Italy’s power utility giant Enel has ended its expansion drive by acquisition and begun focusing on developing its operations in Romania and other countries where it has a presence, according to its chief executive.
“The phase of the big expansion via acquisitions has come to an end with Endesa and OGK-5,” Fulvio Conti told the Borsa & Finanza weekly business newspaper, published on Saturday.
“But this has not put an end to the phase of organic growth that we will pursue with vertical integration in various markets where we are present,” he said.
Conti also said Enel would start paying off the debt it had accumulated after the acquisitions with money raised from bond issues, asset sales and a strong cash flow.
Enel and its Spanish partner Acciona (ANA.MC) bought Endesa, Spain’s largest electricity producer, for –42.5 billion earlier this year.
In Russia, it began buying out minority shareholders in OGK-5, one of six wholesale power generators being spun off from former monopoly Unified Energy System (UES).
Conti said he wanted to emulate the way Enel operated in Russia in Romania and other countries.
“Only in Russia do we have the whole value chain: the production of primary materials, their transformation into energy, and the commercialization of it,” he said.
“In Romania, for example, we are only in distribution – we want to enter into energy production,” he said.
On Friday, Enel won permission from the European Commission to buy Romanian power distributor Electrica Muntenia Sud in a –820 million deal it had struck in 2006.
After its acquisition spree, Conti said Enel’s debt stood between –57 billion and –58 billion.
He said it was essential for Enel to keep an A rating to prove that it was not expanding to the detriment of its finances.
On December 14, Standard & Poor’s cut its long-term corporate credit ratings for Enel to A- from A, citing the weakening of Enel’s financial profile.
(Kathimerini 24-25/12/2007)