Vattenfall moves in on German market

Swedish utility Vattenfall has taken control of German utility Hamburgische Electricitäts-Werke (HEW), strengthening its position in the country’s electricity sector. The battle for Veag continued in October, however, with Vattenfall rejecting the possibility of joining forces with Southern Group of the US, its main rival in bidding for the east German utility.

Vattenfall has taken over the interests in HEW held by E.ON and Sydkraft for a490m ($421m). In exchange, E.ON and Sydkraft have acquired a number of Vattenfall’s shareholdings in Norway, Sweden, the Czech Republic and Lithuania. Vattenfall’s holding in HEW has risen to 71.2 per cent.

By increasing its stake in HEW, Vattenfall has increased its holding in Veag and is well positioned to bid for Berlin utility Bewag, which also holds a minor stake in Veag. Both E.ON and RWE are divesting their holdings in Bewag and Veag under the direction of the European Commission.

Southern Group, which holds a 26 per cent stake in Bewag, is also keen to gain control of Bewag and Veag. In August the company blocked a move by E.ON to sell its stake in Bewag to Vattenfall.

EDP sale raises $1.35 billion

The sale of a 20 per cent stake in the Portuguese national utility EDP has raised Esc323bn ($1.35bn, a1.6bn). Retail demand was oversubscribed even before the conclusion of the offering on October 23.

The sale leaves the government with a 32 per cent stake in EDP, which is the tenth largest in Europe and the third largest on the Iberian peninsula. Shares in EDP have fallen since the offering, largely due to concern over the company’s plans to invest in third-generation mobile telephone technology.

The institutional tranche also saw demand exceed shares on offer by around three times. Of the 305.5 million shares placed with institutions, 40 million went to domestic institutional buyers and 265.5 million were placed internationally.

EDP employs 13 880 and has a generating capacity of just under 11 000 MW. The group has invested both at home and abroad, with foreign interests now accounting for ten per cent of assets. In Brazil, EDP controls four electricity distributors.

Enel asset sale proves popular

Italian utility Enel has said that some 26 international companies have expressed an interest in bidding for 15 000 MW of its generating capacity slated for sell-off in 2001. The sale, which has been brought forward from 2002, is expected to generate revenues of $8.7bn (a10bn).

Three companies— Eurogen, Elettrogen and Interpower— have been set up for the purpose of selling off Enel’s generating assets. Their combined annual turnover totals $2.1bn.

Consortia planning to bid for the assets include Germany’s E.ON, which has linked up with Finmeccanica, and EnBW, which has joined forces with Merloni.

Chicco Testa, Enel’s president, has said that price will be the determining factor in the bidding, and Enel has not ruled out the possibility of a market listing for Eurogen, the largest of the three holdings.

Dutch industry restructures

The Dutch government has said that it will purchase the country’s high voltage power grid in a move to increase competition and speed up liberalization of the electricity sector. The move is a change from earlier plans, under which the government would only have bought 51 per cent of the network.

The government will pay out Fl2.55bn ($967m, a1.13bn) to the four utilities that currently own the grid: EPZ, Epon, EZH and UNA. The deal will silence critics who believe that competition in the market is being held back by the presence of long-standing fixed-price power purchase contracts between the companies. After the sale, the companies will have to compete against each other in the open market.

The four utilities had previously tried to sell the long-term contracts but were unable to find a buyer.

EDF buys 2 GW UK plant

EDF subsidiary London Electricity has bought the 2000 MW Cottam power station from UK energy group PowerGen. The £398.3m ($581m, a676m) deal, if approved by the European Commission, will increase EDF’s current six per cent share in the UK power market.

The 30-year old Cottam plant is one of three that PowerGen put up for sale earlier this year. The coal-fired plant has a book value of £26.3m and had net operating profits of £82.1m in 1999.

PowerGen said that the sale of the 2000 MW coal-fired station in Nottinghamshire, UK, is in line with its strategy to reduce its debt by £1bn.