Slovenske Elektrarne to petition the Constitutional Court of the Slovak Republic

Slovakia

In response to the ruling on operational control of the 720-MW Gabcikovo hydropower plant it owns and operates in Slovakia, on Aug. 16, a spokesperson for Slovenske Elektrarne (SE) announced, “We intend to turn to the Constitutional Court of the Slovak Republic after the verdict announced by the Supreme Court.”

Tuesday’s announcement indicates SE will seek relief from the Supreme Court’s ruling via the Constitutional Court, but the announcement did not indicate by what means SE will argue its position.

The Supreme Court of the Slovak Republic in June upheld a lower court’s decision, the Regional Court in Bratislava, that invalidated the contract for operation of Gabcikovo, which was signed between SE and privately owned utility Vodohospodarska Vystavba S.P.

In 2006, Italy-based Enel SpA purchased a 66% interest in SE, which owns Gabcikovo. Upon its purchase, the plant's operation was privatized under the new majority ownership group.

When Enel acquired SE assets, it also signed a 30-year contract to operate Gabcikovo. The plant remained state property, but was operated by SE, which received profits from selling electricity the plant generated.

The Supreme Court’s ruling benefits the Slovak Republic in that the court decided a public tender should have been offered to operate the hydropower plant.

Vodohospodarska Vystavba S.P. generates and distributes electricity in Slovakia and also supplies water. It was founded in 1953 and is based in Bratislava and has additional locations in Cunovo, Zilina, Vrutky, Bratislava, Nove Mesto, Kosice, Gabcikovo and Banska Stiavnica.

History of events

The project is a communist-era Slovak-Hungarian twin-dam project on the Danube River launched in 1977 to provide electrical power, limit flooding and improve the navigability of the Danube.

Hungary pulled out of the project in 1989, but Czechoslovakia responded by switching to an alternative plan and building Hungary’s part of the project and Gabcikovo was commissioned in 1992.

Hungary terminated the treaty in 1992 against the will of Slovak officials and in 1993 the case was brought to the International Court of Justice in The Hague. The court ruled that both sides had breached the contract and the original contract was still valid. The dispute between Slovakia and Hungary continues.

The plant supplies about 7% of the annual electricity consumption of Slovakia, according to locally published information.

Slovakia’s Public Procurement Office

The government's move to invalidate the contract began in January 2007, when Prime Minister Robert Fico urged the country’s Public Procurement Office (UVO) to invalidate the contract that in essence rented Gabcikovo to Enel.

UVO officially challenged the validity of the contract for operation of Gabcikovo on March 9, 2007.

At that time, Fico said Slovakia was losing between US$57 million and $76 million per year by renting Gabcikovo to the Italian company, but has since revised its figures to between $38 million and $43.4 million per year.

The Regional Court in Bratislava rejected UVO’s lawsuit on Nov. 19, 2013. UVO challenged the verdict and the Regional Court in Bratislava ruled on March 9, 2015, that the contract is invalid.

SE challenged the March 2015 verdict on June 24, 2015, but the court upheld its ruling saying the contract for operation of the plant is invalid because instead of a direct agreement with SE, a public tender should have been announced.

On Dec. 18, 2015, Enel announced it was selling its 66% stake in SE to a privately-held Czech-Slovak energy investment group, Energeticky a Prumyslovy Holding Co., for a preliminary price of $812.70 million.

The sale would be in two stages and the final price would be subject to adjustments related to the condition of the Slovak producer once it completes the construction of two additional reactors at its 940-MW Mochovce nuclear power plant, scheduled for commissioning in 2019.

On Aug. 16, TSAR quoted Jan Mazgut, spokesperson for the UVO as saying, “The verdict of the Regional Court in Bratislava, which decided that the contract is invalid, remains valid.”

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