The fusion between the National Fuel, Alcohol Administration and Portland (ANCAP) and the National Administration of Electric Power Plants and Transmissions (joint venture) is a possibility that has been considered for several years, and that today is once again debated. What has changed since then? Is this initiative viable? How would it be carried out? In this article, we will address these and other relevant aspects.
The first attempts to merge both companies arose in 2002, within the framework of the Bill of Accountability of that year. However, the idea was withdrawn due to the opposition of the Minister of Industry at the time, Sergio Abreuand the president of UTE, Ricardo Scaglia. Both agreed that it was best to maintain the autonomy of each entity.
Today, more than 10 years after those attempts, the merger is once again a topic of discussion. This is due to a number of factors, including the need to address the climate changethe energy transition in Uruguay, as well as the redefinition of the tasks of the country’s energy companies.
Despite the fact that the idea is not currently being analyzed by either of the two entities, both the private sector and some UTE and ANCAP authorities believe that the synergy between the two companies should be greater.
Why merge UTE and ANCAP?
Since both companies have the same owner, the Uruguayan State, many of the problems that arise in a merger would already be resolved. In addition, both UTE and ANCAP are energy companies, which facilitates integration. In fact, the president of ANCAP, Alejandro Stipanicic, assures that merging both companies “is not only not unreasonable”, but also “It is the most convenient, the most reasonable and the most natural: it should happen”. For Stipanicic, the important thing is that the board has the role of government, not manager, in order to carry out the merger process.
The ruling party is close to the idea of this merger
The director of UTE for the National Party, Felipe Algorta, agrees with Stipanicic that it is not unreasonable to think of a merger, since both companies are prepared for it. However, Algorta stresses that the complexity of the merger process must be taken into account, which should be long and start with governance.
“The process (of converting UTE and Ancap into a single company) would not be different from the merger-by-acquisition process that we have seen in other companies in the world, we see (in the sector) corporations that buy each other or that unite in joint venture (joint company working towards the same goal) and they are beginning to have a single government,” explained Stipanicic in a note in the newspaper The country.
