Power Engineering - Enel completes Slovakian acquisition

2 May 2006 - The closing documents for the Italian power company Enel's acquisition of 66 per cent of Slovakia's Slovenske Elektrarne (SE) have been signed in Bratislava. The agreement includes a €2bn ($2.5bn) investment package for the Slovakian power infrastructure.

The transaction marks Enel's largest international acquisition of generation capacity. SE is the major generating company in Slovakia, with 83 per cent of the domestic market, and the second largest in Central and Eastern Europe.

Enel will acquire a two-thirds share of a plant portfolio of approximately 7000 MW capacity that includes nuclear, hydro and thermal.

The sale of the 66 per cent stake in the Slovak power company began with the launch of a call for tenders. On 7 October 2004 Enel was selected as a preferred bidder. Enel paid 20 per cent, €168m, of the price at the signing of the contract in February 2005. The remainder of €671 million was been paid upon closing. The remaining 34 per cent of SE is held by Slovakia's National Property Fund.

As envisaged in the contract signed in February 2005, a nuclear plant due to be decommissioned in the coming years (EBOV1), the hydro plant of Gabcikovo and the assets related to the nuclear waste treatment facilities (VYZ) were spun off from the operating perimeter of SE before the closing.

SE will sell the power generated by the nuclear plant of EBOV1 until the planned stop in 2006 and 2008 of its two units, while the power produced by the Gabcikovo hydro plant will be sold by SE for the next 30 years.

Enel, the National Property Fund and the Slovakia's Ministry for the Economy also agreed on the terms of an investment plan aimed at increasing output and enhancing the efficiency and environmental standards of SE's plant portfolio, contributing to the economic and social development of Slovakia and boosting company profitability. The plan provides for SE's total volume of investments of about €2bn between 2006 and 2013.

Fulvio Conti, Enel CEO, said: "With this acquisition, Enel's largest ever outside of Italy, the company confirms its expansion strategy into Eastern and Central Europe, a market which is recording continental Europe's highest growth rate. Slovenské Elektràrne is among the best regional power generation companies in Europe, it has a well-balanced production mix made up of nuclear, hydro and coal generation, and it has the potential to become an important hub in Central and Eastern Europe's power market."

Slovak Minister for the Economy Jirko Malcharek said: "These negotiations lasted almost two years and were very difficult because of SE's role in complicated contracts, and many deferring conditions." He continued: "This acquisition will benefit the energy market and economy of Slovakia."

The acquisition strengthens Enel's position in Central and Eastern Europe, where the Group is already present with an 800 MW power plant in Bulgaria and 20 per cent of the distribution market in Romania.

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