Vattenfall reported to have agreed with the City of Hamburg to sell its 74.9% in the electricity grid to the city, making it the sole owner. The city, which also holds a 25.1% stake in the district heating network, also has an option to buy Vattenfall’s 74.9% stake in 2019.
The deal follows a referendum in Hamburg in September 2013 that ended with a vote in favour of the remunicipalisation of the distribution grids for electricity, gas and district heating,
Vattenfall informed that “Under the agreement, which has yet to be approved by the Hamburg Senate and Supervisory Boards of Vattenfall, the value of the entire electricity grid company has preliminarily been agreed at EUR 550 million (equity value).” Based on this preliminary equity value Vattenfall’s share would be worth EUR 412 million. A jointly appointed external valuation company shall determine the final value of the company, Vattenfall said, pointing out that both parties had agreed on a minimum value of EUR 495 million (for the entire grid). Vattenfall estimates to make a capital gain of at least EUR 300 million.
The parties also reportedly agreed to transfer parts of the metering company “Vattenfall Europe Metering GmbH” and the network services company “Vattenfall Europe Netzservice GmbH” to Hamburg no later than 1 January 2016 for an additional price to be set by the external party in the same manner as for the electricity grid company. Besides all distribution-related support functions in areas such as procurement, IT, accounting and HR shall also be transferred to the City of Hamburg, Vattenfall informed.
The announcement of the deal comes at a time when the concession agreement that regulates the use of public property for laying and operating power lines is nearing its end. The agreement expires at the end of 2014. The deadline to submit an expression of interest for the next concession agreement with a maximum duration of 20 years expired on 15 January 2014.
The decision about the new concessionaire will eventually be taken by the City of Hamburg, which must, however, decide based on objective an non-discriminatory criteria. According to media reports, E.ON Hanse and a consortium composed of the Dutch grid operator Alliander and EnergieNetz Hamburg eG also submitted bids. Should one of them be awarded the concession, the previous concessionaire is required by law to sell all the assets needed for operating the grids to the new concessionaire if he does not opt for a mere concession to operate the assets (cf. Section 46 para. 2 sent. 2, 3). Hence, even if the City of Hamburg acquires full ownership of the electricity grids, they may have to be sold again in the near future.
“The deal also means that both parties undertake to refrain from legal action that could be encountered because of uncertainties about the terms of the district heating business”, Tuomo Hatakka, CEO of Vattenfall Europe is quoted.
If the City of Hamburg makes use of its option to buy the remaining shares of the district heating networks in 2019, two minimum prices have been agreed, Vattenfall said. If a gas-powered combined heat and power plant (CHP) will be built in the Hamburg-Wedel area, the minimum price will be EUR 1,150 million. If a decision on a CHP plant in Wedel has not been taken by the end of 2015, the minimum price will be EUR 950 million.
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