The sale of around 2 GW of Portuguese hydroelectric generating capacity may be delayed by the government, according to a Portuguese press report, citing a government official.
The sale, for which EDP - Energias de Portugal SA has reportedly received five bids, is dependent on government authorization, granted on a case-by-case basis and only when applied for by the interested party, Lisbon, Portugal, newspaper Expresso reported Sept. 14, citing an unnamed official of the Environment and Energy Transition Ministry.
The ministry source said EDP had not yet informed the government of its intention to sell the dams. Nobody was available Sept. 16 at EDP or the ministry to comment on the report.
Spanish groups Endesa SA and Iberdrola SA; French group Engie SA; and two funds, Ardian and Brookfield Asset Management Inc., reportedly submitted offers prior to the July 31 deadline, according to press reports quoting sources close to the sale. None of the parties have confirmed their bids.
EDP is seeking to sell assets for €2 billion as part of a wider €6 billion asset rotation program.
The utility is reported to be selling hydro assets at Picote, Miranda, Fiticeiro, Baixo Sabor and Foz-Tua with total capacity of 1,706 MW, equivalent to over 8% of all the Portuguese generation capacity.
According to EDP CEO Antonio Mexia, the assets are a mix of run-of-river and dam storage assets, but the final details are subject to change.
EDP operates 7.2 GW of hydro capacity in the Iberian market from a total installed capacity of 19 GW. Output in the second quarter was 1.7 TWh amid dry conditions, a decline of 63% year on year from a relatively humid second quarter of 2018.
"Our base scenario is that the Portuguese government will authorize this transaction," analysts at Royal Bank of Canada said in a note on Sept. 16.
It said a rejection was only likely if Chinese shareholders in EDP — China Three Gorges and CNIC, with a combined 27.6% stake — rejected the deal.
Henry Edwardes-Evans and Gianluca Baratti, who contributed to this article, are reporters with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.
