TenneT, Dutch state choose advisers for strategic review

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AMSTERDAM/FRANKFURT, Dec 5 (Reuters) – TenneT, the largest operator of electricity grids in Germany and the Netherlands, is stepping up preparations for a strategic review as it seeks to raise funds to finance investment needed in large part for efforts to combat climate change.

The company said on Thursday it has chosen ABN Amro and Deutsche Bank as its advisers.

The Dutch state has appointed financial adviser Aperghis & Co and law firm Allen & Overy for the process, sources said.

A ministry spokeswoman on Thursday declined to comment.

TenneT, which is 100 percent owned by the Dutch state, is weighing options for attracting fresh capital to help fund the 35 billion euro investment programme it plans through 2028.

TenneT’s investment program is one of the biggest infrastructure build-outs in Europe. In both the Netherlands and Germany, TenneT is building substations and sea cables to carry electricity generated by burgeoning offshore wind turbine farms to the mainland.

In addition, it is making major investments in cross-border connections in northwest Europe, and in long-distance lines to connect offshore wind parks in the North Sea with the industrial south.

Network infrastructure is crucial to help raise Germany’s wind and solar power’s energy share from a third now to 65 percent by 2030, as it seeks to cut carbon dioxide emissions to meet its climate commitments.

The Netherlands’ Finance Ministry said in September it would decide by mid-2020 how it will address capital needs of 4.75 billion euros, of which 2 billion euros is needed by the end of 2021.

The company, which has already tripled its asset base since 2011, had 9.49 billion euros of debt on a 22.3 billion euro balance sheet as of June 30.

Sources familiar with the matter said that scenarios under consideration include the sale or flotation of a stake of just the German operations, as well as a minority stake sale in the parent company.

But it was unlikely that the Dutch government would relinquish control over the Dutch grid, the sources said.

Similarly, the Dutch government is reluctant to allow its taxpayers to provide all the risk-bearing capital for German grid operations, though it has not ruled out a new cash injection for TenneT.

As a regulated monopoly, TenneT is able to recoup investment costs over a period of years, but it must maintain fresh capital for the company to keep its credit rating.

Germany, unlike the Netherlands, has been reluctant to own grid companies, but moved to buy a stake in grid operator 50Hertz last year in a bid to fend off Chinese investors.

Finance Minister Wopke Hoekstra said in September the German and Dutch government have been in talks over the matter.

Germany’s grid regulator BnetzA said in a monitoring report published last week that the country needs 5,900 kilometres in new high voltage power lines.

Transmission grid firms (TSOs) in Germany have applied to spend 61 billion euros in onshore grids by 2030. Costs for construction and operations are passed on to customers, making up a quarter of consumer’s bills. (Additional reporting by Vera Eckert; Editing by Elaine Hardcastle)

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