Reorganisation Of The Portuguese Energy Sector

Profession:Macedo Vitorino e Associados


Reorganisation of the Portuguese Energy Sector: On April 3rd, 2003 the Portuguese Government announced several recommendations on the restructuring of the Portuguese energy sector.

On April 3rd, 2003 the Portuguese Government announced several recommendations on the reorganisation of the Portuguese energy sector, following a report of Mr. Jo„o Talone, hired as a special advisor to the Portuguese Government.

The recommendations aim at developing the Government's decision dated March 19th, 2003, which set out the following goals for the energy sector: (a) to ensure the appropriate energy supply and security; (b) to develop the energy market sustainable growth; and (c) to increase the competitiveness of Portuguese energy companies.

1. Combined offer of electricity and gas

The distribution of electricity and gas shall be concentrated in the same company, as gas plays a strategic role on the generation of power. This will also contribute to the liberalisation of the Portuguese market, the integration of the Portuguese and Spanish power markets and will reduce the costs of power generation.

The Government expects that by 2005 the power generated from gas will reach 30% of the total Iberian power output, against the current 10%, putting Portugal in the forefront of gas generated electricity industry in Europe.

This measure will strengthen the Portuguese utility, Electricidade de Portugal (EDP), which now holds a dominant position in the electricity generation market and controls the Spanish electricity generator and distributor, Hidrocantabrico.

The Government also proposes to merge the national power grid operator, Rede ElÈctrica Nacional (REN), and the gas supply network operator, Transg·s. To that end, the Government will sell its 18,3% shareholding in the Portuguese oil utility, Galp, to REN. It is expected that REN's expertise as the operator of the power grid will contribute to improve the management of the Trang·s' gas infrastructure.

Galp, the State-owned oil company, will focus on the oil business, where it is a recognised market player, with investments in Portugal...

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