The Slovenia Times

Govt Classifies Energy, Infrastructure, Krka and Triglav as Strategic Investments


While those companies are seen as strategic investments, the remaining of the total of 102 capital stakes held by the state are classified as important and portfolio.

The state is to keep 25% plus one share in companies that are deemed as important, whereas Slovenia Sovereign Holding (SSH) as the asset manager will be able to sell portfolio investments.

As strategic the document classifies companies managing key infrastructure or natural monopolies, such as managers of public networks, while also in cases when having exclusively private providers could cause disturbances on the market.

Such investments include most energy utilities: power distributors Elektro Celje, Elektro Gorenjska, Elektro Ljubljana, Elektro Maribor, Elektro Primorska, grid operator ELES, power producers HSE and Gen energija, the electricity market operator Borzen and electricity system operator SODO.

As strategic the document also lists several operators of transport and logistic infrastructure, railways company Slovenske železnice, infrastructure corporation DRI, motorway company DARS, port operator Luka Koper and air traffic control company Slovenia Control.

Postal company Pošta Slovenije, Pension Fund Management (KAD), insurer Modra zavarovalnica, SID export and development bank and aluminium producer Talum plus Krka and Zavarovalnica Triglav are also classified as strategic investments.

The latter two companies are an important source of dividends, having contributed almost two-thirds to the combined EUR 34.8m in dividends that the SSH received in 2013.

State-owned companies yielded EUR 112.4m in dividends to the state in 2013, more than half of which was generated by airport operator Aerodrom Ljubljana, which has already been sold, and Telekom Slovenije, which is being sold.

The state holds a 26.86% stake in Krka, which the government underscores is one of the biggest employers in the country and as such vital for the social situation in the region and the country as a whole. The stake is moreover a source of funds for legal obligations of the SSH and KAD.

The companies that are vital for broader economic development and serve as a key link in supply chains or in the economy's internationalisation are classified as important.

The group also includes firms that have an important role in the transfer of know-how and technology or are seen as important participants in the capital market, so the state plans to keep a controlling stake.

At least 25% is to be kept in energy company Petrol, gas supplier Geoplin, household appliances maker Gorenje, holding Sava, steel group SIJ, gaming company Hit, national lottery company Loterija Slovenije, petrochemical company Nafta Lendava and reinsurer Pozavarovalnica Sava.

Portfolio investments would meanwhile be managed by the SSH exclusively in pursuing economic objectives and include the Central Securities Clearing Corporation (KDD), poultry company Perutnina Ptuj, footwear manufacturer Peko, dairy Pomurske mlekarne and logistics company Intereuropa.

The draft classification also mentions companies from the list of 15 planned for privatisation in 2013 that have yet to be sold, including Telekom Slovenije. All of these are classified as portfolio investments.

The draft envisages an alternative scenario in case the sole bid for the telcoms incumbent was not deemed acceptable, that is gradual listing of Telekom shares on the international capital market.

The government is committed to reduce its stake in NLB, the country's largest bank, to 25% plus one share, so the bank is listed among important investments. The remaining banks are slated for sale.

Of the 102 state stakes, 22 are classified as strategic, 23 as important and 57 as portfolio. The strategy also cites goals such as improving corporate governance, increasing capital gains yield, expanding stock market listings and forming a reserve demographic fund by 2015.

The latest draft of the strategy and the classification was debated by the Economic and Social Council, an industrial forum, today with Finance Ministry State Metod Dragonja finding a high enough level of consensus.

Voicing satisfaction with the discussion, Dragonja said that social partners had until 30 April to submit their comments and proposals, while the government was expected to adopt the document after 1 May.

Dragonja said the main point made today was that the strategy should give more guidelines to state asset manager SSH over non-price aspects of sale procedures, including that it should consider social and staffing aspects in privatisation.

This is the first time that representatives of trade unions and employer organisations got to see the proposed classification, but Dragonja said concrete stakes were not discussed today.

The boss of the country's biggest trade union association, ZSSS, labelled the document as deficient because it failed to take into account implications of sales on jobs, economy, society.

Dušan Semolič also argued that the list of strategic investments should be longer, and should also include Pozavarovalnica Sava and NLB.

Meanwhile, the Chamber of Commerce (GZS) raised concern that "investments classified as important might include the condition of keeping ownership dispersed apart from the 25% plus one share condition, which is good".

Goran Novković, the adviser to the GZS general manager, said that such a condition would deter strategic investors and would let the state keep excessive power in the companies, which would impact negatively on the economy and jobs.


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