AMSTERDAM, Aug 27: The Dutch cabinet is ready to allow the sale of minority stakes in power grids after utilities are forced to spin them off, the government said on Saturday.
An economy ministry spokesman confirmed a report in business daily Het Financieele Dagblad that the cabinet wanted to sell stakes in the power grids in addition to the already planned sale of generation and retail businesses after unbundling.
“The cabinet finds minority privatization of the networks acceptable,” Economy Minister Laurens Jan Brinkhorst told the newspaper in an interview. “Minority privatization is a sensible foundation for such an important public service.”
The Dutch government announced plans earlier this year to force power and gas utilities to unbundle their grids by January 1, 2008. The ministry spokesman said cabinet approved the draft unbundling law on Friday, which will go to parliament next week.
“The trading and production companies can be sold as soon as splitting up is arranged,” the spokesman said.
“The cabinet has now announced the idea of privatizing a minority stake in the networks as well.”
Most of the Dutch power utilities and the entire grid network are owned by municipalities and other local authorities.
Dutch financial consultancy Sequoia has valued the country’s 12 energy utilities at about 33 billion euros ($40.67 billion). The non-grid assets of the four biggest utilities, Essent, Nuon, Eneco and Delta, are seen worth some 11-14 billion euros.
Het Financieele Dagblad said the sales after unbundling could raise at least 20 billion euros for municipalities.
The Dutch plan goes beyond the European Union’s requirement that energy production companies set up a separate legal entity for their networks and is vehemently opposed by the country’s biggest utilities, which fear becoming easy takeover targets.
Utilities including German E.ON and RWE, France’s Electricite de France, Belgian Electrabel, British Centrica, Sweden’s Vattenfall and Spanish Endesa are seen as possible suitors.
Brinkhorst said it had been a fight to get agreement on the plan, but it would be worth it, noting it was already having an effect with E.ON buying Dutch power and gas utility NRE and Denmark’s DONG agreeing to buy gas company Intergas Supply.
“NRE and Intergas show that the unbundling can go well and create value. The shareholders of the big energy companies should put pressure on management,” he told the newspaper.
The Netherlands has 37 power suppliers, of which Essent, Nuon and Eneco control 88 percent of the retail market.—Reuters