With some fast manoeuvring, the government of Germany last week blocked the sale of a 20% stake in a German power distribution company to a huge Chinese utility, citing grounds of national security.
State Grid Corporation of China, which has over a billion customers, had been in talks to acquire the stake in 50Hertz, a distribution company that supplies around 18 million people in northeastern Germany.
But it emerged on 27 July that a German government-owned bank had been instructed to buy the stake, thereby thwarting State Grid’s plans.
"On national security grounds, the federal government has a major interest in protecting critical energy infrastructure," said a statement issued by the German economy and finance ministries, reports Deutsche Welle.
The opportunity for State Grid arose when Australian infrastructure fund, IFM, decided to sell its remaining 20% stake in 50Hertz, sparking State Grid’s interest.
In a slightly convoluted move, German officials persuaded 50Hertz’s majority shareholder, the Belgian power transmission system operator, Elia, to exercise its rights to buy IFM’s remaining stake.
Elia then immediately sold that stake to the German bank, according to Deutsche Welle.
An earlier acquisition attempt by State Grid was warded off in March, when Elia snapped up another 20% stake IFM wanted to sell.
German legislation necessitated this latest indirect tactic: currently the rules let the government block investment from a non-EU country if the investor wants a stake of 25% or more. That meant the government had to stump up its own cash to block State Grid.
The move led China’s ambassador to Germany, Shi Mingde, to accuse Germany of protectionism.
"China is opening itself further, but we are concerned that the door to Germany that has been opened will be closed again," Shi told the Stuttgarter Zeitung newspaper, reports Deutsche Welle.
Image: 50Hertz’s headquarters on Berlin (Fred Romero/Creative Commons)
Comments
Comments are closed.
Well done Germany