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Edison to create Greek joint venture with Hellenic Petroleum

European utility Edison's board of directors has authorized the signing of a memorandum of agreement with Greek hydrocarbon player Hellenic Petroleum, which establishes guidelines for the creation of a 50:50 joint venture to operate in the Greek electric power market.

While Hellenic Petroleum will provide the joint venture with its T-Power subsidiary, which owns a 390MW, combined-cycle natural gas-fueled power plant already operational in Thessaloniki, Edison will provide its 65% investment in a project for a 420MW combined-cycle facility that is being developed in Thisvi, in central Greece.

In addition, Edison will provide a project, currently in the study phase, for the construction of a coal-fired 600MW power plant in an industrial park in the Greek port of Astakos. The joint venture's objective is to develop a generating capacity of more than 1,400MW (including the 390MW already operational), achieving a level of output equal to about 12% of the Greek market, making it the second-largest electric power operator in Greece.

The agreement also calls for the development of new projects, including hydroelectric and wind power facilities. These new initiatives could raise installed capacity to 1,500MW to 2,000MW, Edison said in a press release regarding the agreement. The two partners have agreed that, upon the conclusion of the due diligence process, Edison will pay Hellenic Petroleum E55 million to account for the difference in the value of the assets that are being contributed to the joint venture.

If the diligence process has a positive outcome, the companies will proceed with establishing the joint venture later in 2007. Umberto Quadrino, Edison's CEO, said: “The agreement with Hellenic Petroleum, will enable us to combine our forces to create the second largest operator in Greece and play a major role in the future development of Greece's rapidly expanding electric power market, which has been growing at a faster rate than the average for the European Union.” (