BRUSSELS, Dec 8 (AFP) - The EU executive commission is expected Thursday to block a proposed merger of Portugal's main electricity and gas groups because of competition concerns.
The transaction would have seen state-controlled oil company Galp Energia sell 51 percent of gas firm GdP to former state electricity monopoly EDP and the other 49 percent to Italian energy group ENI.
Barring last-minute developments, the commission, according to indications from concerned parties here and in Lisbon, is expected to endorse the opposition to the move voiced several weeks ago by EU competition authorities.
Rejection by the commission would be the first prohibition of a takeover by the EU executive in more than three years and a major setback for Portugal's centre-right government, which has strongly backed the merger.
Anticipating such an outcome, EDP on Monday criticized the commission for what it said was its imposition of artificial competition conditions to the detriment of a single energy market.
Portugal and Spain agreed at a summit earlier this year to start running a long-delayed unified power market before June 2005, known as Mibel, and Lisbon wanted the merger to be approved before then.
EDP and the Portuguese government had argued that the EDP-GdP deal should be considered in the context of the proposed Mibel single Iberian energy venture instead of just in the context of the Portuguese market.
The head of EDP, Joao Talone, has said negotiations with the commission ran into difficulties because of conditions demanded by Brussels affecting electricity production by the combined entity.
He said the commission wanted the company to abandon a power plant in Ribatejo, which following the entry into service of a third production unit in 2006 would have total capacity of 1,200 megawatts.
12/08/2004 20:02 GMT - AFP