Italian utility Enel has said that it will pay €820 million ($1.33 billion) for a 67.5% stake in Romanian electricity distribution company Electrica Muntenia Sud, after signing a privatization deal with the Romanian firm's parent company, Electrica.
Enel SpA said that, until it receives the transferred shares, Avas subsidiary Electrica will continue to control and manage Electrica Muntenia Sud (EMS), while Enel will contribute to the management of the company as an observer, in line with the privatization agreement. After share transfer, Enel will run and manage the EMS operations. The company owns and operates the electricity distribution grid of Bucharest and has a customer base of around 1.1 million with a network spanning over 45,000km. EMS, which is one of eight Romanian regional electricity distribution companies, is the fifth distribution company to be privatized by the Romanian state.
Enel already has a presence in the region as it acquired Electrica Banat and Electrica Dobrogea, the two smallest of Romania's eight power utilities. Enel said that the new acquisition would double its Romanian footprint. Matteo Codazzi, Enel Romania CEO and country manager, said: „The signing of EMS privatization contract is a definite step forward as regards the development and liberalization of the Romanian electricity sector, in line with EU policies.” „Enel has a solid industrial plan for EMS to increase the quality of services and upgrade its network, planning investments in amount of €1 billion ($1.32 billion) for the next 15 years. Such massive investment plan will lead, in the mid-term, to a significant increase in the reliability of the network, improving the quality of service and reducing power interruptions,” Codazzi added.
Romania's minister of economy and finance, Varujan Vosganian, said that investments in the Romanian energy sector will be around €30 billion ($40 billion) up to 2020. He said that, although state-owned companies would contribute around 20% to 30% of this, privatization would be necessary for the modernization of the region's energy market. Enel has said that it intends to participate in further generation sector privatization in the future. (energy-business-review.com)