Rome, March 5, 2003 Enel today signed an agreement with U.S. group Entergy to progressively take over Entergys stake in a joint venture (Maritza East III Power Company) with Bulgarias state electricity group NEK. The joint venture will own the Maritza East III thermoelectric power plant, located in Stara Zagora in Bulgarias southeast, and will be responsible for its management, modernization and improvement in environmental terms.
Enels financial commitment, which includes 60% of Entergys stake in the joint venture bought today and an option on Entergys remaining stake (40%), will be between 110 million euro and 140 million euro. The price depends on the conditions under which the option is exercised, which are linked to the projects financial performance. At the conclusion of the operation, Enel will have full control of the company with more than a 70% stake.
Enel chief executive Paolo Scaroni said: The acquisition falls into Enels strategic plan for growth in Europe. The Balkan area is of great interest because of the liberalization and privatisation taking place in the electricity sector; and Enels specific experience could prove a determining factor in the projects success. Bulgaria, itself, is particularly interesting. It offers the prospect of electricity sector liberalization, the availability of very competitive fuels, like lignite, and the capacity for energy export towards Turkey, Greece and Italy.
The plant was built between the 1970s and the 1980s. It has an installed capacity of 840 MW, consisting of four units of 210 MW each, and is fuelled with lignite from a nearby mine. It also has an energy sale contract with NEK for 15 years plus the period of modernization and environmental improvement.
Modernization will lengthen the power plants life, while the addition of a desulphurization plant will bring its emissions into line with international standards. Once restructured, the plant will be able to generate about 900 MW of power, and will become the point of reference for Bulgarias entire electricity system, as well as one of the regions most competitive in terms of production cost.
The total investment, about 600 million euro, will be structured as project financing with the involvement of the European Bank for Reconstruction and Development, Banca Mediocredito (gruppo Unicredito), Crédit Agricole and Société Génerale.