Between 2003 and 2005, crude oil refiner Slovnaft, a.s., Bratislava will downsize the number of its employees by 1,011, or 26.8 percent, to 2,761. Director general of the company Vratko Kassovic told a press conference on Tuesday that Slovnaft will lay off 487 people this year, 250 in 2004 and 274 employees in 2005.

Expenses on severance payments in the whole restructuring period will total almost SKK 500 million. Restructuring should bring net savings of SKK 1.7 billion. Along with severance payment costs, Slovnaft assumes expenses of SKK 30,000 to SKK 40,000 per employee to alleviate the negative impact of redundancy via improving qualification or personnel consultancy.

Mr. Kassovic underlined that restructuring is not a consequence of a change in the shareholders‘ structure in the company and the increased capital share of Hungarian company MOL. The reason behind the transformation is in particular Slovakia’s accession into the European Union, the historical drop in fuel margins, development in crack spreads (difference between quoted product price and quoted Brent crude oil price) of motor fuel in 2000 to 2002, average wage development and personnel expenses. Last year, fuels crack spreads fell from USD 65 to USD 54 per ton y/y in the case of gasoline and from USD 47 to USD 29 per ton for diesel. The average monthly wage in Slovnaft should reach SKK 34,500 this year, compared to SKK 27,663 in 2002.