Privatisation of Slovenské elektrárne (“SE”)

The issue

The Government of Slovakia took the decision to sell a controlling interest in the state-owned generation company Slovenské elektrárne (“SE”). SE’s assets included conventional thermal power plants, nuclear power plants (including one which was being dismantled and one subject to early closure), and hydro power plants (the largest of which, Gabčíkovo, is the subject of a continuing dispute with Hungary). Initially, a number of international utilities expressed an interest in purchasing the non-nuclear part of SE, but not SE’s nuclear business.

Our approach

The PwC team (the London, Prague, and Bratislava offices) proposed that bids be invited on the basis of a pre-sale restructuring of SE that transferred the more problematic nuclear and hydro assets to other state-owned bodies, but gave SE the rights to the output of these assets. This still left substantial nuclear assets as part of SE. PwC also advised that bidders would need some assurances regarding the State-run nuclear decommissioning fund. The Government added an obligation for the successful bidder to consider the completion of an abandoned nuclear power plant construction project. This resulted in compliant bids for SE being received from CEZ (Czech Republic), InterRAO (Russia), and Enel (Italy).

The outcome

Enel was selected as the preferred bidder and contracts were signed in February 2005. Immediately following this signing, the re-structuring of SE began. PwC assisted the government to effect the necessary transfer of assets and the preparation of contracts (giving SE rights to the resulting electricity outputs). PwC also assisted in the review and approval of Enel’s investment plans for SE. Plus, PwC helped the government prepare a new Act covering the nuclear decommissioning fund. The sale to Enel of a 66% share of SE was completed in April, 2006, at a price of €839 million. As part of the deal, Enel says that it plans to invest a further €1.9 billion in SE over the next 10 years.