Electrica shows interest in privatisation of Turkish power

Electrica, one of the largest companies in Romania and currently being privatised, has expressed interest in privatisations in Turkey and Serbia in a bid to expand its operations abroad, market sources told Ziarul Financiar.

Electrica is likely to become the first major company to make an acquisition on foreign markets, whereas the expansion plans announced by other companies are limited to the development of their own networks.

This model has been successfully implemented by the Czech state-controlled power company CEZ, which has begun an unprecedented acquisition campaign in Bulgaria, Romania and other markets in the region.

Electrica is currently undergoing privatisation and has sold its majority stakes in the Banat and Dobrogea branches to Italian company Enel. The eight regional electrical power distribution and supply subsidiaries in Romania are 100% owned by Electrica SA Bucharest.

Enel will pay 35 million euros to the Romanian party and the remaining 112 million euros will be used to raise the share capital of the two subsidiaries.

Electrica SA is relying on its maintaining a yearly turnover of up to 2 billion euros until 2010, by which time it will have sold the majority stakes in its subsidiaries but kept the service and maintenance operations as part of its portfolio.

Furthermore, the company’s long-term business plan envisages inclusion of telecommunications, and even overseas operations in the company’s portfolio.

The company hopes over the following years to generate yearly cash flows of around 300 million euros, which it would use for its expansion outside Romania.

Electrica’s potential targets include Turkey and Serbia.

A delegation of Electrica and other power and gas company officials last week met with representatives of Turkish authorities and companies. Turkey plans to put its electrical power distribution company up for privatisation, involving 21 regions in total. Romania is likely to have some sway on this market, given the planned laying of an underwater power cable between Romania and Turkey. All of this paints a picture of a regional power market in which Romania and Bulgaria appear to hold the upper hand.

The Serbian power market is dominated by state-owned companies, which are also going to be put up for sale in coming years.

On the regional market, German giant E.ON and Czech company CEZ currently hold strong positions.

For this year, Electrica SA forecasts gross profits of 12.8 million euros from a turnover of 1.95 billion euros.
adrian.mirsanu@zf.ro