ECONOMY MINISTER Manuel Pinho addressed the American Club last week on a day of fevered excitement for the energy sector. His speech followed a key European Court ruling that paved the way for the introduction of his government’s much vaunted Energy Plan and the partial privatisation of Electricidade de Portugal (EDP), reports Gabriel Hershman.
Earlier in the day, the European Court of First Instance had upheld the European Commission’s previous ban on state owned company EDP’s attempted takeover of Gas de Portugal. The court justified the decision by pointing to what would have been a substantial increase in EDP’s dominant gas and electricity market position, a development it viewed as detrimental to competition.
Pinho praised the ruling, which effectively vetoed a deal drawn up by the previous administration. “It has removed the last obstacle blocking the implementation of the government’s energy programme,” he said. In addition to the privatisation of five per cent of EDP, José Sócrates’ government intends to launch further privatisations that should reap 400 million euros.
Pinho lamented that the government had not been able to proceed faster with its Energy Plan but blamed delays on the previous administration. He also criticised the tenders for power stations agreed by the last government. “They were so fraught with problems that, if they had not been cancelled, the Portuguese state would have risked court battles for years on end,” he said. Pinho also noted that Portugal was one of the highest energy consumers in the EU when set against its economic growth.
Speaking at the Sheraton Hotel, Pinho appraised the economic situation six months after the Socialists’ accession to power. He reminded his audience that the current forecast budget deficit stands at 6.2 per cent of GDP, more than double the three per cent limit imposed by the EU’s Stability and Growth Pact. He said that Europe as a whole was undergoing a period of upheaval but noted that Portugal currently enjoyed “political stability” – in contrast to the situation in other EU countries such as Germany. Pinho also highlighted recent figures released by the National Statistics Office – showing a 0.5 per cent growth of GDP during the second quarter of this year – as grounds for cautious optimism.
Pinho highlighted the “very special relationship with the United States”, underlined the importance of an investor friendly economic climate and the reduction of excessive bureaucracy. He mentioned the technology plan, a conjunction of measures designed to increase Portugal’s competitiveness and the importance of offering all pupils basic education in English. But he conceded that this target could not be reached at the beginning of this academic year.
In response to a businessman who wanted to see more flexible labour laws in Portugal, Pinho replied that there were many ways to boost economic performance, by making industry more competitive and innovative.