7 Feb 2002 – Austrian electricity generator Verbund has issued statements in the last few days in an attempt to quell speculation that its proposed hydropower joint venture with German power group E.ON will be scrapped. Verbund insists that discussions are continuing and that it has not fallen out with E.ON Energie, the power division of E.ON, which will have a 37 per cent stake in the new company, European HydroPower GmbH (EHP).

The proposed deal was brought into question following reports quoting a spokesman for Energie Allianz, 20 per cent owners of Verbund, as saying, “The deal is politically dead”. The spokesman said no political party would approve the deal after the recent referendum in Austria in which 915 000 signatures were collected opposing the admission of the Czech Republic into the EU. The objections were based on the grounds that the Czech government supported the operation of the controversial Temelin nuclear power plant close to the Czech/Austrian border.

E.ON imports electricity produced by Temelin and, in the face of strong Austrian opposition to nuclear generation, the authorities may be reluctant to sanction a link-up with the country’s state-controlled utility.

Verbund issued a statement defending its strategy of combining its hydroelectric power plants with those of E.ON, which together would have installed capacity of 9600 MW. Verbund said, “EHP is in no way a sell of Austrian hydro power to foreigners.” It said that Verbund would have a 63 per cent holding and that, although E.ON may seek to increase its position up to 49 per cent, this would require the agreement of Verbund’s supervisory board.

Verbund said that production of electricity from hydropower was more than adequate to offer all Austrians the option of buying energy from a renewable source, as defined by the EU. It said, ” There is absolutely no need – either now or in the future – to import atomic power.”

The European Commission has cleared, under European competition rules, the establishment of the joint venture in which they intend to pool their hydro power plant assets. The two companies have indicated that they were planning longer-term co-operation in trade and distribution.

Verbund issued a second statement today in which it insisted that, “there is no resentment between E.ON Energie AG and Verbund,” after claims in an Austrian daily suggested that E.ON had called into question the economic leadership of Verbund in EHP.

If the deal proceeds, it is expected that EHP will be headquartered in Salzburg and will involve 2500 employees across Austria and Germany. “A hydroelectric power producer of European dimensions would point to the future in a free European power market, in which the renewable energy is becoming increasingly important,” said Verbund.