Austria calls for talks on mega hydro power merger
Date: 11-Feb-02
Country: AUSTRIA
Author: Tom Armitage
Austrian politicians this week sharply criticised a planned hydro-electric power joint venture between Austrian state-controlled utility Verbund and German power giant E.ON, calling for a formation of an all-Austrian hydro-electric power producer.
Economics Minister Martin Bartenstein said that the door was open for Austria's nine regional utilities and Verbund to discuss the possibility of merging their hydro-electric power plants to form Europe's second biggest producer.
"There is a better chance than ever before for an Austrian power solution," Bartenstein said in an interview with Austrian state television ORF late on Wednesday, calling on domestic utilities to meet next week.
Bartenstein said the talks would not necessarily affect the Verbund-E.ON deal, adding that it would even be possible for an Austrian hydro-electric power consortium to find a European partner.
However some Austrian provincial governors said last week they strongly opposed the partnership with E.ON, to be called European Hydro Power (EHP) and based in Austria.
"If we have pure hydro power in Austria, then sell that pure hydro power abroad, and end up having to import nuclear power, then it's wrong," Burgenland Governor Hans Niessl said.
Both Chancellor Wolfgang Schuessel and President Thomas Klestil called for an "Austrian solution", arguing that the EHP joint venture could lead to a sell-out of Austria's environmentally friendly hydro-electric power resources.
Concerns that the Verbund-E.ON deal was in jeopardy have been weighing on Verbund shares this week. After falling some two percent on Tuesday and Wednesday, the shares were last one percent higher at 88.50 euros in a firm Vienna market.
The stock has gained some six percent so far this year.
The anti-nuclear Alpine nation produces around 70 percent of its energy from hydro electricity, exploiting the Danube, Lake Constance and the mountainous country's abundance of waterfalls to power a network of some 4,000 hydro electric plants.
Some environmentalists say EHP, which would be majority owned by Verbund, would allow E.ON to take more "green" energy from the venture than it would provide, forcing Austria to cover the shortfall with imports from "dirty" sources.
AUSTRIAN INDEPENDENCE
E.ON said last week it would await the outcome of next week's meeting of the Austrian utilities and would be happy to broaden the planned joint venture to incorporate them.
But Verbund's Austrian rival, Energie Allianz, said talks about an all-Austrian solution would make Verbund-E.ON deal impossible. It said the priority should be to maintain the independence of Austrian power.
"The role of hydro power as the basis of the energy supply in Austria must not be reduced, but that is not guaranteed by the Verbund-E.ON deal," a spokesman for the group told Reuters.
Energie Allianz is composed of five utilities - EVN AG, Wienstrom, Energie AG Oberoesterreich, Linz's ESG and the eastern Bewag/Begas group. EVN, Wienstrom and regional utility Tiwag together have 25 percent plus one share stake in Verbund.
Verbund, which is 51 percent owned by the Austrian state, last week denied reports there was "resentment" between itself and E.ON and that the German firm was unhappy with Verbund's planned initial 63 percent majority stake in the joint venture.
The German firm, whose hydro-electric plants would provide 26 percent of the joint venture's output, has an option to increase its future stake in EHP to 49 percent, though this would need to be approved by Verbund.
Authorities in the European Union and Germany have already approved the EHP joint venture, but Austrian anti-monopoly regulators have yet to give the deal the green light.
(Additional reporting by Andrea Hansal).
