The Big Three: Terna, CGES and Enel

Terna:

The partly state-owned Italian energy transmission operator is responsible for the project of laying the submarine interconnection cable between Tivat in Montenegro and Pescara in Italy.

Terna’s 760-million-euro project is at the centre of the Italy-Montenegro power deals, as it will make it possible for Montenegro to export renewable energy to Italy, which has to raise its percentage of “green energy” consumption to meet European Union requirements.

In Italy Terna is the leader in the field of energy transmission, owning 98.5 per cent of the national electricity network with over 66,000 kilometres of lines, according to the company’s data from 2007.

According to the same data, Terna is the biggest independent operator in Europe and the seventh in the world in terms of the length of lines it manages.

In Montenegro Terna owns 22 per cent of the state controlled transmission company Crnogorski elektroprenos, CGES. Terna obtained its stake in CGES after contributing to raising the company’s capital by 34 million euro in the light of the Tivat-Pescara cable project.

Terna was created in 1999 after Italy’s state monopoly energy provider, Enel, was broken up during the energy market liberalisation process, which required the legal separation of energy production and transmission.

Until 2004 Enel was the only shareholder in Terna. After 2004 the company entered the Italian stock market. From 2004 to 2005, Enel owned 50 per cent of Terna. Enel now owns 5 per cent of Terna.

The Italian government currently controls Terna through its major shareholder, Cassa Depositi e Prestiti, 70 per cent of which is owned by the Italian Ministry of Economy.

The president of Terna is Luigi Roth. Its CEO is Flavio Cattaneo who took over in Terna in 2005 on leaving his former post as general director of the Italian national television, RAI.

According to Terna’s website, the Balkans are “the ideal terminal for new submarine interconnections with Italy”, and are an area of “priority interest and strategic value… considering the region’s geographical proximity and energy potential”.

In the company’s strategic plan 2010-2014, Terna states that its strategy is to “make Italy the ‘electricity hub’ of the Mediterranean”.

To achieve this goal, over the next four years, Terna plans to develop four major interconnections. Apart from the underwater cable from Montenegro, Terna plans 540 million euro worth of 1,000MW land interconnection with France, and two undersea interconnections with the Italian islands of Sardinia and Sicilia, each worth over 700 million euro.

Terna is also examining the possibilities of other interconnections with Slovenia, Croatia, and Tunisia. Terna has been actively working on interconnection plans with its neighbours since 2007.

After the first initial agreements were signed between the Italian and Montenegrin economy ministers, Bersani and Gvozdenovic, Terna and the then fully state owned monopoly Elektroprivreda Crne Gore, EPCG started studying the possibilities of laying the interconnection bridge.
 
CGES – Crnogorski Elektroprenos:

Montenegro’s energy transmission operator was created by a similar process of separation between the transmission and production and sales sides of the former state monopoly, Elektroprivreda Crne Gore, EPCG.

CGES emerged from EPCG in 2009 as part of the ongoing process of liberalising the energy market in Montenegro.

The Montenegrin government currently owns 55 per cent of CGES while Terna has owned 22 per cent since January 2011. Prior to Terna’s entrance into CGES, the Montenegrin government owned 70 per cent of the company.

The small shareholders in CGES complained about the Montenegrin government’s decision to allow Terna to enter CGES without public tender. The authorities responded that this was possible because Terna was the country’s strategic partner in building the marine cable, together with CGES.

Terna acquired 22 per cent of CGES by buying 32 million shares for 34 million euro. The price was 1.06 euro per share.

Terna now has the right to appoint two of the seven board members of CGES as well as the right to appoint three managers. Terna’s two appointees are Elisabetta Colacchia, responsible for investor relations, and Fabio Todeschini, director of financial and international control. Colacchia worked in Enel until 2004, when she moved to Terna.

Based on the intergovernmental agreements, CGES will have the right to 20 per cent of the cable capacity. CGES will be responsible for works related to the cable on Montenegrin territory, such as construction of the energy transformation plant near Tivat and the grid lines that will transfer energy towards the north of the country. Out of the total estimated cost of 760 million euro, CGES will cover 100 million, while Terna will finance the rest.

Enel:

The Italian power company is the second largest Italian operator in the natural gas market and second biggest power utility in Europe, with an energy generating capacity of 95,000MW. Enel produces, distributes and sells electricity and gas. It operates a range of hydroelectric, thermoelectric, nuclear, geothermal, wind-power, photovoltaic and other renewable energy plants.

Enel was one of the two qualified candidates [A2A in consortium with EPCG was the second] for the tender to construct hydropower plants on the Moraca, but in the end it did not submit an offer.

Enel told the Montenegrin media that the conditions were not appealing enough. The tender expired unsuccessfully on September 30, with no candidates having presented bids.

In Montenegro, Enel previously also expressed an interest, together with the Italian Duferco, in building a 800/1,200MW carbon plant.

Enel entered the Milan stock exchange in 1999 after the privatization process, but the Italian government still has the control of the company. The Ministry of Economy directly owns 17.4 per cent and an additional 13.9 per cent is in hands of the Cassa Depositi e Prestiti bank, 70 per cent of which also belongs to the Italian Ministry of Economy.

Enel is present in 40 countries on four continents, selling power and gas to over 61 million costumers.

In Central and Eastern Europe, Enel operates in Slovakia, owning 66 per cent of the biggest electricity generator, Slovenske elektrane, Hungary, Romania, Bulgaria, Greece and Russia.

It was the first foreign company to enter Russia’s energy sector. In Russia Enel operates in the gas sector, in energy production [controlling four thermoelectric power plants with a total power of 8000MW], and in energy sales [owning 49.5 per cent of the most important trader RusEnergoSbyt, providing electricity to major industrial customers].