Slovak PM Fico warns may expropriate utilities

Fico’s statement escalates his clash with western-run utilities as he aims to prevent hikes in household energy bills -- a key promise that helped him win a 2006 election. Analysts, however, said the cabinet was unlikely to seek expropriation as it would be too costly for the state. „(The Constitution) says a thing can be expropriated in public interest,” Fico said in an interview for local news agency SITA carried by the daily Hospodarske Noviny.

„If they, and it’s not just Enel but foreign owners of energy monopolies (in general), continued in policy that is basically against the interest of this state, its people, and therefore against public interest, we will not be shy to use even such extreme options in the future,” Fico said. Fico’s spokeswoman had no further immediate comment.

Slovakia’s main energy firms are run by foreign utilities following extensive privatization process by the previous centre-right government earlier this decade. Leftist leader Fico has focused mainly on the dominant power maker Slovenske Elektrarne and natural gas monopoly SPP in his effort to make good on election promises.

Slovenske Elektrarne is 66% owned by Italy’s Enel, while SPP is run by Gaz de France and Germany’s E.ON through a combined 49% stake and management rights. The main energy companies have said prices will have to increase due to rising cost of oil on the world markets, but Fico said utilities only want to boost their profits. „We will not abandon people, we will fight until the very last option,” the paper quoted Fico as saying.

A Slovenske Elektrarne spokesman said the constitution guarantees appropriate compensation if the state wanted to interfere with property rights. SPP would not comment on the expropriation warning, but added its prices reflect developments with commodity costs. Apart from the energy sector, Fico has also clashed with other private businesses since taking power two years ago.

The government has adopted a law banning private health insurers from keeping profits, and he has threatened to punish retailers if the cabinet deemed their price hikes unjustified after Slovakia adopts the in January 2009. Peter Golias, an analyst with the Bratislava-based think-tank Ineko, said Fico’s latest comments appeared to be aimed at telling his voters he is protecting them against rising electricity and natural gas prices. „Fico knows that expropriation would require compensation, and the state would not be able to afford such a financial burden,” Golias said. (Reuters)