(corrects currency conversion in paragraph six)
By Martin Santa
BRATISLAVA, Sept 5 (Reuters) - Slovakia's prime minister
said on Friday his government could re-nationalise the main
Russia-EU gas pipeline from its Western shareholders, his latest
salvo against private firms ahead of euro zone entry on Jan. 1.
Fico came to power in 2006 on a welfare platform including a
pledge to better protect workers and stop utility price hikes --
a major concern among many in the ex-communist country who fear
their wallets will be pinched when Slovakia adopts the euro.
He has since extended that to a threat to expropriate
utilities if they try to overcharge Slovaks and jail retailers
who may take advantage with price hikes when the European Union
newcomer swaps its crowns for the single currency.
On Friday, Fico told shareholders of gas pipeline operator
and domestic distributor SPP, E.ON Ruhrgas <EONGn.DE> and GDF
Suez SA <GSZ.PA>, he would buy their 49 percent controlling
stake back if they were unhappy with profits made since its 2002
sale.
"The government is ready to take SPP back under state
control... We will pay the purchase price," Fico told a news
conference.
He added SPP made 16.7 billion crowns ($780 million) in
profit in 2007.
"If you don't like to do business here go and do business
somewhere else," he said.
E.ON and GDF were not immediately available for comment.
Analysts doubted whether Fico would actually make good on
his offer but expressed surprise at his comments and said they
were more reminiscent of Venezuelan President Hugo Chavez than a
European leader who has said he would uphold EU values.
"This is Chavez-like populism and there's economic
xenophobia and anti-capitalism sentiment behind it," said
Grigorij Meseznikov, head of the Institute for Public Affairs.
"If Fico actually does what he says he would do, it could
hurt Slovakia's credibility."
BATTLE WITH UTILITIES
In what was one of the region's biggest privatisation of its
time, German E.ON and GDF bought a 49 percent stake with
management rights in SPP for 130 billion Slovak crowns ($6.14
billion), or $2.7 billion in 2002 exchage terms.
SPP moves around 70 percent of the EU's total consumption of
Russian gas, or 20 percent of the EU's total consumption -- and
it is one of Slovakia's most lucrative firms.
The sale of control in the pipeline operator was seen by
analysts and diplomats as key to financing important structural
reforms that were crucial to Slovakia's joining the EU in 2004.
SPP asked this week for permission to raise prices 19.8
percent for households, citing higher gas prices from Russia,
following the rejection of an earlier request by the independent
state regulator (URSO).
"SPP has requested an increase of prices only due to rising
costs and not to raise profit," an SPP spokewsoman said.
Fico indicated SPP would not be allowed to raise prices.
"This is an actual offer in reaction to hike proposal," he
said. "To raise money for the buy-back of SPP (49 percent stake)
would be the easiest thing in the world."
FIGHTING PRICES
Fico has also angered some businesses.
Market watchers said that, in particular, Fico's challenge
could spook foreign investors, who have boosted the country of
5.3 million from the poor man of central Europe to one of its
fastest growing economies with second quarter growth of 7.6
percent.
Fico has more or less keept price growth in check, although
higher food and fuel prices still drove it to 4.4 percent in
July. But many Slovaks fear an even bigger jump, like that seen
in euro zone newcomer Slovenia, where inflation hit a six-year
high of 6.9 percent.
But analysts said his activism sent the wrong message to EU
institutions like the European Central Bank, giving them reason
to pause before allowing other states like Slovakia's neighbours
the Czech Republic, Hungary, or Poland into the euro zone.
"If Fico really does it, it could threaten admission of
other countries to the euro zone as it could be a warning sign
for the ECB and other institutions," said JP Morgan analyst
Miroslav Plojhar.
(Reporting by Martin Santa; Writing by Michael Winfrey)
