If the foreign shareholders of SPP get the idea that gas should be increased in price, the government can stop the idea by not letting it even out of SPP. This leverage will be cancelled next year.
Expensive arbitration was a threat.
Abolish it. That is what the new government is planning to do with the leverage by which it can influence the prices of gas for households. This refers to a law that was introduced by the government of Robert Fico (Smer) about two years ago when the foreign shareholders of Slovensky plynárensky priemysel (German E. ON Ruhrgas and French Gaz de France) requested a hike in gas prices.
“We regard the said law as deforming and bad” said Róbert Merva from the Communications department of the Ministry of Economy. The changes are planned by the ministry next year. “As part of comprehensive changes in the energy sector, with the aim of liberalising it and depoliticising it, we will definitely cancel this act” added Merva.
The Germans and French can sue for money
The law from Fico’s stable has already been used by economy minister Juraj Miškov (SaS), however. Thanks to the law representatives of the state managed to block two proposals for a hike in gas prices at the General Meeting of SPP. According to the privatisation contract, however, the Germans and the French bought also managerial control in addition to a stake in SPP.
For some time Slovakia has therefore been faced with the threat of arbitrations, which could work out expensive for the country. The chances of the Germans and the French being successful are not negligible according to a lawyer.
“The state strengthened its position by the fact that it passed the kind of law that disadvantages another shareholder in a private company” said advocate Ján Buocik.
What’s more, Buocik also feels that Fico’s law on the gas company is in conflict to contracts on protection of investments. “At the time the shareholders entered SPP, such a law did not exist, while it greatly limited the possibility of profit for shareholders whose investment in Slovakia could be threatened by this law” said Buocik. The Ministry of Economy, however, sees no reason for arbitrations.
It is still not entirely clear when the jurisdiction to decide on gas prices will pass fully to the regulatory authority. Until that time the shareholders of SPP will not be able to submit price proposal as they wish without the consent of the state. “So far the act imposes us to participate in the General Meetings of SPP and to vote” said Merva.
Strange position of the state
Proof that the whole dispute between the state and the gas company is far from resolved can be seen in the ongoing negotiations. “For sure you will understand that we will not comment on the details” said Kai Krischnak from E. ON. While the state holds control of SPP, it finds itself in a delicate situation.
If through the fear of arbitrations it were to leave the decision-making on prices up to the regulatory authority, it could approve the proposal of the Board of Directors of SPP despite disagreeing with it. But the Ministry would have to state a negative stance to the gas price hike in its standpoint, which is part of price proceedings.
Voting in favour at the General Meeting and then writing a disagreeing standpoint would be very strange, says MP Ivan Stefanec (SDKÚ). He says the whole law, though, is “ripe for being repealed, because it gives politicians excessive power in the area of pricing”.
That is exactly what the former government wanted.
“Party chairman Robert Fico was always in favour of the state having control over energy prices” said spokeswoman of Smer, Silvia Glendová.