Monday, October 11, 2010

Enel Awaits Romanian Energy Reforms Before Making Reactor Bid


Italy’s Enel SpA wants to see how Romanian restructures its energy industry before deciding to take part in bidding on a 4 billion-euro ($5.6 billion) project to build two nuclear reactors, Enel country manager Claudio Zito said.

The government plans to merge its energy assets, including nuclear generation, under two holdings to improve efficiency by the end of this year, later than an initial forecast of June 30. It also would need approval by the nation’s competition watchdog because the holdings would control 90 percent of the market.

The Cabinet, cash-strapped to find ways to save money, is coming under pressure from unions, who sued the government on charges the plan would merge unprofitable assets with money- making enterprises. E.ON Romania Chief Executive Officer Frank Hajdinjak also said the project endangers new investments and is a “step backward” for the market.

“Our willingness to invest is strongly dependent on how the regulation of the market will be reformed,” said Zito in an interview yesterday in Bucharest. “We are looking at what the government will do for the reform of the generation system. I think that is a crucial moment in which all the investors will see how to go ahead.”

The country’s wants to merge its hydropower and hard coal holdings under one entity called Hidroenergetica SA. Coal-fired and hydropower plants and two nuclear reactors would be moved into a second holding called Electra SA.

Venture Members

Enel is part of a venture created to build and operate the two planned reactors together withIberdrola SA, GDF Suez SA’s Electrabel SA unit, Germany’s RWE AG, steelmaker ArcelorMittal and the Romanian state, which owns the majority 51 percent stake.

Czech utility CEZ AS, which holds 9.12 percent of the venture, said on Sept. 22 that it plans to sell its stake to focus on domestic investments.

The investors might split CEZ’s stake in the venture or negotiate a one-on-one deal and Enel would be interested “in principal” to increase its 9.1 percent stake in the reactor venture “but we have to consider how the market will be reformed,” Zito said.

All the investors in the venture are expected to decide by the end of this year on whether they want to invest in the project or pull out, after the Romanian state said it plans to lower its majority stake because of lack of funding.

Enel has expressed interest in buying the Romanian government’s minority stakes in the power company’s local units, Zito said.

Government Shuffle

Former Economy Minister Adriean Videanu said the government wants to sell its minority holdings in the Romanian units of E.ON AG and Enel to raise cash for investments. Videanu was replaced by Ion Ariton as minister after a Cabinet reshuffle on Sept. 22.

“We have expressed interest to the government in case they want to sell that we would be willing to talk about that, we have started talking,” Zito said, adding that he can’t comment about the timing because of the government shuffle. “The new minister has to get information and his own ideas before he starts doing anything else in this regard.”

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez in Prague atjagomez@bloomberg.net

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