Como se combate o populismo? "Com eleições", responde Fukuyama

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RPT-UPDATE 2-EU staff recommend blocking EDP, Galp gas deal

18/11/2004 14:28

(Repeats with rewritten headline) (Recasts with staff recommendation, adds Brussels dateline)

By David Lawsky and Sergio Goncalves

BRUSSELS/LISBON, Nov 18 (Reuters) - European Commission staff recommended on Thursday the rejection of plans by Energias de Portugal to buy natural gas assets from energy company Galpenergia, a source familiar with the matter said.

The recommendation will be sent to the European competition commission, the source said, as state-controlled EDP and Brussels were in 11th-hour talks Thursday to resolve antitrust issues over EDP's plan.

EDP and the EC are seeking remedies to ease Brussels' objections to the closely watched deal, which involves splitting off 1.2 billion euros ($1.57 billion) in natural gas assets from state-controlled Galpenergia.

In Lisbon, Economic Affairs Minister Alvaro Barreto said Portugal had an "alternative proposal" in case Brussels rejected its programme.

The proposal "maintains the general outline of the initial proposal and goes through the goals of market liberalisation, greater competition and, above all, protection of domestic consumers", he told parliament in a debate on the 2005 budget.

He did not give details and said he expected the matter to be resolved by the end of November. The EC had set a date of Dec. 15 for concluding the process.


WANT TO CLOSE DEAL

A source in Lisbon close to the deal said both sides were trying to conclude the talks before Monday, when a new Commission executive headed by former Portuguese prime minister Jose Manuel Durao Barroso takes office.

EDP, Portugal's biggest industrial group, and Italian energy group ENI are buying 51 percent and 49 percent, respectively, of Gas de Portugal from Galpenergia.

Portugal is restructuring EDP and the rest of its energy sector to face increased competition with the launch of a single Iberian power market scheduled for June next year.

The Commission sent a list of objections to EDP and ENI last month about the purchase. Portuguese authorities have said antitrust agencies in the 25 European Union countries are watching the case closely, especially Spain and France.

EDP is balking at a Commission suggestion that it give up contracts for the importation of 6.5 billion cubic metres of natural gas, the Lisbon source said.

The Commission wants the contracts to go to Transgas, the state natural gas network.

The Commission also objects to EDP's stakes in two Portuguese power plants, Turbogas and Tejo Energia, the second source said. EDP has minority holdings in the two but has veto rights over strategic decisions.

The Commission wants EDP to give up its veto rights. EDP wants to give them up only until the start of the single Iberian market.

The Commission is also proposing that EDP give up its oil terminal at Sines, a port about 60 miles (100 km) south of Lisbon. EDP is willing to give in but points out it could buy a terminal or be partners in one in Spain, the source said.

The source said EDP wanted solutions only until the start of the single power market, when increased liberalisation will remove antitrust objections.

Shares in EDP were off 2.61 percent at 2.24 euros at 1334 GMT while the benchmark PSI20 index was off 0.73 percent. The drop came as the DJ Stoxx utilities gauge was flat. ((Reporting by Sergio Goncalves in Lisbon and David Lawsky in Brussels, writing by Ian Simpson, Editing by Elizabeth Fullerton; Lisbon newsroom, 351-21-350-9201, lisbon.newsroom@reuters.com; Reuters messaging: ian.simpson.reuters.com@reuters.net;)) ($1=.7665 Euro)