Romania to Sue Italy's Enel Over Failed Sale

Romania is to open a legal case against Italian energy holding Enel at the Paris-based International Court of Arbitration for breaching privatization terms concerning the sale of the local company, Electrica Muntenia Sud.

Bucharest authorities are demanding that Enel pay 521 million euro for the 23.6 per cent stake that the Romanian state holds in the former electricity distribution company, which is now controlled by Enel.

The privatization contract signed in 2007 obliged Enel to buy a part or the whole of the state's stake in Electrica by the end of 2012. But the deal collapsed as a result of contractual disagreements.

The government’s move comes shortly after the Italian group said it planned to sell its electricity distribution business in Romania.

Early this month, Enel announced plans to sell five Romanian energy distributors and one services company as part of a broader 6 billion euro programme of asset sales aimed at reducing Enel's debts.

Romania is currently trying to sell minority and majority stakes in energy companies under the terms of a 20-billion-euro bailout loan led by the International Monetary Fund, IMF.

The country largely depends on foreign borrowing to finance its investment plans. It has so far failed to sell a minority stake in the oil company Petrom on the stock exchange.

It is also late in selling the natural gas producer, Romgaz. In addition, the Economy Ministry also plans to finish selling minority stakes in the utilities companies Transgaz and Transelectrica.

Other major European utility companies with assets in Romania include CEZ, EON and Gaz de France.