The Portuguese government is said to be accelerating plans to sell a 30 percent stake in REN – the operator of the country’s electricity and natural gas distribution networks – as it struggles to cut debt in the face of increasing pressure from the global financial markets.
REN is the concession holder for the national electricity transmission network for 50 years as of 2007. The company manages over 7,400 kilometres of electricity transmission lines across the country. It also holds a 40-year concession, since 2006, for the 1,218 kilometres that comprise Portugal’s natural gas transmission network, as well as several storage facilities.
The company has a market capitalisation of €1.5 billion as of April 21, 2010, according to data from the Financial Times. That means a 30 percent share sale could net the government at least €450 million at current share prices. The Portuguese government holds a total of 51 percent in REN.
Local banking sources familiar with the process said the sale is still in its early stages, but they expect the government to accelerate it following Standard & Poor’s downgrade of Portugal’s long-term debt rating from A+ to A-. A share sale is expected to take place later this year, depending on market conditions.
The government had already said earlier this year that it would sell stakes in a number of companies in order to cut its debt, which is higher than originally forecast. In the last few weeks, though, pressure has been mounting, with Portugal’s borrowing costs rising steadily on the back of fears that the country – like Greece and Spain – could be at risk of defaulting.