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Ministry Announces Merger of HSE and Gen Energija

Ljubljana, 13 October (STA) - The Economy Ministry announced on Wednesday plans to integrate state-owned power utilities HSE and Gen Energija before the end of the year and in effect reverse the decision of the previous government to divide the power production market between the two utilities.

According to the ministry, the merger is needed to boost human and investment potentials ahead of challenges faced by the Slovenian energy sector.

As regards investments, the ministry highlighted a joint management of the Sava river and the construction of a chain of hydro power plants on the river, as well as a new generator at the Sostanj coal-fired power plant (TES) and a second reactor at the Krsko Nuclear Power Plant.

HSE manages hydro power plants based on the Drava, Sava, and Soca rivers and coal-fired power plants in Brestanica, Sostanj, and Velenje, whereas Gen Energija manages the Krsko nuclear plant.

In line with the proposal, both companies would continue operating in their present forms, however with direct synergy effects estimated at more than EUR 26m. The bulk of this, EUR 21.5m, would come from savings stemming from fuel and servicing costs. The estimated debt potential stands at EUR 2.5bn.

With the integration reducing the level of competition on the market, the ministry plans to immediately activate the Competition Protection Office, which will propose measures. One of the expected measures is the setting of quotas for energy which the integrated company will have to sell to other market participants.

Meanwhile, daily Dnevnik reported today that the state, which is the sole owner of HSE, will provide a capital increase for the holding via its stake in Gen Energija.

The "new" HSE is to be led by a three-member management, with several sources confirming for Dnevnik that Economy Minister Darja Radic has already offered the leading post to the head of Gen Energija Martin Novsak.

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