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Řebíček: We’ll have problems selling Prague Airport before elections

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The cabinet of Mirek Topolánek might not manage to privatise the Prague Airport, the biggest transaction since the sale of Český Telecom to Spain’s Telefónica, before the next general elections.

“It will be a big problem for us to manage it even if we held out until 2010,” Transport Minister Aleš Řebíček told Týden. “The first problem is that we will know the advisor at the end of March at the earliest. Then the privatisation process will take some time, so I think we might not manage it anyway.”

One of the reasons is the delay in the tender for a privatisation advisor. The weekly Euro reported that Deutsche Bank appealed a few weeks ago against the Finance Ministry’s decision to exclude bank from the tender. Deutsche Bank was one of seven bidders seeking the lucrative order. Finance Ministry spokesman Ondřej Jakob said the advisor could be chosen within weeks.

Moreover, the buyout of land that the Prague Airport needs for new runway construction has not been resolved yet. A significant part of the land is in the hands of the financial group Penta.

The airport sale will become much more complicated owing to the global financial crisis that has made it harder to access loans. “I think that out of the seventy bidders who were interested and have visited the airport, about half of financial groups will fall behind,” Řebíček said.

“Those who will remain are financial groups that have some airport already and want to expand, so it is their main business.” Asian, American and Canadian financial groups will therefore be involved, Řebíček added.

Apart from these groups, Prague will be interesting for companies that operate a few airports all over the world, Řebíček said. So the government still can expect hefty privatisation proceeds. “I think that we still can get those CZK 100 billion,” Řebíček added.

Finance Minister Miroslav Kalousek wanted the sum at the beginning of the year, but many experts say it is not realistic due to the crisis. The evaluation of airports put up for sale in the world has decreased sharply.  David James Bentley, a consultant and author of the Global Airport Privatization Report, said that the evaluation of London Gatwick airport had decreased from GBP 3 billion (roughly CZK 90 billion) to GBP 1.85 billion (about CZK 56 billion) in a few weeks. Gatwick is a more advanced airport than Prague. Its growth potential is not that big, but it clears 35 million passengers a year, said Bentley.

The reason is the decline in air transport that makes airports less attractive. Both passenger and cargo air transport fell sharply in September. International transport of cargo dropped by 7.7% on the year, the largest decline since 2001. International passenger transport decreased by 2.9%, the first decline since the 2003 outbreak of the SARS disease.

Many ministers have even admitted they would abandon the privatisation if the prices offered were too low. Řebíček said he would be against the sale if bids were below CZK 90 billion.

Translated with permission by the Prague Daily Monitor.

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