Germany buys stake in grid operator to fend off Chinese bid

July 27, 2018 - 7:34 am

BERLIN (AP) — The German government said Friday that the state-owned KfW bank is buying a 20 percent stake in electricity grid operator 50Hertz, fending off a bid from a Chinese company.

"The government has a strong interest in protecting critical energy infrastructure because of security policy considerations," the economy ministry said in a statement on the decision.

50Hertz is one of four grid operators in Germany and supplies some 18 million people with electricity, mainly in the east of the country.

China's state owned network operator SGCC had tried to buy a stake in 50Hertz earlier this year. Belgian firm Elia, which owns 80 percent of 50Hertz, will buy the remaining stake and sell it on to KfW.

Separately, German media reported that the government plans to veto a Chinese takeover of specialist engineering company Leifeld Metal Spinning, citing security concerns.

A spokesman for China's foreign ministry expressed concern about the reported decision to veto the Leifeld bid.

"In the face of growing protectionism and unilateralism, as major world economies, China and Germany have a responsibility to jointly defend free trade and multilateralism," said the spokesman, Geng Shuang.

"We hope Germany will see China's investment objectively, enlarge market access and provide a level playing field with a stable institutional framework for Chinese companies' responsible investments," he added.

A senior official with Germany's main business lobby group responded warily to the 50Hertz move, saying that KfW taking a stake in a company for security policy reasons is "problematic."

"This must at most be an interim solution that is ended quickly," said Stefan Mair of the Federation of German Industries. "Such a decision in an individual case carries the risk of impairing the climate for foreign investments."

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