VERBUND Backing Bartenstein Proposal

2/7/2002Wien

VERBUND welcomes the renewed initiative of Dr. Martin Bartenstein, Minister of Economics, for creating an Austrian solution at all stages of added value for the domestic power industry.

For years, VERBUND has made an effort to achieve such solutions and presented, with Energie Austria, a trendsetting project which was unfortunately rejected by EVN, Wienstrom and TIWAG.

Subsequently, VERBUND continued to work consistently on Austrian partnership models. Bringing together the two largest Styrian power companies, Steweag and Steg, as well as the partnership with Salzburg AG are successful steps in this direction.

The initiative taken by the Minister of Economics to create a comprehensive Austrian power solution will therefore be fully supported by VERBUND. However, partnership and fairness will be prerequisites for a successful outcome of this plan. By contrast, breaking up VERBUND, the largest Austrian power company and one of the major listed companies of the Republic, would certainly not be the right way.

In the course of the past years, VERBUND has successfully reorganized and plays an important role in the free European power market. Today, its profitability is higher than the average in the trade.

The net indebtedness of the VERBUND group, caused by long-term financing of the large hydroelectric power plants of Austria, does not amount to 50 billion ATS (3.6 billion Euro) as alleged, but to approx. 35 billion ATS (2.6 billion Euro) at present. In the past three years alone, the net indebtedness was reduced by nearly 10 billion ATS (730 million Euro).

Since the beginning of the liberalization, the development of the supplier relations between VERBUND and the individual provincial companies has been surprisingly varied. Whereas the purchases of most provincial suppliers in Austria remained practically the same as before, EVN, Wienstrom and TIWAG slashed their purchases of VERBUND power.

Minister Bartenstein’s proposal is the right way because it includes a fair participation in all business segments by means of contributions in kind – from production via grids and trading to the supply of big industrial buyers and households. Only by including all stages of value added will an optimal solution with highest synergies be reached.

VERBUND is still convinced that it would bring considerable advantages for an Austrian solution if the hydroelectric activities of E.ON were included. Obviously in an extended solution, too, the economic control must firmly be in Austrian hands, and the company headquarters in Austria, like in the joint project of VERBUND and E.ON Energie GmbH. Thus a hydroelectric power producer could be created under Austrian direction in one go, which would absolutely rank among the top within the EU. A hydroelectric power producer of European dimensions would point to the future in a free European power market, in which the renewable energy is becoming increasingly important. Therefore, VERBUND will enter the discussions of an Austrian solution freely and constructively but without losing touch with the European dimension in favour of building up value for all stockholders and customers.