State Grid Corp of China in frame for stake in Italy’s energy grids

China’s state power grid is one of two bidders for a large stake in Italy’s energy grids, but such a link could create problems because the Chinese and Italians both aim to buy assets around Europe, sources said.

As part of a privatisation drive to cut public debt, Italian state lender Cassa Depositi e Prestiti (CDP) is trying to sell up to 49 per cent of CDP Reti – the vehicle that controls gas grid Snam and soon power grid Terna.

Sources said State Grid Corp of China and Australia’s Industry Funds Management (IFM) were the only suitors interested in buying a significant stake, although they did add CDP was also seeking investment funds to buy smaller stakes.

Failure to find a deal with potential investors on governance of the grid vehicle could put such a sale at risk.

“Terna initially was not over the moon. An operator like that can’t be happy about having an industrial rival in its shareholder base, since potential conflicts of interest could crimp overseas ambitions,” a source close to the matter said.

CDP and State Grid declined to comment, while officials at IFM could not be reached for comment.

CDP had initially planned to raise the proceeds by the end of last month, but the sale is taking longer than planned. Terna, one of Europe’s biggest power grid operators with 63,000 kilometres of high-voltage lines, is interested in Greece’s plans to sell a 66 per cent stake in power grid company ADMIE, which operates an 11,000km power network. Sources say State Grid is also in the race.

Rome supports Snam’s ambitions to be a leading player in the integration of Europe’s gas transport grid to turn Italy into a gas hub and has indicated Terna also could do a similar thing in power. State Grid aims to more than quadruple its overseas assets to US$30 billion to US$50 billion.