Government hold over EDP

THE PORTUGUESE State has warded off further threats of a budgetary shortfall by selling five per cent of its 20 per cent stake in national energy giant Energia de Portugal (EDP). Finance minister, Bagão Félix, was forced to take this measure to bring 400 million euros into the public purse.

In a statement dated December 31 2004, EDP announced that energy holding Parpública acquired 184,206,402 unprivatised shares of EDP common stock, corresponding to 5.04 per cent of EDP share capital and 5.06 per cent of the voting rights. Parpública now holds 569,951,658 shares of EDP common stock. The government is believed to have carried out the deal with Parpública just after Christmas through the Director General of the Treasury “with the intention of guaranteeing a safety net for the treasury and avoid eventual problems”. The sale of the shares also means that the State no longer has a direct capital participation in EDP.

The funds could be needed to bring Portugal within the three per cent budgetary limit stipulated by the European Union’s Stability and Growth Pact.

This has not been the first structural alteration to the energy company’s share set up in the past 12 months. In order to strengthen its position in the Iberian energy market, the Portuguese group increased its capital by 1.2 billion euros with the recent purchase of a controlling interest in Spanish group Hidrocantábrica from 40 to 95 per cent. Equally, State-owned bank Caixa Geral de Depósitos reinforced its stake in EDP by around 10 per cent. Presently, the private companies that own shares in EDP are Spanish energy company, Iberdrola (5-7 per cent), Portuguese bank BCP (5.06 per cent), Portuguese road toll company Brisa (two per cent), and more than 50 per cent is owned by foreign investors.