The French state electricity utility Electricité de France (EDF) will take a 25 per cent stake in the Austrian regional utility Energie Steiermark Holdings (Estag) for $448 million.
The government of the Austrian province of Styria, which owns the company, presented details of the deal to the provincial parliament and approval is considered a formality. In securing the deal, EDF defeated a joint bid by the German utility Bayernwerk and the Austrian oil company OMV. An Austrian consortium, led by the national grid operator Verbund, had also made an unsuccessful bid.
Politicians in Austria have been critical of the move to sell a stake in Estag to EDF. Some believe it will deal a fatal blow to moves to integrate the various electricity companies in Austria into a single entity. Liberalization of the energy markets in the European Union are putting pressure on the Austrian industry to rationalize.
Austria produces 70 per cent of its electricity from hydroelectric plants. Verbund generates around 55 per cent of this power; the remainder is produced by eight provincial utilities which are controlled by local governments.
Verbund offers one route to integration of the Austrian industry. A consortium, led by Verbund, now hopes to gain a 25 per cent stake in the Upper Austrian utility OKA, which is also being sold.
The state government is keen to find an Austrian partner but the high price paid by EDF for Estag could potentially make this difficult.