EU Opens Probe into Water Concession Deal for Portugal's EDP

By Laurence Norman

BRUSSELS--European Union authorities are opening a probe into the 2007 concession to Portuguese utility EDP Energias de Portugal S.A. (EDP.LB) of public water resources, saying the price paid may not have been "adequate."

The European Commission said that in 2007, Portugal extended concessions to EDP for using public water for electricity generation in return for a 759 million euro ($1 billion) payment. Portugal didn't notify the concessions to the EU as a state aid measure at the time.

In a statement Wednesday, the EU said its anti-trust authorities have "doubts that EDP paid an adequate price for the concessions."

"At this stage, the (European) Commission doubts that such aid would be compatible with the EU internal market," the EU said. Authorities also said they believe "the long duration" of the water resource contracts may also restrict competition in Portugal's electricity market.

The EU's executive arm said it is also requesting preliminary information about the granting or extension of concessions for use of water for hydro-power generation in other member countries.

Write to Laurence Norman at [e-mail]

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