BRATISLAVA, February 2, (WEBNOVINY) — The Coalition Council will discuss a proposal to privatize six large central heating companies prior to ministers’ debate on the economic analysis of the National Property Fund (FNM) and the Ministry of Finance, according to which it would be more advantageous for the state to sell 100-percent stakes in heating companies than hold them to benefit from dividend payments. On that account, ministers did not discuss the analysis at the Cabinet session on Wednesday, prime minister’s spokesman Rado Bato informed.
“Comparing the expected revenue from the sale of a 100 percent stake to the expected income from dividends, the sale of the property stake in the heating companies to a strategic investor is more advantageous. Immediate proceeds from the sale is more beneficial from the fiscal point of view as well as considering consolidation of public funds, than the FNM’s long-term position in companies of local importance,” the fund stated in an analysis of economic benefits of holding the stock with the aim of collecting dividends or selling the shares.
The FNM and the Ministry of Finance estimate that the sale of heating companies in Bratislava, Zilina, Martin, Zvolen, Trnava, and Kosice can be completed within a year. “We expect that selection of an advisor should take about three to four months. The sale alone, including the preparatory phase, should require approximately eight to ten months, depending on the selected structure and the process of the sale,” informed the FNM. It further stated that international privatization advisors should participate in the selection process. “Proceeds will represent the market price for the sale, which will be the result of a bidding process,” stated the fund, which estimates the market price of the heating companies at EUR 160 million to EUR 200 million.
The FNM maintains the privatization will not negatively affect heating prices. “The heat price will continue to be regulated by the respective authority, the Regulatory Office for Network Industries (URSO),“ the FNM said and added that the sale of heating companies is also necessary because future investments into the heating plants would be secured by private investors. The state should thus save EU funds that are to be earmarked for this purpose. “Saved EU funds can thus be used for other government priorities, such as highways or informatization of society,“ added the fund.
The FNM and the Ministry of Finance justify advantageousness of the sale of heating companies also in reference to the long-lasting decline in the volume of sold heat, which leads to profit decrease, increasing credit burden of heating companies, inevitability of investments to make them environmentally friendly, or overall obsoleteness of heating technological facilities. The FNM also pointed out great reserves of heating companies in optimization of costs, disadvantageous procurement, low rate of return of implemented investments, decreasing competitiveness and climb-down from their position on the heating market.
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