Billions of euros for global energy

E.ON unveils three-year investment program

The world's largest private energy concern E.ON from Düsseldorf has unveiled its investment plans. The total amount of investments from 2006 to 2008 will reach 18.6 billion euros. About 90% of this amount will go to existing energy facilities. Chairman of the board of the company Wulf Bernotat said yesterday: “Over the next three years, we intend to invest mainly in highly efficient and environmentally friendly power plants, modern networks for electricity transmission and gas transportation. By doing this, we will ensure reliable supply to our customers. This large-scale investment is also our contribution to the revitalization of markets and jobs."

The concern plans to invest approximately 1.2 billion euros in renewable energy sources. A separate line in the E.ON investment program includes costs for the acquisition of equity participation, “especially in projects in Eastern Europe,” and the production of natural gas – a total of 2.3 billion euros. The concern plans to send almost three times more - 7.4 billion euros - to Central Europe, maintaining the principle of priority investment in industrial energy facilities, for which 6.6 billion euros have been allocated from the total amount. Of this, 2.6 billion euros will be spent on the development of electricity production: it is planned to build a high-tech coal-fired power plant with a capacity of 1,100 MW in Datteln, two combined cycle power units in the Bavarian Irsching, as well as another ultra-modern gas power plant in the Italian Livorno Ferraris.

3.7 billion euros will be invested in Central European electricity and gas networks, of which 2.8 billion will be invested in maintaining and developing networks in Germany. At the same time, E.ON considers the construction of electrical networks that could be connected to wind power plants to be a key task.

Significant attention in the new investment program is paid to the concern’s activity, which is called “Pan-European Gas”. Gas workers will receive about 3.2 billion euros in investments over the next three years, of which 1.9 billion will be allocated to the development of gas pipelines, underground storage facilities, as well as their own natural gas production. The remaining 1.3 billion euros are allocated for the acquisition of equity participation, in particular in gas production.

A large volume of investments will be made in another traditional E.ON market - the UK. It is planned to allocate 3.7 billion euros to Foggy Albion, mainly for the construction of gas and coal power plants, as well as for the development of wind energy. The structure of E.ON’s investment policy in Scandinavia is shaping up in exactly the same way, where it is expected to allocate 2.7 billion euros. It is interesting that of the 1.7 billion euros of investments in the development of E.ON’s business activities in the United States, the most significant share will fall on measures to improve the environmental friendliness of existing power plants and improve electrical and gas networks.

E.ON sold "chemical package"

E.ON is selling a 43% stake in Degussa, one of the leading companies in the German chemical industry, to the German concern RAG for 2.5 billion euros. As a result, RAG (which combines mining, chemical and real estate companies) will own 93% of Degussa's share capital. “We are laying the foundation for a successful future for the RAG group,” said CEO Werner Müller, former economics minister in Gerhard Schröder's government, yesterday. “This is an important step on the way to the stock exchange.” The deal between RAG and E.ON should be completed by the middle of next year. At the same time, E.ON expects 500 million euros of net profit from it. The energy concern plans to pay this money to its shareholders as a “special dividend” - 4.25 euros per share. It is believed that, by setting the price of the transaction, E.ON met halfway the rather financially weak RAG. Based on the stock price of Degussa shares, 43% of its shares are worth almost 600 million euros more than the buyer will pay for them.

Yuri Shpakov, Berlin