RWE Launches Sale of German Gas Grid

AMSTERDAM/DUSSELDORF (Reuters) – Germany’s RWE (RWEG.DE), Europe’s fifth-largest utility, said it has launched an auction process for the sale of its gas transmission network Thyssengas.

Confirming an earlier Reuters report, RWE, which has to sell the business by March 2011 after settling an EU antitrust investigation, said it was expecting expressions of interest for the grid by Aug. 25.

“We contacted potential investors from Germany and abroad last week. We hope to get answers from serious investors by Aug. 25 and finish the process by the end of the year,” an RWE spokeswoman said late on Wednesday.

One source who declined to be named, but who is familiar with the deal, said Thyssengas is estimated to have a regulated asset base of around 500 million euros ($650 million).

RWE shares closed down 2.3 percent to 54.2 euros, in line with the German blue-chip DAX index .GDAXI, which closed down 2.1 percent.

A consortium of Bavarian gas company Bayerngas and local utilities Stadtwerke Dortmund, Dortmunder Energie und Wasser, Stadtwerke Bochum, Munster and Gelsenwasser (WWGG.DE) is interested in bidding for Thyssengas, spokespeople for it said on Wednesday.

“The consortium wants to make an offer, gas is our core business. We are not looking for further partners at the moment,” Bayerngas board member Andreas Springer told Reuters in an interview.

Dutch gas pipeline operator Gasunie said in March it would no longer work with local utilities on an offer for Thyssengas, arguing that the regulation of gas transport tariffs in Germany made the outlook for the return on investment unattractive. 

The sale could attract financial investors such as infrastructure funds, though German gas infrastructure deals have recently struggled.

In May, Swedish utility Vattenfall and German peer E.ON (EONGn.DE) called off the sale of their combined stake in eastern German gas supplier Gasag because bids were too low. [ID:nLDE64707E]

Thyssengas runs 4,100 km of pipelines linked to major natural gas import points in Germany and transmits up to 10 million cubic metres of natural gas annually to distribution grid operators, industrial firms and power plants. ($1=.7681 Euro)

By Greg Roumeliotis and Tom Kaeckenhoff
(Editing by Hans Peters and Louise Heavens)