Report backs Suez and GdF asset link
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A report drawn up for a French parliamentary commission has proposed a partial combination of assets in place of the planned €68bn ($85.6bn) merger of Gaz de France with Suez to create a new French energy colossus.
The merger of non-regulated assets of state-controlled GdF, centred upon its gas exploration and production business, with Suez could defuse tensions within the ruling centre-right that threaten to block the deal, some MPs believe.
Both the companies and the French government, lead by Dominique de Villepin, prime minister, have hitherto insisted there was no “Plan B” to the proposed full merger unveiled by Mr de Villepin in February.
But the government was obliged to postpone a bill allowing the full privatisation of GdF until the autumn because of opposition among its backbenchers.
On Wednesday, Jean-Claude Lenoir, rapporteur of the proposed law that would allow the government to reduce its stake in GdF to less than 70 per cent, will present a new proposal to the Parliamentary Commission for Economic Affairs. Parliamentary sources say its aim is to “permit a merger of the non-regulated activities of Gaz de France with Suez without calling into question the 2004 law” which requires the state to retain at least 70 per cent of GdF equity.
Although the company, which has a monopoly over household gas supply in France, is listed on Euronext Paris, the state retains 80.2 per cent of its equity.
Opposition socialist MPs have tabled 30,000 amendments to the bill, which is set for its first parliamentary reading on September 7.
Some government backbenchers also oppose the privatisation of GdF via the merger, fearing the measure could become a political liability.
Under Mr Lenoir’s alternative deal, GdF would instead merge assets, which account for almost half its revenues and a quarter of its operating profit, with Suez, a diversified energy utility.
The more limited deal would include GdF’s exploration and production assets, part of its energy buying and selling arm, its international distribution business and the management of customer accounts, leaving its French retail gas distribution business in state control.
Additional reporting by Ross Tieman
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