% of GDP
a free service
In 1918 the Slovaks joined the closely related Czechs to form Czechoslovakia. Following the chaos of World War II, Czechoslovakia became a communist nation
within Soviet-ruled Eastern Europe. Soviet influence collapsed in 1989 and Czechoslovakia once more became free. The Slovaks and the Czechs agreed to
separate peacefully on 1 January 1993. Historic, political, and geographic factors have caused Slovakia to experience more difficulty in developing a
modern market economy than some of its Central European neighbours.
UPDATE January 2002
The Slovaks are doing much better than might be thought. A series of reforms since independence in 1993 has produced a remarkable rise in productivity by 50%
in the manufacturing sector over the last seven years, the figure for 2000 alone being 8%.
There was a big discrepancy here between domestic and foreign-owned firms, the latter easily outperforming the former ones. Inward foreign direct investment
(FDI) rose to US$2bn in 2000, 10% of GDP. Further privatisation in 2001 is attracting in more FDI, as in the gas transit company, linking Russia to Western
The Slovaks have a transit as well as transition economy, acting as a conduit for Russian and Ukrainian goods westwards, while being a useful, low cost
venue for production by Western firms looking eastwards. The role of middlemen is suitable for a people that were linked for long to Bohemia, the economic
powerhouse of the Austro-Hungarian Empire.
Bratislava is an important regional centre between Prague and Budapest. Political developments have been favourable of late with a serious setback for
ex-dictator Vladimir Meciar, who lost an election that he must have thought sewn up, just as Milosevic was to do in Serbia two years later. Consequently
Slovakia is now much more politically respectable, being considered for NATO membership soon and EU accession as well.
Slovakia is an important country in the struggle against terrorism precisely due to its role conducting of Russian and Ukrainian wares westwards, (some of
which are likely to have been dangerous materials of interest to nefarious elements). Bratislava, has a huge mafia complex, only too likely to be interested
in this dubious traffic. It has been used as a meeting place for terrorists for a long time.
It is, therefore, reassuring that it is on the mend and being integrated into the West. The Slovaks have their place in Europe and its scheme of things.
Slovakia, Toyota in talks for auto bodywork plant
Slovakia's economy ministry and Toyota, one of the leading carmakers in Japan, are now in talks to construct an auto bodywork factory and an electric parts
plant in eastern Slovaki Economy Minister, Lubomir Harach, told reporters.
The ministry is also reviewing potential partnership agreements with other investors for the same projects. Toyota initially contemplated placing its
production only in Poland, but then expanded its plans for Central Europe, Harach said.
The ministry is in talks with several Japanese companies to develop an industrial park in Presov and Kosice, two east Slovak regions, so that it could
benefit from the nearness of the US Steel Kosice's plant and local capacities in engineering and electrical engineering.
Slovak government okays OTP purchase of bank
The Slovak government announced recently that OTP Bank Rt will purchase a 92.55% stake in Investica a rozvojova banka a.s. (IRB) from the Slovak state for
Sk 700m (US$15.5m) and will increase the bank's capital by buying Sk 1bn of new shares within 12 months of the purchase of the ownership stake.
According to OTP Deputy CEO Laszlo Wolf, Hungary's largest bank will make the payment for the 92.55% stake in January 2002, meaning the capital increase will
take place by 2003. OTP will finance the acquisition from its own sources. Wolf said OTP is satisfied with the purchase price of the Slovak bank,
"especially since the Sk 1bn (of the capital raise) will remain as our money," he said.
As part of the agreement between OTP and the Slovak government, the latter will guarantee Sk 12.1bn in IRB's outstanding loans to Slovenske' Elektrarne AS,
the state-owned electric company. The government also pledged to cover all the future costs of pending legal disputes and to reimburse Sk 289m which the bank
paid this year in taxes.
While preparing to sell IRB, the Slovak government injected Sk 5.7bn into the bank and assumed most of its bad loans.
This is the first foreign acquisition to be made by OTP, whose market share at home has been edging down due to intense competition, although it still
controls over 20% of the market in terms of total assets.
Gyorgy Fenyo, investor relations' executive at OTP, said that the bank is likely to continue seeking acquisition targets abroad. He said the bank may
consider taking part in the privatisation of banks in Croatia.
Wolf said OTP is planning in the short term to strengthen IRB's retail banking and its services for large corporations. In the long term, OTP would like to
stretch out to small and medium-sized companies in Slovakia, he added.
OTP is expected to facilitate a change at the management of the Slovak bank. Wolf said that OTP has "certain ideas" about the personnel to pick for the new
management team, but declined to give details.
According to OTP, IRB had total assets of over Sk 23bn at the end of June, and after-tax profit of Sk 32m in the first half of the year.
After the Slovak government considered OTP's earlier bid too low, OTP increased the bid price in September.
Konsolidacna to obtain direct stake in KBB
Slovakia's government gave the green light to Slovenska konsolidacna to obtain a direct stake in the Bratislava-based Konsolidacna banka (KBB) for one
billion Slovak crowns, according to CTK News Agency. The book value of KBB is negative at 30.23 billion crowns. "As a state-owned bank, KBB has a narrowed
manoeuvring space to settle the transferred claims. It cannot use effectively the method of claim settlements vis-à-vis the creditors through a
debt-for-equity swap and a subsequent sale to a strategic investor, CTK cited a report of the privatisation ministry."
Because it is not a banking group, Slovenska Konsolidacna could straighten out any claims and liabilities of KBB by accelerating the liquidation of the
group or by restructuring the entities. Prior to the signing of the sale agreement, the Slovak Natinal Property Fund (FNM) and the bank will settle an
agreement worth 843.71 million crowns to cover KBB's debt to regional bank Vseobecna uverova banka (VUB) by year-end.
FNM will undertake KBB's obligation to savings bank Slovenska sporitelna (ASLSP), valued at 800 million crowns and payable by the end of July 2002. Founded
in 1992, KBB aims at assuming long-term loans of up to 27.2 billion crowns. Two years ago, it obtained control of classified loans from VUB.
8 investors offer bids for government advisor of Elektrarne
Eight investors registered for the November 19th deadlined first stage of a public tender to find an advisor for the government as regards the privatisation
of a minority share package in Slovenske Elektrarne, the country's leading, although financially stricken electricity producer, according to local reports.
The state privatisation organisation, Fund of National Property, disclosed that it had registered domestic and foreign names among the applicants. However,
it failed to reveal the names of the groups. A committee to examine and select the formal aspects of the candidates concerning conditions was to begin work
in late November. Candidates accepted will proceed to the second state of the tender, scheduled to be finalised in early December. The winner of the tender
will be announced by December 7th, the reports said. As per the plan, the winner should sign the agreement by end-2001 in order to begin working in early 2002.
MOL sells crude oil storage company
The divestment programme of Hungarian oil and gas company MOL Rt took another step forward recently as the company sold its 51% stake in Crude Oil and Crude
Oil Product Stockpiling Association (KKKSz) for Ft 6bn (US$21.2m).
According to a report by OTP Securities Rt, this is some Ft 5.49bn over the storage firm's book value.
"We are unlocking capital for other opportunities," said MOL's CFO Michel-Marc Delcommune recently. "why should we play two roles in Koolajtarolo?"
He explained that while Crude Oil Storage is far from being a non-core activity of MOL, the company is also a member of KKKSz, which already owns the other
half of the storage company.
Delcommune said that the Ft 5.41bn in profit from the sale will appear as profit in the company's fourth-quarter results. He added that, while not enough
to compensate for MOL's loss making gas division and put the company in the black this year, it will help put the company's gearing ratio back on
target. This year the company increased its gearing ceiling from the previous 40% to 55%.
"We have a 40% target in the long run, but because of the gas issue and the regional opportunities in Poland, Croatia and Serbia, we have chosen to relax to
55% for a limited period," said Delcommune. He said the length of this period depends on both the impending sale of the gas division and the speed at which
regional partnerships can be negotiated.
MOL is currently negotiating to buy a 17.6% stake in Poland's PKN Orlen, while it was recently shortlisted to bid in the privatisation of the Czech Republic's
Unipetrol. In addition, the company has expressed an interest in Serbian oil company, Beopetrol, and Slovakian pipeline operator, Transpetrol, among others.
MOL president, Zsolt Hernadi, travelled to Poland recently to meet his counterpart at PKN Orlen, Andrzej Modrzejewski. PKN's president-CEO told Hungarian
daily 'Nepszabadsag' that his management team supports the MOL bid, although it had previously favoured MOL's rival, Austria's OMV AG.
MOL's sale of its crude oil storage business is part of a three-year divestment programme begun in 1999. Around 70 companies remain to be sold, mainly
service companies, said Delcommune.
Also for sale is MOL's gas division, which fell victim to government price-capping last year and is continuing to make losses in 2001. Delcommune said five
companies have shown an interest, although he named only German utility Ruhrgas, which recently announced its bid for a 50% stake in the division.
He also confirmed that the gas division of MOL will come bundled with stakes the company holds in gas distribution companies. MOL has minority stakes in gas
distributors Degaz Rt, Egaz Rt, DDGaz Rt and Kogaz Rt. The first two of these are majority-owned by French utility Gaz de France - which has also been
slated as a possible bidder for the MOL gas divisions - while DDGaz is mainly owned by Ruhrgas, and Kogaz's main owner is German energy giant E.ON AG.
SPP, Delek Group discuss creation of consortium
Slovensky Plyarensky Priemysel (SPP), the Slovak gas monopoly, announced it is currently in negotiations with Delek Group of Israel to set up a consortium,
which would vie for a licence to develop an Israel-based state gas carrier, according to local reports.
A marketer and distributor of petroleum goods, Delek told the Tel Aviv Stock Exchange that the Slovak company suggested that the two groups collaborate on
the licence tender. "As a result of the proposal, Delek is in talks with SPP and others to study the possibility of participating in the tender," Delek said
in its statement. Interested parties for the tender are obligated to apply before December 17th, 2000.
Austrian firm wins tender to buy 13 state-owned filling station
A tender for Slovak company Transpetrol's 13 filling stations has been won by Austrian-owned OeMV Slovensko, Transpetrol Director-General, Stefan Czucz,
told TASR News Agency on 5th December, TASR web site has reported.
OeMV beat Slovak oil refiner and filling station operator, Slovnaft, to a 100 per cent stake in Transpetrol Trading, and is due to sign the purchase
agreement before the end of the year.
The Economy Ministry, Transpetrol's majority shareholder, chose OeMV on the recommendation of the Transpetrol Board. OeMV currently runs 61 of Slovakia's
743 stations on which it has so far spent 2,332m korunas. OeMV Slovensko Director, Peter Roth, said the decision was a success for the company. "The fact
that we accepted a challenge to supplement the original bid proves the importance of the tender for OeMV," Roth said.
Slovnaft, which operates 316 stations, has not yet commented on the result. However, its Strategy and Finance Director Vratko Kassovic told TASR News Agency
that it was very interested in the sale and had also supplemented its bid.
Of 11 companies that received the information memorandum for the sale, five made indicative bids by 31st July and all five were allowed to perform due
diligence of the company.
Russian oil firm wins tender for sale of stake in Slovak oil pipeline operator
Russian oil company, Yukos, has won the tender for 49 per cent of Slovakia's state-owned oil pipeline operator Transpetrol, Slovak Minister for the
Administration and Privatisation of National Property, Maria Machova, announced on 7th December, TASR web site has reported.
A privatisation commission chose Yukos ahead of domestic refiner Slovnaft. Yukos offered US$74m (3.5bn Slovak korunas) for the stake, which includes
managing powers. Machova refused to specify Slovnaft's offer. The tender result has still to be approved by the cabinet. Machova expects to submit the
proposal to the cabinet on 19th December.
In its statement, Yukos welcomed the decision and said it believed that the cabinet would approve it. "The acquiring of the stake is a part of our
international activities aimed to increase our share on European markets.
"After cabinet's approval we would continue in the transaction according to agreed terms," a Yukos PR representative said. Slovnaft did not comment on the
results. The commission was expected to reach a decision soon after final bids were submitted, but a few days later asked the companies to resubmit higher
offers, because "both offers were of good quality but were too low."
According to Machova's statement prior to the decision, price should have been 60 per cent decisive in choosing the investor, with other criteria including
capital strength, development plans, and ability to upgrade Transpetrol buildings. Of six companies that made indicative bids, four pulled out: Russian
company Rosneft cited concern at an ongoing legal dispute over 34 per cent of Transpetrol shares; multinational Texaco and Russia's Surgutneftegas gave no
reason; and Czech refiner, Ceska Rafinerska, withdrew at the behest of shareholders. Both investors proposed increasing the volume of oil transited through
the Druzhba pipeline (in 2000 it was 9.2m tonnes), and employing the new Adria pipeline to the Balkans. Transpetrol expects the gross profit of 295m Slovak
korunas (US$4.1m) in 2001, which would mean a 90 per cent rise year-on-year. Yukos is the second largest Russia's oil company. In 2000 it posted profit of
US$3.3bn and turnover of US$9.8bn (almost a half of Slovakia's GDP).
Slovak privatisation agency completes redemption of bonds to individuals
The government privatisation agency, the National Property Fund (FNM), has completed the redemption of privatisation bonds to domestic private individuals
on 30th November. It transferred 2.05bn korunas to an account in the RM-System in this connection. Afterwards, Slovenska sporitelna [Slovak Savings Bank -
SlSp] received from the RM-System 2.03bn korunas for the redemption of 148,327 bonds. The money the FNM provided was used to repay FNM bonds to citizens
born between 13th June 1970 and 4th March 1999. The RM-System has transferred additional 2.1m korunas to redeem 185 bonds held by citizens over 70 years
old. The RM-System transferred 10.59m korunas to settle 1,295 execution orders, after which the.
Balance of the special bond redemption account at Slovenska sporitelna was 5,849,778 korunas said Tatjana Lesajova, spokeswoman for the FNM. The FNM thus
satisfied all the domestic private individuals, including those who owned more than one FNM bond.
The FNM has yet to redeem bonds to foreign private individuals and corporate entities. Foreign private individuals hold 306 privatisation bonds and foreign
corporate entities 830,680 bonds. The FNM extended maturity of bonds of over 4.5bn korunas until 2002. In total the FNM should repay bonds worth 7bn korunas
to legal entities.
At the beginning of this year the FNM was supposed to redeem 1,921,029 privatisation bonds to 1,010,947 holders. It has redeemed 1,408,439 bonds from 1996 to
2000. Total issue comprised 3,329,733 privatisation bonds.
French Carrefour opens 4th hypermarket in Slovakia
Carrefour, a French retail chain giant, opened its fourth hypermarket in November, Carrefour Slovensko CEO Jean-Luc Masset was quoted as telling reporters
by CTK News Agency.
The hypermarket's construction, occupying an overall space of 13,000 sq.m of land and with 7,500 sq.m. of shopping area, was completed in a six-month period.
The Denmark-based TK Development designed the building. Four hundred and fifty people will work at this new hypermarket and in turn bring the overall
Carrefour Slovensko staff number to over 2000 strong, Masset was quoted as saying. The Carrefour official said the French company will open more hypermarkets
Plans to build underground in Slovak capital unveiled
Plans for a new 43.6bn-koruna metro system in Bratislava were unveiled on 28th November by representatives of the Transport Ministry, City Council and
investor Metro company, TASR web site has reported.
The metro with subways covers 50 km, and could be funded out of the settlement of Russian debt to Slovakia. It will have two lines with two intersections,
and four branches to districts Raca, Ruzinov, Dubravka through Karlova Ves and Petrzalka. There will also be connections with the current tram system and
main railway lines to Malacky, Trnava, Galanta, and Dunajska Streda.
A first 8.5km section from Petrzalka to the central railway station should be built by 2010 and at a projected cost of 13.5bn korunas (not including
trains). The project is slated for completion by 2030.
Metro Director-General Vladimir Kovalcik said the submitted project was 50 per cent cheaper than an original proposal. The Cabinet is due to discuss the
project in February next year.
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