Guardian Unlimited- Private equity and hedge funds would be banned from taking over the gas and electricity networks of huge energy groups unless they met strict investment targets under crucialproposals for the entire EU to be adopted by MEPs later today, the Guardian has learned.
The European parliament will also insist that no third country such as Russia, working through state-owned Gazprom, will be allowed to buy up the assets when it votes in favour of full-scale “ownership unbundling” of groups such as Germany’s Eon and RWE and France’s EDF and GDF – unless it agrees to complete reciprocity. Gazprom has signalled its wish to buy up European assets, including in Britain.
The 785 MEPs are expected to endorse by a large majority European commission proposals, due to be put into a draft law in September, for breaking up the continent’s energy groups and forcing them to sell off their network of grids and pipelines. This follows the opening up of the EU’s retail gas and electricity markets for domestic consumers on July 1.
Enshrining fears shared by energy commissioner Andris Piebalgs and competition commissioner Neelie Kroes, the MEPs have inserted a series of caveats. “We are effectively saying that we don’t want private equity and hedge funds taking them [the assets over],” Eluned Morgan, Labour MEP and rapporteur of the parliament’s energy committee, said last night.
Drawing on the UK model, the MEPs will say that any purchaser of the assets would have to meet long-term investment targets in an effort to deter capital-rich funds from buying them, squeezing cash out of them and selling them on in the short to medium term. “We’re saying they can’t sweat the assets and then leave them as wrecks,” Ms Morgan said. “Nor do we want them guzzled up by the likes of Gazprom or any other company that won’t allow access to their markets.”
