State could raise REN stake to 20% to balance China
Portugal’s planned option to lift its REN stake to 20% is seen by specialists as a way to counterbalance Chinese shareholder State Grid in a strategic energy asset.
Portugal’s option to raise its stake in REN to as much as 20% could help balance the influence of State Grid, the Chinese state-owned group that is currently the company’s largest shareholder, according to governance and geostrategy specialists consulted by ECO. The issue matters because REN runs Portugal’s national electricity transmission grid and gas networks, making it a strategic asset for the country’s energy system.
The government has already bought 13.7% of REN, but a ministerial order signed by the finance minister and the environment and energy minister asked state holding company Parpública to acquire up to 20% of the company. Observador first reported the existence of that mandate after reviewing documents sent by Parpública to Portugal’s audit court, which cleared the transaction. Heitor Barras Romana, a professor of strategic studies, told ECO that with 13.7% — and even more so at 20% — Portugal would create a national shareholder counterweight to State Grid’s 25% stake.
Specialists interviewed by ECO said a larger state holding could also help prevent other shareholders from becoming more dominant and give the government closer oversight of the company’s strategic decisions. Under Portuguese company law, the current 13.7% stake gives the state the right to appoint at least one board member. Energy Minister Maria da Graça Carvalho said the issue of board representation would be discussed later with shareholders and within the government. REN’s current board mandate ends at the end of this year.
According to João Moreira Rato, head of the Portuguese Institute of Corporate Governance, a state-appointed director would allow the government to follow execution of REN’s concession contract more closely from inside the company. Duarte Pitta Ferraz, a partner at Ivens Governance Advisors, told ECO that the Portuguese state should not hold less than State Grid’s 25% in such a strategic infrastructure, while adding that foreign investment remains welcome but should not mean “strategic naivety”.
Originally published at Eco.pt