Italy and China to Renew Governance Pact on Key Energy Networks
Renewal of Governance Pact and Strategic Implications
By Giuseppe Fonte
Background of the Governance Pact
ROME, June 1 (Reuters) - Italian state lender CDP and State Grid Corporation of China are set to renew their governance pact in the company handling Italy's key energy networks, sources said, despite concerns among Rome officials over Beijing's influence over these assets.
The pact is due to expire at the end of November but will renew automatically after neither party made use of an option to end it six months before the expiry date, the sources said, asking not to be named.
CDP Reti's Role in Italy's Energy Sector
CDP Reti, among Italy's foremost state-backed companies, owns roughly a third of the country's power and gas grid operators Terna and Snam.
Concerns Over Chinese Influence
Recent Developments and International Reactions
Rome's concerns about Chinese influence on its key energy assets came into focus in November, when Snam scrapped plans to acquire a stake in Germany's largest independent gas transmission firm.
The German economy ministry opposed the transaction due to the presence of the State Grid Corporation of China as an indirect investor in Snam, Reuters reported at the time.
European Strategy Towards China
Both Rome and Berlin are aiming to counter China's growing industrial and political influence in Europe, while at the same time trying to maintain key economic ties with Beijing that are vital for their industrial sectors.
Details of Chinese Stake and Board Representation
Italian state lender Cassa Depositi e Prestiti (CDP) in 2014 sold the State Grid Corporation of China a 35% stake in CDP Reti, which owns 31.4% of Snam, 29.0% of Terna and about 26% of Italgas, Italy's biggest gas distributor. Snam also holds 11.4% of Italgas.
Qinjing Shen, a representative of the Chinese state-owned group, sits on the boards of Snam, Terna, Italgas and CDP Reti.
Implications for Italian Energy Policy
His position on all three boards gives him visibility over Italian moves in the energy sector, fuelling concerns among government circles that the Chinese shareholder could hamper the companies' expansion plans.
Legal Framework and Safeguards
Italy's golden power rules allowing it to shield strategic assets cannot be used in the case of CDP Reti, as the renewal of an existing governance pact falls outside the remit of the legislation.
The sources, however, stressed that the pact limits the scope of action of China's State Grid over CDP Reti, and thus safeguards Italy's strategic interests in the three companies.
(Additional reporting by Francesca Landini in Milan, editing by Gavin Jones)
