Privatisation in Slovakia - 'Quo Vadis'?

Over the past 20 years Slovakia has gained extensive experience in privatisation as part of the process of transferring state property into private hands. Slovakia's privatisation backlog started shortly after the fall of the Iron Curtain, continues to the present day and, apparently, will have to be dealt with for some time to come.

Over those years, Slovakia saw a number of privatisations and experienced a range of privatisation policies: from the conviction that the state is a good owner to the exact opposite; from preferring voucher privatisation in favour of "all citizens" to preferable privatisation to selected "domestic capitalists".

The golden age of privatisation

The golden era of privatisation was during the two terms of Prime Minister Dzurinda, between 1998 and 2006, when for the sake of tackling the country's economic lag, a liberal attitude prevailed that led to the extensive privatisation of substantial parts of the economy. Due to this, reputable international players managed to acquire principal local enterprises in the energy, telecommunication and banking sectors, as well as other industries, such as the Enel acquisition of 66% in Slovenské Elektrárne, the E.ON Ruhrgas and GDF Suez acquisition of 49% (in aggregate) in SPP (the main Slovak gas company) and the Deutsche Telekom acquisition of 51% in Slovak Telecom.

A return to the view of the state as a good owner

After Prime Minister Fico came to power in 2006, the runaway privatisation train was suddenly derailed. This related in particular to Rail Cargo and Bratislava Airport, where the privatisation processes were abandoned almost at the last minute. Once again, the theory of the state as a good owner prevailed.

Naturally, the idea of the state as a good owner cannot be labelled as being without merit. After all, some of the foreign investors that acquired majority holdings in Slovak enterprises in privatisation proceedings are partly state-owned themselves. Unfortunately, a number of scandals at Slovak state-owned enterprises have been revealed, indicating that this might not be the right way for Slovakia.

A limited about-face

Prime Minister Radicova has now turned back towards privatisation, although not without limitations. The Government's Programme Declaration proclaims entry of a strategic business partner into Rail Cargo or Bratislava Airport, as well as the denationalisation of six state-run heating utilities and the remaining shares in bus transport companies...