Enel ordered to pay EUR 401 mln to Romania in international arbitration case

Italian utility Enel has been ordered to pay over EUR 400 million for a minority stake in Electrica Muntenia Sud, the supplier and distributor of electricity that is split today in E-Distribute Muntenia and Enel Energie Muntenia, following a decision taken by the Arbitration Court in Paris.

The Romanian state had asked for EUR 550 million, but the Arbitration Court in Paris ruled out that Enel will pay EUR 401 million for 13.57 percent of Electrica Muntenia Sud, according to sources quoted by News.ro.

Enel said in a statement that in was assessing the effects of this ruling.

“Moreover, the results of this arbitrage are in line with the expectations of the company and with the internal analysis carried out in this case,” said Enel.

The Romanian state failed to clinch a deal with Enel over the put option clause in the privatization contract according to which Electrica had the right to sell and Enel the obligation to buy the minority stake in Electrica Muntenia Sud. The transaction mechanism had been established by the government in late 2012.

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“Enel confirms that it received an arbitral award yesterday from the International Chamber of Commerce of Paris in relation its shareholding in the Romanian electricity sector and in particular the exercise of the put option by SAPE in Enel Distributie Muntenia and Enel Energie Muntenia. Enel respects the decision and the outcome of the arbitration proceedings is in line with the company’s financial provisions set for the case,” Enel told BR in a statement.

However, after Electrica was listed on the Bucharest Stock Exchange, the state created a new a company that managed its stakes in energy companies and opened several international arbitration procedures.

What happened after Enel won the USD 1.2 bln arbitration case against Romania

Before going on trial, Enel said it was willing to pay EUR 250 million for this stake, but the government refused this offer.

“The solution of the arbitration court also opens the path for the payment of dividends for shareholders in companies in which the state holds stakes alongside the Italian partner,” said Victor Grigorescu, the former minister of energy, on his Facebook page.

The Romanian state has been battling with Enel in international arbitration courts as it claimed that the utility firm did not fulfill its post-privatization targets, mainly related to investments, since entering the local market in 2005.

Last summer, Enel won a large scale arbitration case against Romania, in which the state was seeking more than EUR 1 billion in damages. The authorities alleged that Enel did not respect certain provisions from the privatization contract for Electrica Muntenia Sud. In this case, the state was ordered to pay EUR 1.5 million for the court fees.

The state also battled in court with Delgaz Grid, formerly known as E.ON, and CEZ, and it got mixed rulings.

Czech utility CEZ paid EUR 5.7 million to the state in a case. Romania has lost another case against German Delgaz Grid.

Ovidiu Posirca