Belgian concern over merger of French utilities

27th February 2006, Comments 0 comments

27 February 2006, BRUSSELS — The Belgian government has raised concerns about the looming merger of French electricity firms Suez and Gaz de France and its impact on the Belgian market.

27 February 2006

BRUSSELS — The Belgian government has raised concerns about the looming merger of French electricity firms Suez and Gaz de France and its impact on the Belgian market.

The merger will have ramifications for the Belgian market because Suez owns Belgium's Electrabel and Gaz de France controls Luminus and Citypower.

French Prime Minister Dominique de Villepin announced the merger on Saturday, claiming that it was the right choice given the strategic importance of energy supply in France.

The merger will create the Europe's second-largest energy supply company and if the deal goes ahead, the French government would own 34 percent of the combined EUR 72 billion business.

It means the French government will have a say in decisions within the merged company over, for example, important investment issues in Belgium.

The Belgian government is therefore wary about the about the planned merger and its ramifications for the Belgian market. It is seeking advice from electricity and gas supervisory authority CREG.

Prime Minister Guy Verhofstadt is also demanding that Suez fulfills the promises it made last year during its takeover of Electrabel, such as building the Zeebrugge port into a central gas supply hub for Europe.

The federal government is also concerned about the electricity and gas competition in Belgium, concerns shared by Flemish Energy Minister Kris Peeters.

The Christian Democrat CD&V minister said the merger of the French firms should be considered carefully because mega-mergers of this type are at odds with the liberalisation of the energy market.

"The European Commission's basic principle was that the liberalisation of the electricity market had to boost competition within the EU," Peeters said.

"Now it appears — definitely with the recent developments in France — that competition is not increasingly, but is actually declining."

Meanwhile, the French merger deal has also been strongly criticised by Italian ministers who claim it is an attempt to thwart a deal between Suez and Italian firm Enel.

Italian Production Minister Claudio Scajola said it was bad for consumers and smacked of "neo-protectionism".

[Copyright Expatica News 2006]

Subject: Belgian news

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