February 17, 2020 / 12:27 PM / 6 months ago

UPDATE 1-Romania may sell 5% stake in Hidroelectrica to EBRD

(Adds details, background)

BUCHAREST, Feb 17 (Reuters) - Romania is considering an offer from the European Bank for Reconstruction and Development (EBRD) to buy a 5% stake in state-owned power firm Hidroelectrica ahead of an initial public offering this year, the interim economy minister said on Monday.

The government has said it aims to sell up to 20% of Hidroelectrica on the Bucharest bourse in the second half of 2020, and the company is in the process of selecting equity and legal advisers for the sale.

“We have a letter of intent from the European Bank for Reconstruction and Development which wants to support the process and participate in a pre-listing of 5% to boost the company’s value,” Virgil Popescu told an energy seminar organised by daily Ziarul Financiar.

The EBRD did not immediately respond to an email request for comment.

Popescu said the sale could bring in “one billion euros or more, the timing is important.”

Consecutive governments have said they aimed to list a minority stake in Hidroelectrica, Romania’s largest and cheapest power producer, but the plans kept getting delayed.

Speaking at the same conference, Hidroelectrica manager Bogdan Badea said the firm planned to diversify into wind and solar energy in the coming years. It is currently undergoing due diligence to buy the Romanian assets of Czech power utility CEZ .

Popescu’s Liberal minority government is running the European Union country on an interim basis after it lost a no confidence vote earlier this month. The Liberals are trying to trigger a snap parliamentary election a few months ahead of schedule which would shorten the election cycle and could put an end to years of political instability.

On Monday, Popescu said Romania aimed to reduce the role of coal in electricity production to 10% by 2030 from 25% now, replacing it with more gas-fired plants and renewable energy.

Several gas producers have spent years and billions of dollars preparing to tap Romania’s Black Sea gas, but were blindsided by price caps, taxes and export restrictions pushed by a previous centre-left government.

In January, U.S. energy major Exxon Mobil confirmed it was weighing an exit from the long-stalled Neptun Deep offshore project in the Black Sea it holds jointly with Romania’s OMV Petrom.

“I’ve always said the window of opportunity to tap Black Sea gas is narrowing by the day,” Popescu said. “The European Investment Bank will no longer finance gas projects from 2021, gas prices are falling on foreign markets ... it is the last moment to start investment in the Black Sea.”

However, he said legislative changes required by foreign investors for offshore projects would need a parliamentary consensus. (Reporting by Luiza Ilie; Editing by Mark Potter)

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