UPDATE 1-Slovak govt seeks veto rights on gas price rises

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BRATISLAVA, Nov 4 (Reuters) - The Slovak government agreed on Tuesday to change the law to boost state powers in utilities mostly owned by foreign shareholders as it seeks to prevent hikes in energy prices for households.

Prime Minister Robert Fico said the new draft law, which needs to be approved by the government-controlled parliament, will give the state veto rights over prices of natural gas that the gas monopoly SPP charges to households.

SPP, which is seeking a price hike for households for 2009, is run by E.ON EONG.DE and Gaz de France (GSZ.PA) through a combined 49 percent stake. The government holds the remaining 51 percent but is in a minority on SPP's board.

Fico said SPP had requested that the network market regulator approve a price increase by either 13 or 24 percent for next year, which the government opposes.

"The state, as the majority shareholder, is saying it does not want to see an increase in prices for households," Fico told journalists after an extraordinary cabinet session where ministers approved the draft law.

The proposed legislation will require all companies that are supervised by the market regulator to have price proposals approved by a resolution taken at their shareholders' meetings.

In SPP, such resolutions must be approved by a 52-percent majority, which neither the government nor the foreign shareholders have. Therefore they must agree on a compromise, Fico said.

"This is the veto right," he added.

Fico, who won a 2006 election on promises to help the poor, has long clashed with SPP over prices as efforts to prevent jumps in energy bills are a key part of his agenda.

SPP, which also manages a key pipeline shipping Russian natural gas to Europe, said its prices reflected developments with cost of commodities on world markets.

The market regulator has already rejected two SPP price hike requests this year as ungrounded.

The government has earlier offered to buy back the 49 percent stake from the foreign owners for the same price they acquired it in the 2002 privatisation deal.

SPP shareholders did not respond directly to the offer. They said they were long-term investors in Slovakia, adding the country had to respect principles of a market economy and obligations resulting from validly signed contracts. (Reporting by Peter Laca, editing by Anthony Barker)