The Italian electricity utility ENEL is seeking joint-venture partners to set up power generating groups in Italy ahead of the deregulation of the power sector, which is currently scheduled to take place in 1999, Reuters reports.
The company has already established a power generation joint venture with the US company Enron, but a similar deal with the US-based Entergy Corp was abandoned in July.
A law on the technical aspects of liberalisation of the Italian electricity sector is due this Autumn, although no date has yet been set. This will establish the rules under which the market will operate, set up a regulator and outline the tariff structure and levels.
ENEL, which has an installed capacity of 55 000 MWe and generates 74 per cent of Italian electricity, has to cut its capacity by 30 per cent to comply with European Union power regulation. It faces increasingly aggressive competition from rivals such as the private group Edison, part of Montedison, which plans to invest $300 million annually for the next five years.
The joint venture between ENEL and Enron will own up to 5000 MWe of power plants currently owned by ENEL. Enron will provide trade and risk management services in the liberalized market. ENEL has previously said that the joint-venture deal would involve an investment from Enron in exchange for a 50 per cent share in the power plants.
ENEL has also been negotiating alliances with the Italian energy company ENI and with Fiat Avo. The domestic joint venture planned with ENI will be opened to other investors, ENEL said. The Fiat Avo deal will focus on the international markets.
The long-planned privatization of ENEL, which was originally due to take place in 1996, will not now happen until 1999 at the earliest. It still remains a politically difficult move because the current government includes the Communist Refoundation party which remains fundamentally opposed to the privatization of state-controlled companies.