Spain and Portugal due to agree creation of Iberian electricity market

Spain and Portugal ministers are due to meet Wednesday to sign a protocol intended to create a unified Iberian market for electricity.

Portugal’s economy ministry said in a press release that Economy Minister Luis Braga de Cruz will attend the signing in the Spanish capital, which is expected to lead to the creation of a unified Iberian market on Jan. 1, 2003.

The date coincides with that set by the Spanish government for the complete liberalization of Spain’s electricity market. The two governments have been in talks over closer co-operation between their respective power markets for many months.

In January, analysts had said they expected the Portuguese government to give ground in the far from open Portuguese power market to ensure a bid by utility Electricidade de Portugal SA (EDP) – which is partly-owned by the Portuguese government – for Spain’s Hidroelectrica del Cantabrico SA (E.HIC) would get the green light from the Spanish government.

Spanish law curtails the voting rights of foreign state-owned energy companies that own more than 3 per cent in a Spanish utility, although there is a clause that allows a company to request that its case be given special consideration, in which case the issue is referred to the Spanish government.

The Spanish government was loath to allow a state-owned utility into the domestic market without reciprocal rights.

Portugal’s electricity market is currently only 33 per cent opened, and various elements of the existing market structure make life difficult for new entrants. The government has been expected to announce an acceleration and simplification of the deregulation procedure by the end of 2001. Spain’s power market is currently 55 per cent open to competition.

Market watchers doubted EDP would have proceeded in the first place without some sort of sign the Spanish government would approve its bid.

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