EUA chegam a acordo com a UE para tarifas de 15%

[TRSM]

EU to approve Portuguese aid to EDP - sources15 Jul 2004 09:42 GMT


BRUSSELS (AFX) - The European Commission will approve plans by the Portuguese government to compensate Electricidade de Portugal SGPS and other generators for the costs of market liberalisation, said an EU source.

EDP may receive as much as 1.9 bln eur for the scrapping of the so-called power purchase agreements (PPAs), analysts have predicted.

The commission will also insist that it rules on EDP's planned acquisition, together with Italy's Eni SpA, of Gas De Portugal, the source said. The Portugese competition authority hotly contests the deal and may to ask for jurisdiction.

Following de-regulation of the Portugese energy market in 1996, EDP was faced with so-called stranded costs which result from the decline in the value of electricity-generating assets. Electricity prices normally fall below production costs as a result of de-regulation.

"The companies do not earn as much because of the liberalisation of the market and they are sitting on non-recoverable investment costs. The Portugese state wants to give the companies certain guarantees and the commission will allow it to reimburse the companies, probably within two months," said an EU source.

Furthermore, the commission has already allowed Spain to compensate its electricity utilities for these stranded costs. Now that Portugal and Spain are forming the single Iberian energy market, the commission will have to approve the Portugese aid to create a level playing field among the companies, said a source.

One minor sticking point which has cast some doubt over the approval of the aid is the notification itself, which sources say is incomplete. "The commission uses a very intricate methodology for stranded costs and the Portugese did not submit all the information. However, this is only a spat over methodology."

Concerning the GdP acquisition, the Portugese competition authority released recommendations about the conditions for approving the purchase. These recommendations were based on a study by consultants who said Gas de Portugal should be split into two companies, one controlled by EDP and the other by ENI.

However, the acquisition meets the thresholds which give the European Commission jurisdiction. The deal was notified to EU regulators on July 9. The EU has opened an initial inquiry which lasts for one month. On August 13, it will decide whether to clear, conditionally clear or open an in-depth probe.

The Portugese competiton authority may submit a referral request within the next two weeks to the EU. The EU would therefore extend its initial one month inquiry by two weeks while it considers the request. However, sources said the commission will not allow Portugal to rule on the deal.

"This would be a hopeless request. Given the creation of the single Iberian energy market, this is clearly not a national deal and the Portugese will not be allowed jurisdiction. The merger is not going to be such a big deal and is likely to be cleared," said a source.

The new Spanish government has delayed the Mibel's launch at least to October from the scheduled date of April 20 but Antonio Fernandez Segura, the Spanish government's secretary general for energy pledged this week that the Mibel will be launched by the end of the year.

Espirito Santo Research estimated in April that compensation to EDP is likely to have a total value of 1.4 to 1.9 bln eur, including land.

emma.davis@afxnews.com