Germany sticks with plans to buy TenneT’s German division -economy ministry

By Andreas Rinke

BERLIN (Reuters) -The German government is still planning to buy the local division of Dutch grid operator TenneT, an economy ministry spokesperson told Reuters on Sunday.

The government’s plan to buy TenneT’s German operations, which includes part of the country’s power grid, had hit a hurdle after a ruling by the country’s constitutional court on Wednesday that 60 billion euros ($65 billion) in unused COVID-19 pandemic funds cannot be re-used for climate projects.

As a result, it has become politically difficult for the government to propose spending more than 20 billion euros to buy TenneT’s German business at a time when bigger issues in the 2024 budget are up in the air, people familiar with the matter have told Reuters.

State-owned TenneT operates the Dutch high-voltage grid and part of the German grid and is key in the energy transition away from fossil fuels amid increasing demand for electricity.

“With the takeover, the federal government would acquire a company that is central to the security of supply and the implementation of the energy transition,” the German economy ministry spokesperson said.

The finance ministry declined to comment.

The two countries have been working hard towards a sale of TenneT Germany, with a valuation of 22 billion euros ($24.00 billion), since February.

“The negotiations, which have been conducted intensively for months, have not yet come to a conclusion, despite very extensive progress,” the spokesperson from the economy ministry said.

Strains within the ruling coalition may grow as the parties haggle over which projects to prioritise after the court ruling, as some of the expenditure planned for the coming year will now have to be cut.

Chancellor Olaf Scholz said on Friday he wants to stick to the promised subsidies for chip manufacturer Intel.

“I want these investments to take place in eastern Germany, in Magdeburg and Dresden,” said Scholz at a conference in Leipzig.

A spokesperson for the Ministry of Economic Affairs had previously said that the federal government would keep its promise of state subsidies for the establishment of semiconductor factories.

“There is a clear political decision in favour of Intel and nothing has changed yet,” said an economy ministry spokesperson on Friday.

($1 = 0.9168 euros)

(Reporting by Andreas Rinke, writing by Maria Martinez; Editing by Hugh Lawson and Jane Merriman)