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Italian minister calls for energy infrastructure investment

28 Feb 2002 – Italy’s Industry minister Antonio Marzano issued a stark warning Wednesday that the country risked blackouts if urgent steps were not taken to strengthen its electricity and gas grids. He said there was a pressing need to encourage new investment to build electricity networks, regassification plants and pipelines to boost imports from abroad.

Italy fears a power shortage and recently enacted legislation to speed up the time it takes to build new power plants. The country is undergoing deregulation of the industry which has sparked fears of a power crisis with the break-up monopoly power providers such as Enel and concern that the private sector is not yet strong enough to contribute significantly.

“If we wait for demand and supply to be obviously imbalanced we will create a disastrous situation for both the economy and individual households. We foresee a deficit in the electricity production sector in about three years,” Marzano said.

National electricity grid operator GRTN has also warned that Italy risks electricity blackouts in 2003 and 2004 because of a foreseen decline in production capacity.

Enel, which still controls the lion’s share of the market and is controlled by the Italian Treasury, owns the grid, which is however run by GRTN.

The government plans to merge GRTN with Enel and list it on the stock exchange. Italy also plans to set up an electricity bourse by the end of the year.

Enel has been forced to shed three of its generating companies with Endesa of Spain having acquired a stake in Elettrogen last year at a cost of €2.6bn plus debt. The auction of the two remaining companies will be completed this year.

Marzano said the gas market risked severe shortages as well. “The gas sector is experiencing a strong growth in demand while internal production is decreasing due to difficulties in gaining authorisation to exploit existing sources,” he said.

“Without new investment, our import structures won’t be able to satisfy demand in four to five years time,” he said.