MILAN (Thomson Financial) - Enel SpA could raise between 500 million and 900
million euros from the sale to E.ON AG of nuclear virtual power plant (VPP)
capacity in Spain which will be used for debt reduction purposes, analysts said.
According to one London-based energy analyst, the VPP contract will cover
450 megawatts of nuclear capacity in Spain over a period of ten years.
"The two sides are still negotiating the terms. By my calculations the VPP
deal could raise around 675 million euros for debt reduction," he said, noting
that the average life of Enel's nuclear plant in Spain is 14 years.
An Enel spokesman confirmed that negotiations with E.ON over the sale of
nuclear capacity in Spain via the VPP mechanism are ongoing but gave no
indication of when the deal could be completed.
The VPP deal was previously agreed with E.ON but was not completed in time
to be included in the recent sale by Enel of Endesa Europe assets to the German
energy operator.
Under VPP agreements the owner of the power generation plant continues to
own the facility while another party has the disposal of the capacity.
Another analyst said he expects the net present value of the VPP contract to
be in a range of 500 million and 900 million euros.
"The wide range reflects uncertainties surrounding the VPP contract such as
the assumptions that will be used on power prices, tariff liberalisation, and
the rest," he said.
At its business plan presentation in March, Enel committed to reducing its
55.79 billion euro debt pile to between 45 billion and 49 billion euros at the
end of 2012.
It said it could raise 11 billion to 15 billion euros in net cash from
disposals in the period 2008-2012 to help reduce its debt which skyrocketed
after it acquired, with Acciona SA, Spain's Endesa SA.
The sale of Endesa Europe assets to E.ON will allow Enel to reduce its debt
by around 8.4 billion euros.
stephen.jewkes@thomsonreuters.com
sj/lam
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