Danish energy group Orsted has scrapped its planned sale of assets including an electricity grid network around Copenhagen after the government said the sale can no longer proceed due to political opposition.
Orsted said in a stock exchange announcement on Monday (14 January) that it has decided to discontinue the sales process it announced last summer, though it will still examine options for exiting the businesses.
The announcement comes after finance minister Kristian Jensen told Danish media that the sale cannot now proceed after the opposition Social Democratic Party withdrew its support for the process. Its leader, Mette Frederiksen, wrote to Jensen saying that the party would no longer support the sale process proceeding on the premises outlined by the government.
She said that the Social Democrats were opposed to the sale proceeding along the lines of the current process because critical infrastructure should be owned by consumers or be at least 50% publicly owned. She added that the sale of the assets is “legitimate” and that the sales process could be continued if these criteria are met.
The Danish government owns 50.01% of Orsted, giving it a decisive say in the sales process. Although the Social Democratic Party is in opposition, its support is necessary for the sale to proceed.
Political opposition to the current sale process comes after it emerged that foreign pension funds and utilities are among the groups which have been shortlisted to buy the assets, comprising Orsted’s power distribution business Radius and its much smaller residential customer and street lighting businesses. Analysts previously said they expect Radius to sell for around DKK 14bn (EUR 1.9bn), based on a premium to its regulatory asset base of DKK 10.6bn.
Bidders that had been shortlisted for the assets include: Canadian pension fund CDPQ; a consortium of OMERS and local pension fund PKA; Italian utility Enel; and a consortium of local utility co-operative SEAS-NVE and Danish pension fund ATP.
Jensen said the “sudden” change of stance by the Social Democrats is “very unfortunate”, adding that the party had known about the terms of the sale for months.
However, the Social Democrats’ finance spokesman Benny Engelbrecht told Inframation that the party’s stance on critical infrastructure assets having to be co-operatively owned or majority public-owned has existed since 2017.
He said the Ministry of Finance had “given the impression that these principles would be honoured” in the sale of the Orsted assets, adding that the decision to scrap the sale is the government’s.
The Danish Finance Ministry did not immediately provide a response to Engelbrecht’s comments.
Industry observers following the process previously said they believed that local investors seeking to bid for the assets Orsted wants to sell would have an advantage over foreign investors due to the government’s likely preference for them to remain in Danish hands.
Engelbrecht said the Social Democratic Party is not opposed to there being foreign ownership of the assets as long as appropriate due diligence is conducted on any buyers.