Satellite halts client withdrawals from 3 hedge funds: report

Satellite halts client withdrawals from 3 hedge funds: report
Thu Nov 27, 2008 5:44am EST

Nov 27 (Reuters) - Satellite Asset Management, founded by former employees of billionaire George Soros, stopped client withdrawals from its three largest hedge funds, Bloomberg reported.

The company also eliminated more than 30 jobs, after losses reduced the firm's assets to about $4 billion this year, according to the report.

Satellite Overseas Fund Ltd, Satellite Fund II LP and Satellite Credit Opportunities Ltd have declined as much as 35 percent in 2008, Bloomberg reported, citing a person with knowledge of the funds' performance.

The firm is retaining teams that trade bonds and loans and invest in companies going through events such as takeovers, Bloomberg said, citing the unnamed source. (Reporting by Ramya Dilip in Bangalore; Editing by Mike Nesbit)

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EU pressed for Congo force, Kinshasa vetoes Indians
Thu Nov 27, 2008 8:09am EST

By Joe Bavier

KINSHASA, Nov 27 (Reuters) - Europe heard growing appeals on Thursday to rush a military force to east Congo until the arrival of U.N. reinforcements, from which diplomats said Kinshasa wants to exclude Indian troops.

Congolese President Joseph Kabila's government told U.N. Secretary-General Ban Ki-moon this week it did not want Indian soldiers to be part of the 3,000 extra U.N. peacekeeping troops and police destined for east Congo, diplomats in Kinshasa said.

In a letter and verbal messages to Ban and U.N. officials, Democratic Republic of Congo's government said it was unhappy with Indian U.N. troops in North Kivu province, where they have been criticised for failing to stop rebel attacks and killings.

In an embarrassment for the U.N. mission in Congo (MONUC), the Indians have also been investigated for sexual misconduct and illicit gold and arms trading, and have faced accusations of showing support for Tutsi anti-government rebels led by renegade General Laurent Nkunda.

Congo's objections to Indian troops emerged as prominent world figures appealed to the European Union to help provide security for east Congo, where rebel advances since August have driven around a quarter of a million civilians from their homes.

The dignitaries, including former presidents of the Czech Republic, Ireland and South Africa, said an EU rapid reaction force should be deployed immediately.

"While the U.N. has authorised an additional 3,000 troops it will likely take between three and six months to deploy them. The Congolese people cannot wait," they said in a letter.

It said the EU could send one of its standing battle groups to help protect civilians which the U.N. says have suffered massacres, executions, rapes and torture by both sides.

Evoking previous massacres in Rwanda and former Yugoslavia, the figures, among them Nobel Peace Laureate Archbishop Desmond Tutu and billionaire investor George Soros, said world leaders had vowed never to let such atrocities happen again.

"It needs your personal political leadership to make sure this happens and ensure 'never again' really means never again," the letter addressed to European leaders said.



STRETCHED U.N. FORCE

Belgium said on Wednesday it could contribute to a possible European force in its former colony, where there are fears the latest conflict could escalate into a repeat of a devastating 1998-2003 war that sucked in neighbouring states.

But there have been doubts about the idea of a European force for Congo among some EU members, a number of whom already have military commitments in Afghanistan and Iraq.

"Nothing is off the table, but our main priority is to strengthen MONUC," said Nick Kay, British ambassador to Congo.

The U.N. force in Congo, at 17,000-strong the largest peacekeeping mission in the world, has said it cannot provide total security in North Kivu, stretched as it already is over a country the size of Western Europe, where armed groups abound.

In their objections to the Indian peacekeepers, Congolese officials described them as "an instrument of destabilisation" but have sought to minimise the diplomatic sensitivity of their move by trying not to mention India in public statements.

"They mean the Indians, it's well known," another western diplomat told Reuters.

Humanitarian agencies say they cannot work without more protection.

Rebel chief Nkunda has pledged to respect a ceasefire, but hundreds of Congolese civilians fled east into Uganda on Wednesday to escape Tutsi rebel operations against their traditional Rwandan Hutu militia enemies in the province.

MONUC said these actions violated the ceasefire.

Nkunda cites the presence of the Rwandan Hutu FDLR militia as the justification for a rebellion he says aims to defend Tutsis. The FDLR includes perpetrators of Rwanda's 1994 genocide that slaughtered hundreds of thousands of Tutsis.

A U.N. special envoy, former Nigerian President Olusegun Obasanjo, is due to return to Congo on Friday on a mission to try to set up peace talks between Nkunda and the government. (For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com/) (Writing by Pascal Fletcher; Editing by Matthew Tostevin)

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Finns Fume as Exhaust-Spewing Trucks Jam Border Roads to Russia

By Kati Pohjanpalo

Nov. 27 (Bloomberg) -- Marjatta Oksanen recalls how fresh the leaves used to smell when she strolled through her forest in southeastern Finland, along the Russian border.

Now, the aroma around Oksanen’s cottage and surrounding woodland is more like that of a loading dock as thousands of Russia-bound trucks line up on a nearby road with their motors idling.

“It’s not fun,” said the 69-year-old pensioner, whose retreat is just 10 kilometers (6 miles) from the southernmost border crossing. Her village “is really suffering.”

The quiet of Finland’s clear, rocky lakes and untouched pine forests along the 1,300-kilometer demarcation between Russia and Finland is pierced these days by the whirr of an unending stream of truck traffic.

The road-gouging freight from Finnish ports to Russian consumers has become a political issue between the two nations: The Finnish government plans to introduce fees on Russian trucks, and Russian Prime Minister Vladimir Putin promised during a Nov. 25 visit to the region to simplify customs procedures and upgrade facilities at checkpoints.

“The roads of southern Finland are a giant storage area,” said Tommi Kivilaakso, who heads the customs office in the city of Lappeenranta, near the second-busiest crossing. “Few countries plan their road networks to be used as parking lots for neighboring countries.”

Russia needs Finland’s ports and roads to feed its demand for autos, electronics and mobile phones from Western Europe. Seven in 10 trucks headed east serve the transit trade that provides Finland with little else than highway potholes. The traffic generates only 3,000 jobs in this Nordic country of 5.3 million, according the transport ministry.

Stacks of Tires

In the forests her father loved, Oksanen’s wild blueberry patches are now covered with stacks of tires left by Russian truckers. Food wrappers and cigarette butts litter the roadsides. As truck traffic on the icy and narrow highways increases, so does the chance of accidents. This time of year is the worst as Russian retailers stock up for the holiday season.

Last year at Christmas, lines at the Vaalimaa-Torfyanovka border crossing, which feeds a steady flow of trucks to St. Petersburg, stretched to a record 63 kilometers. On an average day, the lines are about 20 kilometers, said Kivilaakso, the customs official.

Kivilaakso says the backup is caused in part by the antiquated Russian system to process the goods. Customs clerks enter details of the trucks’ cargo manually into their computers, which is too slow for the amount of traffic, he said.

The Finnish government said earlier this month that the fees it plans to introduce will be used to pay for new parking areas and road safety improvements.

New Potholes

Only one of the nine road improvement projects planned in the area is under way. In the meantime, the trucks -- especially those carrying autos, the heaviest -- are creating potholes. The weight of hundreds of trucks lining up on the side of the road sometimes makes road shoulders collapse as well.

Last year, Russia imported 679,000 cars through Finland, more than triple the number in 2004. Although the slowing economy and tightening credit markets are now curbing demand, by mid-October of this year trucks had already carried 760,000 vehicles.

“The heavy traffic is burdening the highways,” said Kari Halme, a Finnish Road Administration traffic engineer. “We have to pave them more often.”

In his visit, Putin viewed the Vaalimaa-Torfyanovka crossing, near Oksanen’s residence, and acknowledged that conditions at the busiest entry point had not improved.

“Traffic lines remain standard practice,” Putin said.

Trading Partner

Russia, 50 times larger in land mass and 27 times larger in population, became Finland’s biggest trading partner this year for the first time since the collapse of the Soviet Union.

While 20 percent of Russian imports travel through Finland, most of the goods are recorded as transit trade, leaving Finland only about 360 million euros ($462 million), the transport ministry estimates.

Railways provide little relief: Only 3 percent of the cars Russia imports travel by rail because of a scarcity of terminals, said Kivilaakso at the customs office.

The Finnish government is considering building a parking lot at the Vaalimaa-Torfyanovka crossing that would hold 1,000 trucks. Currently, the lots there hold only 160 trucks. The project, spanning 65 hectares and estimated to cost 24 million euros, is on hold pending planning approvals.

For now, the roar of engines and wisps of blue gasoline fumes mark where the Toyotas, Audis and Volkswagens are ferried off to Russian consumers. Oksanen, whose family has owned property in the area since the 16th century, said she’s a bit fearful to venture out onto the roads: “The accidents are so close.”

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China tests home-made commercial airliner: state media

AFP

China successfully tested its first home-made commercial airliner Friday, with the pilots praising the handling of the regional jet, state press reported.

The one-hour maiden flight of the ARJ21 -- which stands for Advanced Regional Jet for the 21st Century -- took place in Shanghai where the plane is manufactured, the China News Service said.

"The plane flew normally and it handled well," the report quoted pilot Zhao Peng as saying.

The maiden flight, which did not rise above 900 metres (2,970 feet) in altitude, had been expected earlier this year, the report said.

So far only six of the jets have been produced, it added.

The flight comes after the Commercial Aircraft Corporation of China (CACC) announced the sale of five of the jets to US-based General Electric earlier this month at southern China's Zhuhai Airshow. Delivery is expected in 2013.

General Electric makes the engines for the Chinese-made aircraft which is designed to carry between 70 to 90 passengers on short-haul flights.

The plane and other jets to be produced by CACC are widely seen as part of a Chinese plan to eventually rival the dominance of aviation giants Airbus and Boeing.

The aircraft leasing arm of General Electric also signed an option to buy an additional 20 planes, in a deal that could be worth 735 million dollars.

The ARJ21 has not yet been approved by Chinese or American aviation regulators.

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Volvo not interested in buying Ford-owned Volvo Cars: report

AFP

Swedish industrial group Volvo is ready to help its former car unit Volvo Cars if current owner Ford goes bankrupt but is not interested in buying it back, Volvo's chairman told a newspaper Thursday.

"We would gladly finance joint projects, such as sponsor projects or research projects, and could consider being part of various consortiums without becoming the main owner," Volvo chairman of the board Finn Johnsson told Swedish financial daily Dagens Industri.

"We absolutely do not want to buy Volvo Cars," he stressed.

The Volvo group, which includes heavy truckmaker Volvo Trucks, sold Volvo Cars to Ford in 1999. The US automaker is now in severe financial difficulty in the wake of the global financial crisis.

Johnsson said he was opposed to calls for the Swedish state to acquire Volvo Cars.

"The state knows nothing about the car industry and Volvo needs an owner that can increase sales and cooperate with suppliers on components and development," he said, suggesting French carmaker Renault as a good owner for the Swedish company.

Ford launched a major restructuring plan in 2006 to boost productivity and gradually transform its product portfolio to increase the share of compact and energy-efficient models.

Ford, which lost 129 million dollars in the third quarter of this year, has along with General Motors and Chrysler pleaded with US lawmakers for a multi-billion dollar rescue for their crippled industry.

The Democrats have put off a vote until at least December and told them to come up with a new restructuring plan.

Volvo Cars has been hit by Ford's weakness and the slowing market.

The Swedish automaker, which employed 24,400 people at the end of 2007, has announced a total of 6,000 job cuts worldwide since June, including 3,900 in Sweden.

Volvo Cars manufactured about 467,300 cars in 2007, including about 213,000 in Sweden, according to Swedish agency TT.

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厚労省所管の公益法人、外国人研修生受け入れで虚偽報告（1/2ページ）

2008年11月28日18時13分

　厚生労働省所管の社団法人「国際労働運動研究協会」（東京都中央区）が、外国人研修生受け入れ事業で、名古屋入国管理局に虚偽報告をしたとして、法務省から３年間の受け入れ停止処分を受けていたことがわかった。同協会は定款にない「支部」を各地に設け、受け入れ企業を集めていたといい、厚労省が実態調査を始めた。

　外国人研修・技能実習制度では、企業が社団法人などの団体を通じて研修生を受け入れる場合、団体が研修を指導・監督し、定期的に入管に報告する義務がある。不正があったとして社団法人が重い処分を受けるのは異例。

　同協会によると、受け入れ企業だった愛知県内の家具製造会社２社が合併し、定員を上回る研修生がいる状態になったのに、従来通り２社に研修生がいると報告していたという。同協会は「合併したことを知らなかった」と説明している。昨夏に研修・実習制度を支援する「国際研修協力機構」の調査で発覚し、３月に処分を受けていた。しかし、所管する厚労省労政担当参事官室には今月に入るまで報告がなかったという。

　処分時点で研修や技能実習中のベトナム人ら５９５人について、同協会は、受け入れ団体を探しており、４４９人の移籍が決まった。ただ、１１６人は帰国済みか帰国予定で、失跡した人も２３人いるという。

　一方、同協会をめぐっては今月になって、定款にない「支部」を全国９カ所に開設していたことも発覚。同協会によると、契約を結んだ社会保険労務士らを支部長とし、研修生らの受け入れ先になる企業を集める営業活動や、企業を定期的に回って研修生の様子を見る管理活動などを委任していた。報酬は研修生ら１人につき月約２万円で、労働者派遣業を営む企業グループのトップもいたという。

　公益法人について定めた民法の規定によると、社団法人の事務所の所在地は定款の記載事項とされている。また、社団法人でない者が、社団法人や誤認させるような名前を名乗ることは禁じられており、罰則もある。厚労省は「問題があれば厳正な処分を考える」としている。

　同協会は７１年５月の設立で、研修生受け入れ事業は９７年度に始めた。決算報告書によると、０７年度の収入は約７億３千万円で、９割以上を同事業が占める。元協会職員の岩井進一氏が会長で、労働組合幹部らが理事に名を連ねている。

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Business fears over Chinese-French rift

By Ben Hall in Paris and Geoff Dyer in Beijing

Published: November 26 2008 19:49 | Last updated: November 27 2008 19:57

Business leaders expressed concern on Thursday that French commercial interests in China could be harmed in the wake of the cancellation of a summit between Beijing and the European Union, but said there was no sign of immediate repercussions.

Laurence Parisot, head of Medef, the French employers’ body, said she was “concerned” at the Chinese government’s decision to call off next Monday’s summit in protest at President Nicolas Sarkozy’s planned meeting with the Dalai Lama, the exiled Tibetan leader.

Ms Parisot also expressed her irritation with Beijing. “I don’t see why Nicolas Sarkozy shouldn’t meet the Dalai Lama. I need explanation,” she said

The latest tensions come only months after protests in Paris against the Beijing Olympics triggered a nationalist backlash in China and a boycott of French products and businesses – especially Carrefour supermarkets.

Beijing defended its decision to cancel the summit, suggesting that French interests were at stake. “As France has major interests in China, and the French government and leaders have repeatedly said they are an important partner of China, why they should do this is precisely what the Chinese people do not understand,” said Qin Gang, a foreign ministry spokesman.

China is the EU’s second biggest trade partner after the US and its biggest source of imports. The EU imported €231bn ($300bn, £195bn) of Chinese goods last year and exported only €72bn, according to EU data.

This enormous trade deficit is creating political pressures inside Europe to defend the EU against supposedly unfair Chinese trade practices. These pressures may translate next year into action such as “carbon tariffs” on Chinese goods – protectionist measures dressed up as sanctions on China for not applying the EU’s self-proclaimed rigorous environmental policies.

Diplomats in France, which holds the EU presidency, suggested it suited China to call off the summit because of differences with Europe over subjects including exchange rates, trade, intellectual property and climate change.

The EU is hoping to persuade China to take a constructive approach in the run-up to the Copenhagen UN world climate change summit in December 2009.

It is also an unwelcome setback for Brussels because it chills EU-Chinese relations just as the EU is having difficulties with Russia over the fall-out from the Georgia crisis in August.

The EU Chamber of Commerce in China hoped the spat “will not lead to the rise of economic nationalism in terms of antagonistic and protectionist actions”.

Fridolin Strack, managing director of the Asia-Pacific Committee of German business, was confident the Chinese would differentiate between the actions of Mr Sarkozy and the aims of German business. “The Chinese are sending a clear signal to President Sarkozy, one that shouldn’t be dramatic for us,” he said.

Anne-Marie Idrac, French trade minister, played down the possibility of retaliation against French business interests, which are mainly involved in long-term projects necessary for China to modernise its infrastructure and boost its economy.

Projects by French companies include aircraft construction, construction and design of two nuclear reactors, railway and public transport systems.

“They are subjects [projects] that are very deep and very long-term, have been in preparation for a very long time and which stretch way into the future,” she told the FT.

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Uruguay confident of weathering financial crisis

By Jude Webber in Montevideo

Published: November 27 2008 14:40 | Last updated: November 27 2008 14:40

There are few safe havens in the global financial crisis but with investor interest still alive, record exports and a healthy financial system, tiny Uruguay is confident it can weather the storm, even if another crisis erupts in neighbouring Argentina.

Uruguay’s financial system toppled in a domino-effect in 2002 after Argentina’s $95bn default and devaluation sparked a run on Argentine deposits in Uruguayan banks. New fears that South America’s second biggest economy could be heading for another debt crisis have sent shivers down Uruguay’s spine, especially as the world lurches towards recession and prices for Uruguay’s valuable commodities exports fall.

But officials say Uruguay has slashed dependence on its larger neighbour, courted investors, bounced back with six years of growth that will hit a record this year and prefinanced its debt until 2010. It even overtook Argentina in one of its most emblematic exports, beef.

“The situation is completely different to 2002,” Economy Minister Alvaro García told the FT, noting that Uruguay now has manageable debt and a floating peso as well as less than half the exposure to Argentina in terms of trade and foreign currency deposits as it did then.

Overall, “Uruguay is far better prepared and less vulnerable than a few years ago and we’re optimistic that we face this [international financial] crisis with much lower costs than before,” said Mario Bergara, Uruguay’s newly-appointed central bank president.

Ernesto Talvi, an economist at Montevideo-based think-tank Ceres agreed Uruguay has a very liquid banking system with low credit risks, and has stuck to orthodox policies despite having a leftist government.

But he sees recession in major world economies, a painful slowdown among Uruguay’s regional trading partners, lower commodities prices and the combination of costlier and less available credit spelling “strong recessionary pressures in 2009-10” for Uruguay.

Uruguay posted first-half growth of 13.1 per cent and expects to raise its 9.5 per cent full-year forecast, amid expectations by private economists of 2008 growth of around 11 per cent, Mr García said. For 2009, the official estimate is 4.5 per cent, against market expectations of 3.5 to 4 per cent, and the government is likely to trim its forecast in a revision next month, he added.

“I think the government’s growth forecasts are optimistic,” said Mr Talvi, who sees 2 to 2.5 per cent growth next year, a presidential election year, falling to zero in 2010. He reckoned the government should seek a $2bn contingency loan from multilateral lenders for 2009-10 ”to be relaxed”.

Mr García says no IMF package will be necessary and says Uruguay has credit lines with the Andean Development Corporation, the World Bank and the Inter-American Development Bank ”which we probably won’t have to use”.

Officials see maintaining output as their main challenge. Uruguay is also a large exporter of rice, wheat, soy, corn and dairy produce, and an increasing mecca for forestry and pulp producing companies. Sweden’s Botnia invested $1.2bn – Uruguay’s biggest investment ever - in a pulp plant which started up last year, and Mr García said the government had recently received confirmation of another three similar projects worth five times that amount in total.

Portugal’s Portucel Soporcel confirmed it had signed a memorandum of understanding for forestry projects and a 1.3m tonne-a-year pulp mill. The company declined to give financial details but Mr Garcia said that project was worth about $3.5bn. He said Finland’s Stora Enso and Spain’s Ence had also confirmed investments. ”There’s $5bn to $6bn in these three projects alone,” he said.

An Ence source said the company has lined up bank financing but declined to discuss figures, while a spokeswomen for Stora Enso said a final investment decision had not been taken and the company was weighing Uruguay, Brazil and China as options.

“Maybe the rate of investment will slow or projects will be delayed, and that could affect growth,” said Mr Bergara. “But this is in the context of growth at rates we’ve never seen before … I’d be quite optimistic. I think things are going to settle down quite quickly.”

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Iran about-turn

By Najmeh Bozorgmehr in Tehran

Published: November 28 2008 02:00 | Last updated: November 28 2008 02:00

The government of President Mahmoud Ahmadi-Nejad has been unusually silent about the Iraqi government's approval of the security pact with the US, writes Najmeh Bozorgmehr in Tehran .

But that may be because it has been loath to publicise its dramatic change of attitude towards the agreement.

People close to the government in Tehran say that after initially opposing it, and asking its Shia allies in the Baghdad government to resist it, Iran has been relatively satisfied with the last-minute changes demanded and won by Iraq.

Analysts see an additional reason for the about-turn: the election of Barack Obama as US president.

The National Iranian American Council says the shift after the election suggests that Tehran "sees the future of US policy in a new light and seeks to co-operate with Washington, if its interests are also recognised through mutual diplomacy".

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Tajikistan turns on Rusal after Talco deal

By Megan Murphy, Law Courts Correspondent

Published: November 28 2008 01:26 | Last updated: November 28 2008 01:26

The government of Tajikistan will turn its sights on Rusal, the aluminium group controlled by billionaire oligarch Oleg Deripaska, after settling one of the most expensive lawsuits contested in the UK.

The high-profile High Court trial over alleged corruption and bribery at Talco, the state-owned aluminium smelter that is Tajikistan’s most important industrial asset, prompted unwelcome headlines for a government that is struggling to bring investment to one of central Asia’s poorest countries.

The news that Talco now intends to focus its efforts on related legal proceedings against Rusal in the British Virgin islands may outrage aid groups who have criticised the government’s decision to spend tens of millions on legal fees abroad while the country faces crippling shortages of food, heat and electricity this winter.

The long-running legal battles centre on Talco’s allegations that the smelter’s former manager, Abdukadir Ermatov, and its main supplier, Avaz Nazarov, conspired to divert more than $500m (£325m) in profits between 1996 and 2004, stashing the money in a complex web of offshore companies.

Talco claims that Rusal, the world’s largest aluminium company, and Mr Deripaska were knowing co-conspirators in the alleged fraud, and are pressing ahead with efforts to recover damages through proceedings in the BVI.

Thursday’s settlement ends the company’s litigation against Mr Nazarov and Mr Ermatov, which both sides have acknowledged was never likely to recover substantial sums.

Both men denied allegations and were pursuing a $150m counter-claim against the smelter. Neither has admitted liability as part of the settlement, which was reached on confidential terms.

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Nations aim to hammer out Azeri gas deal

By Guy Dinmore in Rome and Isabel Gorst in Moscow

Published: November 27 2008 22:55 | Last updated: November 27 2008 22:55

The governments of Italy, Greece, Turkey and Azerbaijan will meet in the coming weeks to try to hammer out an agreement on the export of Azeri gas to Europe via a planned pipeline across the Adriatic, official and industry sources said in Rome on Thursday.

Ilham Aliyev, president of Azerbaijan, met Silvio Berlusconi, Italian prime minister, in Rome following talks in Milan with Umberto Quadrino, chief executive of Edison, an Italian-French utility.

Edison is seeking final approval from all four governments on the supply of 8bn cubic metres of gas a year from Azerbaijan. Pipelines already exist to take the gas through Turkey and Greece and Edison intends to construct the missing link, known as ITGI, between Greece and Italy.

Edison quoted Mr Aliyev as saying that he considered the project as the “most realistic” of various proposed ventures, a reference to the Nabucco consortium that would take up to 31bn cubic metres of Caspian gas a year via Turkey, Bulgaria, Romania and Hungary to a hub in Austria.

Mr Aliyev is also being courted by Russia’s Gazprom to sell Azerbaijan’s surplus gas to Russia. Washington is pressing him to look towards Europe instead.

Turkey is cited by analysts in all four countries involved as being the main stumbling block to an accord, despite a recent visit by Mr Berlusconi. Turkey wants the option to increase the amount of gas it consumes from Azerbaijan to make up for expiring Russian contracts, and is asking for special transit terms.

The EU, keen to diversify its sources of gas away from Russia, says Turkey has no right to demand special transit terms.

Industry sources said the four governments would meet at a senior level, possibly prime ministers, in Turkey. An Italian government source said the level and venue were to be decided.

Mr Berlusconi, who wants to maintain Italy’s close business relationship with Russia, says the ITGI project is “complementary and not alternative to others”. Eni, the part state-owned Italian energy company, has a joint venture with Russia’s Gazprom to build a deep sea pipeline to take Russian gas across the Black Sea to Europe.

The original ITGI plan assigned 8bn cubic metres of gas a year to Italy and 1.5bn each for Turkey and Greece. The Azeri gas is intended to come from the second phase of the Shah Deniz field.

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Enel to offload gas network

By Guy Dinmore in Rome

Published: November 27 2008 19:24 | Last updated: November 27 2008 19:24

Enel, Italy’s largest power utility, will launch next week a tender offer for its gas distribution network, valued at €1.6bn, and has chosen Morgan Stanley and Banca IMI as advisers, people close to the industry said on Thursday.

Enel needs to sell what it regards as non-core businesses to reduce its debt burden following its purchase last year of Spain’s Endesa.

The network, Enel Rete Gas, has 12 per cent of the Italian market. It provides some 3.5bn cubic metres of gas a year to 2m customers in 1,200 municipalities.

Enel is looking for a fund or funds to take a stake of 70 to 80 per cent. It was reported last month that Enel was in talks with F2i, an infrastructure investment fund.

Enel is also in talks with Terna, a leading grid operator, to sell its 19,000 km high-voltage network.

Flavio Cattaneo, Terna chief executive, said Enel was in a hurry to sell but Terna was not in a hurry to buy.

Terna would not pay a premium above similar opportunities outside Italy, he told the FT. “The price must be right,” he said.

Enel is committed to lowering its debt to below €50bn by the end of the year, from €51.4bn at the end of September. People close to the industry said Enel hoped to receive expressions of interest for its gas network before the end of the year.

Separately, Enel announced yesterday a joint venture with Japan’s Sharp Corp to build solar energy plants in Italy with a total capacity of 189 megawatts – enough to power a medium-sized city – with an investment of about €720m.

Sharp and Enel also plan to build a solar panel-production factory in Italy using Sharp’s thin-film solar technology with an investment of about €660m.