Scratch my back

21 July 2003

Portugal says it will finally open its energy market to Spain. But in return Spain has to lift voting restrictions it placed on EdP. This is similar to EdF’s hagglings in Italy. In Portugal s case, though, it is a firm Eni that holds the key, not politicians. This is similar to the deal France s EdF has offered Italy. Such haggling is a step backwards for EU energy liberalisation.

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Portugal has asked the Spanish government to drop a 3% voting cap that it placed on Electricidade de Portugal three years ago and in return Lisbon would open its domestic power market to Spanish firms.

Portugal and Spain have so far agreed to harmonise regulations for an energy pool by the end of July as a step towards a single Iberian energy market. EdP has a 40% stake in regional Spanish utility Hidrocantabrico, which it bought in 2001. Cantabrico's second biggest investor, Electricite de France, has a 35% stake and faces similar voting restrictions.

Earlier this year, Portugal unveiled a blueprint for its energy sector that involved parcelling up statecontrolled energy firm Galp into three bits. Its gas supply business would be sold to EDP and its gas distribution unit would be sold to the national electricity grid. Galp's rump operation would meanwhile return to its oil roots. Italian oil firm Eni has a 33.34% stake in Galp, and an option to buy another 12%. EDP owns 14%.

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