Italy's Enel Group, one of the world's largest utility operators, is interested in buying the electricity distributor Electrica Muntenia Sud, sources close to the Italian investor told Ziarul Financiar.
Electrica Muntenia Sud, nicknamed 'Electrica's crown jewels' by analysts and investors, is attractive because it powers Bucharest, which accounts for more than 25% of Romania's GDP.
Enel is the first foreign investor in the Romanian electricity distribution business, after having signed the contract to buy 51% in Electrica Banat and Dobrogea for 112 million euros in July. The Italians already have 1.3 million clients on the Romanian market following the takeover of the two local electricity distributors.
Muntenia Sud, which supplies electrical power to the Romanian capital, is one of the so-called 'big' branches of Electrica, due to its more than 1.2 million customers in Bucharest, Ilfov and Calarasi Counties.
"Enel has so far bought two small electrical power distributors and I don't think they will have any competition issues if they try and buy a large branch, such as Muntenia Sud," sources involved the energy distribution privatisation process say. Enel is now focusing on its expansion into the energy and natural gas business in Romania and Bulgaria, attempting to get a foothold in these two countries in light of their upcoming EU accession.
When contacted by ZF, Enel's representatives were not willing to comment on the issue. All in all, there are about eight million customers on the Romanian market. This means that the Italians, should they participate in and win the tender for Muntenia Sud, would end up controlling less than one third of the market.
The privatisation of Electrica Muntenia Sud has aroused keen interest among foreign investors, with Germany's utility group RWE and Spain's Union Fenosa having expressed their interest so far.
The privatisation of this energy distributor had been initially scheduled for the end of 2002, when RWE was supposed to form a partnership with Electrica, with no previous tender.
The Romanian State requested PricewaterhouseCoopers (PwC) to provide an analysis of this particular Electrica branch, come up with privatisation strategy recommendations and see the seller through the transaction. The Germans at RWE, however, decided to pull out of the acquisition early last year, amidst management changes.
The new consulting deal has been recently sealed, but the privatisation strategy is to be announced by the end of the year or early in 2005.
The Italian State owns two thirds of Enel and not long ago announced that it would sell 20% in it to pay off some of the national debt, the third largest in the world. adrian.mirsanu@zf.ro
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