Italian utility Enel SpA is in talks about selling part of its electricity network to power grid operator Terna SpA and may also sell its gas distribution network to cut its debt, Enel CEO Fulvio Conti said on Monday.
Enel, Italy’s biggest utility, was saddled with almost €56 billion ($88.84 billion) of debt at the end of 2007 after it bought Spain’s Endesa SA with partner Acciona SA. Enel has started cutting debt with an agreement to sell parts of Endesa to Germany’s E.ON AG. “As far as the sale of network is concerned, we are in talks with Terna and until we close with them we will not ask for better offers,” Conti told a news conference at the International Energy Forum (IEF) gathering.
Enel plans to sell 19,000 km (12,000 miles) of high-voltage network by the end of 2008. Conti said talks with Terna would last a few weeks or months but if the grid’s offer was not satisfactory, talks could be opened to others. Enel is also considering other options to cut debt, including selling its gas distribution network. “It is one of the hypotheses in the debt reduction program, but there is nothing concrete,” Conti said. Shares in Terna were off 0.78% at €2.790 at 1520 GMT, while the DJ Stoxx utilities index was down 1.2%. Enel was down 0.45% at €7.080.
LOOKING FOR MORE GAS SUPPLIES
Conti reiterated his call for Italy to reconsider its opposition to nuclear power, banned more than 20 years ago, to reduce energy costs. Conti said Enel was seeking to diversify gas supplies and was in talks with Egypt and other countries.
Earlier this month Enel has signed a memorandum of understanding with Egyptian Natural Gas Holding Co. (EGAS) on a broad cooperation in gas exploration and sales. Egypt’s Oil Minister Sameh Fahmy told Reuters at the IEF working groups have been preparing detailed cooperation projects and would present an “action plan” in the next three to six months. Enel has been looking to secure supplies of liquefied natural gas (LNG) from Algeria, Qatar, Nigeria, United Arab Emirates and may buy stakes in LNG plants in those countries, a source close to Enel has said.
Qatari Oil Minister Abdullah al-Attiyah told Reuters his delegation would meet Enel executives at the IEF, a gathering of energy ministers and top executives from around the world, but Qatar had no LNG available for sale at present. Attiyah said on Saturday Qatar was diverting LNG previously earmarked for the European and US markets to China because of more favorable returns. (Reuters)