12/4/2005

German E.ON plans on further expansion in the Czech Republic and Romania

German energy industry company E.ON intends to continue its expansion in Central and Eastern Europe. It wants to concentrate on Romania and Bulgaria, as well as the Czech Republic and Slovakia, E.ON board member Walter Hohlefelder announced on a seminar in London earlier today.

E.ONkeeps an eye especially on the privatization process in Romania. Earlier this month, the group signed a contract there to purchase majority in electricity distributor Electrica Moldova for €100 million. On the Romanian market, E.ON will compete with ČEZ, which bought another Romanian electricity distributor – Electrica Oltenia.

“We will take part in privatizations in Romania, especially in the north of the country, where we have natural gas operations, so that we could utilize synergies,” said Hohlefelder. “We are also looking for growth opportunities in the natural gas industry in the Czech Republic, Slovakia and Bulgaria,” said a member of E.ON’s management.

The largest German energy industry company has already invested about €2 billion in acquisitions throughout Central and Eastern Europe. In countries of this region, E.ON serves about 7 million customers.

Electricity industry groups from the West are now trying to invest in Eastern Europe in an effort to make the most of the rapid growth of demand in this region. The demand is fueled by the accelerated economic growth after most of the countries of the region joined the EU.

Romania and Bulgaria have yet to join the EU and the privatization of domestic electricity distributors is one of the terms of the energy industry restructuring process required by Brussels. Investors anticipate the privatization here will take two more years, until the two countries’ expected joining of the EU in 2007. 

Belgian Electrabel also mentioned its Central European expansion plans during the seminar. Currently, the company keeps an eye especially on the privatization process in Poland, where it already holds stakes in two electricity industry companies.

Source: Czech News Agency (ČTK)