake, and EPH has an option to buy Enel’s shares once Mochovce is completed.

Meanwhile, the biggest opposition party, liberal SaS, does not believe that the third and fourth blocks of Mochovce would be completed and the new deadline – met, and claims that the money for the project is falling into a black hole and the completion has been deliberately delayed. According to SaS head Richard Sulik, firms intertwined with leftist senior ruling Smer are siphoning off money. Recall that the price of the two blocks’ construction has been raised several times – originally, in 2008, the costs were estimated at EUR2.8bn, while according to the latest approved budget, the costs would be nearly double at EUR5.4bn. SaS hence proposes completing the privatization of SE and also urges the government to adopt a fixed and binding timetable for the project and its budget, as well as to define sanctions against Enel, which is accountable for completing the n-plant. SaS wants to create public pressure with the government regularly informing the parliament’s economy committee about the state of the project. In response, the economy ministry said that the state is only a minority shareholder in Mochovce and hence cannot determine deadlines and costs for the construction of the two reactor blocks. The ministry pointed out that the private majority owner of SE bears the exclusive and full managerial accountability for the project. The ministry also noted that the construction is not financed from the state budget. In response to the opposition party’s proposal for completing the privatization of SE, the economy ministry points out that it was exactly the disadvantageous privatization which caused the state to lose the ability to influence the power plant’s construction. The ministry hence proposes that the state should obtain again a majority stake in SE, the country’s dominant electricity producer.

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