Iberdrola, Endesa Will ‘Never Accept' Loan Writedowns in Spain

 

Iberdrola, Gas Natural and Endesa will "never accept" any writedown on loans to Spain's electricity system, the industry's lobby group said.

Any so-called haircut on power-system debts would be an expropriation, Eduardo Montes, chairman of the Madrid-based Unesa group, said today at a press conference in the city. "That would be very, very serious and we wouldn't be impassive," he said.

Spain's electricity system has run up a 24 billion-euro debt by charging consumers less than the revenue booked by utilities. Industry Minister Jose Manuel Soria said yesterday that power companies will have to share the burden of eliminating debts as the nation works to cut its budget deficit.

Soria wasn't insisting a writedown was on the table, Montes said. "The minister has never spoken to me of a haircut," he said. "We would never accept it."

Deputy Prime Minister Soraya Saenz de Santamaria twice passed up invitations to rule out haircuts for the power industry at a separate briefing in Madrid today.

The cost of delivering power in Spain is set to outstrip revenue from electricity bills by 5.9 billion euros next year, Unesa estimates, dwarfing a legal limit of 1.5 billion euros for the so-called tariff deficit set by the previous administration.

Soria stopped granting subsidies for new renewable-energy plants last month to shore up state funds. Montes urged the government to extend the subsidy freeze to projects approved and not yet commissioned.

The row over financing of the electricity system piles more pressure on Mariano Rajoy's administration as it struggles to convince investors it can meet a target to lower its budget deficit to 4.4% of GDP this year, from about 8% last year, while simultaneously trying to create jobs in a country where 23% of workers are unemployed.