The Slovak government adopted a draft law on Tuesday enabling the state to prevent the gas monopoly SPP, partially owned by German E.ON Ruhrgas and French GDF SUEZ, from raising household energy prices.

`We decided to take the veto route so that the majority shareholder (the state) will be able to decide about prices` of gas, Prime Minister Robert Fico told a press conference following an extraordinary government meeting.

France`s Gaz de France, now GDF SUEZ, and Germany`s E.ON, now E.ON Ruhrgas, obtained managerial control of the national gas company when they bought a 49-percent stake in 2002.

Under the current law, Slovak energy companies submit requests for price changes to the market watchdog URSO based on a proposal by the board of directors. The new bill orders them to send only requests approved by shareholder meetings.

GDF Suez spokeswoman Armelle Dillar said the step was `a restriction of our contractual managerial rights` obtained before the privatisation in 2002. `We are going to analyse the step and take the necessary steps,` she said.

Fico, who has long criticised the conditions of the privatisation process, said last month that the state was ready to return the purchase price paid in 2002 to regain control over SPP.

He also warned at that time that if SPP proposed another increase, the government would prepare a draft law to boost the state powers and enable it to veto such a move.

On Monday, Economy Minister Lubomir Jahnatek said that SPP had sent a new request to raise gas prices as of 2009 to reflect past oil price rises, after two increases had been rejected in July and October, the second being a 19.8-percent increase from November 2008.

According to Fico, the new proposed raise was either by 24 percent or 13 percent with a possible retroactive effect on 2008 bills.

Fico warned earlier the cabinet may change the composition of the SPP board by a law. `I would not talk about this change today,` he said Tuesday but added further steps were possible if SPP`s foreign shareholders try to bypass the new law.

The Slovak government has pinpointed energy prices as one of its main inflation worries both in the run-up to euro adoption scheduled for January 1, 2009 and afterwards.

Average annual inflation is to increase to 4.0 percent this year and to gradually fall to around 3.5 percent in 2009, according to the last European Commission forecasts.