Deputies amended the law on passing price proposals

Week in Slovakia

CASE: Managing boards of companies will again have authority over price proposals

Price proposals will be approved only by managing boards of companies. Deputies of the National Council SR repealed the law on handing price proposal by trading companies according to which the proposals had to be approved on a meeting of the general assembly before sent to the Regulatory Office. The companies should return to the traditional way of approving energy prices starting off in May.

Deputies from the opposition party Smer-SD tried to moderate the law at the plenary session by suggesting that the proposals would have to be approved by a general assembly of companies which have less than five shareholders. However, the coalition deputies did not approve their amendment.

Repealing the law should according to the Minister of Economy Juraj Miškov remove bureaucratic burdens for the companies, their costs and in the end also improve the business environment.

Regulation vs. needs of the market

„Price regulation of storage services (natural gas storage) for its administrative demands causes the fact that the whole process of creating proposals for storage capacities delays even three months and the it does not correspond with the current demand of the gas market,” said Martin Hollý, director general of the company Nafta, a.s. last year for energia.sk.

The problem of price regulation according to him was that the operator of the natural gas storage tanks had to go through an extensive process before it could sing a contract. After those interested in their products handed in their offer, Nafta, a.s. had to work out a price „benchmarking” from surrounding countries in that particular time, based on this benchmarking then work out a price proposal, have it approved by its own general assembly and then asks the regulatory (ÚRSO) to approve the maximum price for which it can rent out its storage capacities. And after ÚRSO gave then a positive stance they could finally sing the contract.

Opinions about the change

Companies welcome the steps taken in the question of repealing the law. „Finally. This law made reporting of new prices for heat to the Regulatory office very complicating. The law complicated the whole process of approving price proposals. We welcome it,” reacted chief of the Slovak Union of Heat Producers, Miroslav Obšívaný.

„Slovenský plynárenský priemysel welcomes the aim to repeal this law. Companies will be able to submit price proposal without all the unnecessary slowdowns and complications,” said Ondrej Šebesta, spokesman of the Slovenský plynárenský priemysel.

„The group Východoslovenská energetika welcomes all the activities that lead to making the process of electricity price regulations easier – and also in extending the principles of liberalization in all market segments where it is possible,” added Boris Peško, spokesman of Východoslovenská energetika.

„Západoslovenská energetika welcomes all activities that leas to an increasing level of transparency and eliminating barriers on the market,” said Peter Kimijan from company Západoslovenská energetika, a.s.

Tuesday – 29th March 2011

If the government initiates privatization of the six heating companies, the towns where the power plants operate want at least a 49 % share. The National Property Fund (NPF) and the Ministry of Finance are against. According to them, it would complicate the whole privatization process and deform the competitive market. On the contrary the Union of towns and cities of Slovakia argue that this procedure absolutely ignores the local character of the heating power plants and their connections with the transmission networks which belong to the cities. The NPF says that the heating companies currently need a necessary investment of at least 760 million Euro and the cities would have a problem to find such financial sources. Marián Minarovič, the Secretary General of the Union argues back that „these arguments are weak, because if at least 49 % of shares are transferred to the hands of the cities, they would be able to take part in the European program „City mayor convention” and gain support from European sources. Of course this could happen only in case we carry out a substantial greening of the heating power plants.”

The case of high rewards for resigning people at the top management positions in the heating company in Košice has its first law suits. „The law suits were filed based on an extensive inspection. The inspection has checked the contracts of the top managers that were signed since 2006 until present. As the inspection revealed, in some cases the contracts on terminating employment were not a valid legal act and therefore paying the compensations is against the law,” explained Miloslav Homola from the National Property Fund. Therefore the company can claim its financial damage at a court. Until now TEKO, a.s. has filed two law suits. According to the information from media that were also confirmed by the persons involved, nominees from SDKÚ-DS and SaS, Ján Podhorský and Ivan Zich received 90.000 Euro after working only for a few weeks or months as the chief of the Košice heating company. A third case is also Martin Borovský (SaS) who was the director of the financial section.

Thursday – 31st March 2011

During the last five years, that is since the last attempt to sell the share of the National Property Fund in the heating company, the value of the companies markedly fell. As Miloslav Homola from NPF explained, the „main reasons behind this negative trend are the decisions taken by the companies that were motivated by short term goals. In an energy sector that is based on long term development plans this is highly counterproductive.” As the analysis of the NPF revealed, the heating companies are not profiting from their main activity, which is generation and heat distribution. „Incomes of the heating companies mainly come from revenues from selling their properties or unused emission permits,” added Homola. Homola also refused the argument of the Union of towns and cities of Slovakia that once the cities will own a share they would be able to apply for EU funds. „Even private heating companies have the right to apply for these sources from the EU.”

Friday – 1st April 2011

In the upcoming three years Slovakia could save energy at a volume of 8,5-thousand terajoules (TJ) thanks to the adopted economical measures. As the proposal of the second action plan for energy efficiency reveals, in a nine years´ period (2008-2016) and after reducing the influence of companies that trade with emission permits, Slovakia could save energy at a total volume of 28-thousand TJ. During 2011 and 2013 the saving measures will be mainly directed at buildings, public sector and industry. Currently approximately 80 % of the buildings are categorized as older and need improvement. In the industry sector, energy intensity of production should be lowered. The second action plans of energy efficiency also counts with savings of electric appliances and transportation. According to the Ministry of Economy and Constructions which produced the action plan, Slovakia fulfilled the goals of the first action plan (2008 – 2010). Over the two years 3,7-thousand TJ of energy was saved. The costs of implementing the first action plan reached 3,3 billion Euro, that is 80 % of the planned financial resources.

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