Business News

Govt Postpones Decision on Merger of HSE and Gen Energija

Ljubljana, 21 October (STA) - The government discussed the proposal to merge state-owned power utilities HSE and Gen Energija on Thursday but it reached no final decisions. Economy Minister Darja Radic continues to argue in favour of the merger and she rejected views that the move would lead to a monopoly.

According to Radic, the government chose to put further debate on the issue into the broader context of the new energy policy, which the ministry will present soon.

PM Borut Pahor told the press that he has been too busy focusing on the planned EUR 1bn-plus investment into a new generator at the Sostanj coal-fired power plant (TES).

"It needs to bee seen what kind of energy policy Slovenia has," said Pahor, resorting to the "can't see the forest for the trees" phrase.

While supporting Radic in her efforts, Pahor added that decisions should not be rushed here.

The minister meanwhile insisted that there were three strong reasons in favour of the merger, the first being increased energy potential. She said that financing the TES project would be easier, since there would be no need for guarantees to secure loans.

A second reason is optimisation of production costs, Radic said, announcing that this will be proven through calculations.

Organisational synergies are the third reason. "Optimised operations and planned investments would be secured this way."

The minister rejected the view of the opponents of the merger that the two energy pillars were already coordinating investments. "Obviously the two pillars, being competitors on the market, cannot come to an agreement."

She also disagrees with the position that a merger would lead to a monopoly, arguing that "Gen Energija is a Mercedes and HSE a Volkswagen Golf" and that "this is no competition" and "will not lead anywhere".

Radic noted that Slovenia was not an isolated market when it comes to electricity. It is competing in a wider region, its real rivals being German RWE, Austrian Verbund and Italian Enel. "If we integrate HSE and Gen Energija, the merged company will still be a little chicken."

She added that fears that electricity prices would go up as a result were unjustified, as there is also competition within Slovenia, where electricity is also being sold by Gen-I and Petrol.

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