The German government’s plans to buy the local division of Dutch grid operator TenneT have hit a new snag following a ruling by the country’s constitutional court this week on the use of pandemic funds, three people familiar with the matter said.
The court’s ruling on Wednesday that 60 billion euros ($65 billion) in unused COVID pandemic funds cannot be re-used for climate projects has thrown German budget negotiations into disarray.
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, the people told Reuters.
The two countries have been working hard towards a sale of TenneT Germany, with an enterprise value of up to 25 billion euros ($26.3 billion), since February.
“Talks are still going on, so we do not comment on any developments,” a spokesperson for TenneT said.
A spokesman for Germany’s economy ministry said that there was nothing new to report in ongoing discussions with the Dutch government over TenneT.
The Dutch economy ministry declined to comment.
Sources told Reuters last month that a deal was less likely to be reached before Dutch national elections scheduled for Nov. 22 due to differences over price.
Since then, however, those issues have been ironed out and the governments are still seen as likely to eventually reach a deal on TenneT at a price of between 20-25 billion euros, given Germany’s desire to control infrastructure seen as vital for its plans to increase renewable electricity production.
Meanwhile the Dutch government has said it does not make sense for Dutch taxpayers to fund TenneT’s investment plans, which are seen as costing more than $100 billion in the coming decade, with roughly 60% of that to be spent in Germany.
The Dutch parliament must approve any German offer and it is currently in recess. However once a German offer is on the table, it could still be approved as early as December.
Delaying the deal is problematic for TenneT, which has 20 billion euros in bond debt and is expected to be recapitalised on both the Dutch and German sides following its split.
If the deal is delayed into 2024, TenneT could have to borrow additional money to fund investments at higher interest rates than it has faced in the past, and its credit rating could be at risk.
