Sale of energy giant sparks doubts and questions

Sale of energy giant sparks doubts and questions

21st January 2009, Comments 0 comments

German energy giant RWE's takeover of Dutch provider Essent is causing concern among environmental groups. Some MPs are asking questions about the sale.

Greenpeace spokesperson Meike Barretta told Radio Netherlands Worldwide that her organisation is not happy about the takeover:

"RWE's record in terms of sustainability is deplorable. It is Europe's biggest producer of CO2 gas as a result of the huge quantities of coal and lignite they are burning. Only three percent of their energy production can be classified as 'clean', while Essent had reached 16 percent. It is illusory to expect RWE to follow Essent's example."

Smiling shareholders
Following the nationwide separation between energy distribution and energy production and supply, it is only the latter - the supply and production companies - that change hands in case of a sale. The power distribution network will remain in government ownership.

Essent's shareholders - six Dutch provinces and 140 municipalities - are generally satisfied with the planned takeover. Annemarie Moons, a member of the executive council in the province of North Brabant, said that the takeover will net the shareholders some 7.5 billion euros. Her province is planning to spend its share, 2.3 billion, on building new motorways and investing in sustainable energy and innovation.

Sustainable Energy

Another shareholder, the eastern province of Overijssel, would like to spend its one million from the sale on job creation and renovating inner city areas near the railway stations in the towns of Zwolle and Hengelo railway stations, according to provincial council executive Theo Rietkerk.

Nuon, another energy Dutch energy provider, is likely to follow in Essent's footsteps soon, according to sources quoted by regional daily Eindhovens Dagblad. These sources say ten foreign parties have issued bids for Nuon, with a deal likely within a month.

Following the nationwide separation between energy distribution and energy production and supply, it is only the latter - the supply and production companies - that change hands in case of a sale. The power distribution network will remain in government ownership.

Logical
Political reactions to the takeover are divided. The two largest of the coalition government parties, the Christian-Democrat CDA and Labour, say the sale is a logical result of a liberalised energy market. The conservative opposition party VVD agrees. The vocal leftwing opposition Socialist Party (SP) says Essent has been frittered away. "The government should block this sale," says party leader Agnes Kant MP. "The energy sector is crucial for the Netherlands and should not be sold off." The SP has already requested an emergency debate with Finance Minister Wouter Bos and Economics Minister Maria van der Hoeven about the takeover.

WWF not happy
The Worldwide Fund for Nature (WWF), which is partly sponsored by Essent, may want to end its relationship with the energy provider if the takeover takes effect. The relationship between WWF and Essent dates back to 1995, when the energy provider was the first to offer sustainably produced electricity.

The Dutch branch of WWF told ANP news agency that it likes to have partnerships with companies that are serious about sustainability, energy conservation and use of raw materials. The fund doubts whether Essent will remain in the vanguard of sustainability once it is under RWE ownership. "They have no qualms about investing in conventional coal-burning energy plants," a worried WWF director Johan van de Gronden said on BNR Nieuwsradio. The current partnership agreement between WWF and Essent is scheduled to end in 2010.

The nuclear question
Borssele nuclear energy plantIf RWE becomes the owner of Essent, it will also own a part of Essent's Dutch nuclear plant in Borssele (pictured right). Questions are being asked about whether a Dutch nuclear facility should be in German hands.

Greenpeace says, "RWE's management of nuclear plants in Germany does not instil much confidence. The biggest incident with a nuclear installation in German history, in 1987 in Biblis happened under RWE's responsibility. And after that they continued taking clumsy and dangerous decisions, such as building a nuclear plant in an earthquake zone. The plant was allowed to operate for two years until Germany's highest judicial authorities revoked its licence. This irresponsibility is worrying considering that the Borssele plant is 35 years old, and has only been allowed to continue in operation until 2033 provided certain conditions set by the government are met. And RWE are continuing their irresponsible policies; they are investing in a new Russian-designed reactor in Bulgaria, which is again situated on top of a geological fault line."

Not there yet
Essent currently employs 7800 people. RWE says it expects a statement by Essent's works council in the coming weeks, which is one of the last hurdles in finalising the takeover. Another issue is the approval of the competition watchdog authorities in Germany, the Netherlands and at EU level. RWE is hoping to complete the takeover in the third quarter of 2009.

 

Rob Kievit
Radio Netherlands

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