EDP rejects €100 million provision for Stamp Duty on sale of dams

CEO of EDP, Miguel Stilwell d’Andrade, said Friday that the company does not plan to record provisions related to the more than €100 million in stamp tax allegedly due for the sale of dams on the Douro river to France’s Engie.

“This was a standard transaction, done according to the rules, of demerger and sale of a company to Engie, fully supported by legal and financial advisors, and therefore extensively scrutinised. We have fully cooperated and provided all the information requested of us,” he assured.

The CEO also said that there were no new developments following the searches that were conducted at the company’s headquarters at the beginning of July, as part of an investigation led by the Central Department of Criminal Investigation and Prosecution (DCIAP) and whose investigation is being conducted by the Tax and Customs Authority (AT).

This process is investigating facts related to the business of transferring six dams from the EDP group to the French consortium comprising Engie, Crédit Agricole Assurances and Mirova (Natixis Group) and is concerned with suspected tax fraud, DCIAP has already confirmed.

Asked about EDP’s real tax obligations regarding the sale of the dams to Engie and what could be at risk with this ongoing criminal case, Stilwell d’Andrade said the company is “very comfortable” with the situation.

“There are no developments. There is an ongoing investigation in relation to an alleged tax debt which according to a local move is €100 million. It is something that is being looked at and reviewed, many, many times, by our legal, financial and tax adviser teams. We are very comfortable with the position we have. We are cooperating fully with the investigation and we hope it will be clarified as soon as possible,” the CEO assured on a call with investors and analysts.

Having inspected the deal for several months, the Tax Authority has a maximum deadline of one year to present its conclusions on whether or not there was aggressive tax planning by EDP in the sale of the dams and whether or not €110 million of Stamp Duty should be paid for the operation.

EDP waiting for low-voltage auctions to renew concession

About the auctions that the government is expected to hold later this year to renew low-voltage contracts, a process that has been going on since 2019, Stilwell d’Andrade said that the working group set up for the purpose should now be finishing its proposal, which “will be disclosed in the coming weeks”, followed by a new public consultation.

In the race for the new low-voltage concessions are municipalities (the original owners of the concessions) and other electric companies, such as Endesa, for example.

“This represents [a business of] €1.2 billion and that we continue to manage in a business as usual way. With the new auctions, we will either be pushed aside or we can win the concession for another period of time,” the CEO said, adding that the whole process of renewing the low-voltage concessions (in EDP’s hand for 20 years) “lacks visibility”, especially about whether “the new concession will be for a single region or several regions,” he finished.