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RWE promotes cooperation with Abu Dhabi, cuts further costs

[DUSSELDORF] RWE AG, Germany's largest power producer, is promoting cooperation in renewable energy technology with Abu Dhabi as the emirate pursues climate targets, Chief Executive Officer Peter Terium said.

The company is the "natural partner," he told reporters in Dusseldorf late Wednesday. "It's about designing and operating a system, possibly also for other emirates, Egypt, other parts of the Arab world and up to northern Africa," he said, referring to Abu Dhabi-based investors with whom RWE is in talks with about possibly taking a stake in the Essen-based utility. He declined to identify them.

Solar and wind farms, grids, energy efficiency and the appropriate market design are conceivable elements of the project that will cost billions of euros and that RWE seeks a minority stake in, he said.

It may be cooperation at project level or a joint venture, he said. "We would be able to do this under our own efforts," while an equity investment by the potential RWE investor is "also is an option," he said.

Mr Terium added he is confident municipal shareholders, who hold about 23 per cent of the company, would agree on the latter as they "have never prevented sensible decisions."

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RWE is considering selling a 10 per cent stake to Abu Dhabi investors as it contends with sliding wholesale power prices and debts of 27.7 billion euros (US$31.3 billion), people with knowledge of the matter said in March.

RWE rose as much as 2 per cent, most since June 10, and traded up 1.3 per cent to 19.81 euros at 12:18 pm in Frankfurt. It was the fourth-biggest gainer in the 26-member STOXX Utilities Index while German competitor EON SE fell the most.

RWE intends to make further cost cuts in the company's structure and its conventional generation unit and doesn't plan further disposals except nuclear-fuel maker Urenco Ltd.

"We've already reduced controllable costs of generation by 30 percent and we're seeking further cost cuts, which are possible, while becoming more difficult," Mr Terium said, declining to comment on their volume. He's confident about winning over the supervisory board to simplify RWE's legal structure in Germany within the next two months, he said, without elaborating.

While not ruling the option out, Mr Terium is more reluctant on a split-up of the company, which EON has chosen and that RWE rejected in 2012.

"I prefer being fast follower to being first mover," he said.


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