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Government to sell off ‘family jewels’

The Portuguese State is preparing to privatise a number of state-run companies or companies with state participations at knock-down prices because of current market conditions.

From a number of state companies, both electricity giant EDP (Energias de Portugal) and electricity grid network REN (Rede Eléctrica Nacional) have alone seen their values on the stock market plummet by as much as 20% in a year.

Under the terms of the Memorandum of Understanding between the Portuguese State and the ‘Troika’ is a widespread privatisation plan which includes EDP, Galp and REN. But the selloffs have to happen precisely at a time when stocks and shares are tumbling in markets across the globe.

EDP, which is led by CEO António Mexia, has already lost €1.62 billion on stock markets between July 10 last year and the end of last week.

On average it represents €4.4 million lost on stock markets every day at a time when the president of China Power is said to be interested in buying up EDP.

REN is in a similar situation: losses worth €272 million on the stock markets in the same period according to analysis from Banco Carregosa.

The oil and gas refiner and retailer company Galp is one of the few companies with a significant state interest that has managed to maintain its value on the stock markets – a slight increase on last year of 0.28% with each share valued at €12.59.

TAP, which is also on the government’s privatisation list, is already attracting the interest of British Airways and Iberia, which have already formed the International Airlines Group (IAG).

According to the Banco Carregosa’s investment department, the amount the Portuguese State will earn from these privatisations amounts to just €3 billion.

The minister of Finance has already said that he would like to net around €5 billion from the privatisations – which is difficult to imagine given the current economic climate.