The other unevaluated commitments and risks are:
Commitments arising from the contract for the acquisition of Italgas and Stogit from Eni
Acquisition of Italgas
The price determined for the acquisition of Italgas and Stogit is subject to adjustment mechanisms based on commitments made when the transaction was completed which were also intended to apply after the date of execution.
The Italgas acquisition price may be adjusted in order to pay: (i) Eni part of the profits from selling properties owned by Italgas that are no longer part of operations; and (ii) Snam the amount arising from any compensation claims relating to the provision for environmental risks.
Acquisition of Stogit
The Stogit acquisition price may be adjusted to take into account the different amount that might be recognised by the Electricity and Gas Authority for the tariff period 1 April 2014 - 31 March 2018 relating to the volumes of natural gas owned by Stogit on the share transfer date and which are part of RAB assets.
The purchase agreement also provides for hedging mechanisms aimed at ensuring Eni keeps the risks/benefits that may arise from any sale of storage capacity which is no longer regulated and which may become freely available following negotiations, or from the sale of concessions held by Stogit when the share transfer took place which may be mainly dedicated to storage activities that are no longer regulated.
Developments over the course of 2011 are reported below.
As settlement of asset adjustments in its favour, Snam Rete Gas S.p.A. paid its ultimate parent Eni S.p.A. €86 million, the net balance between:
- €145 million in favour of Eni for the difference between the provisional estimated aggregate value of the RAB (regulated asset base) of Italgas and some of its subsidiaries and associates and the aggregate RAB value defined by the Electricity and Gas Authority;
- €59 million in favour of Snam relating mainly to estimated liabilities on events pre-dating the signing of the contract.
Snam Rete Gas S.p.A. paid Eni S.p.A. €3 million as its share of the capital gain on the sale of natural gas no longer needed for the functioning of the storage system.
Metropolitan area of Rome and the “Romana Gas” business unit
Following the sale by French company Suez S.A. (now GdF Suez S.A. after a merger) of its Belgian subsidiary Distrigaz, the ultimate parent Eni, on the basis of preliminary agreements with Italgas, agreed to sell to Suez, together with other gas and electricity assets, the distribution business of Italgas in the metropolitan area of Rome.
The subject of the sale was the business unit responsible for distributing gas to the municipalities of Rome, Fiumicino, Ciampino, Marino, Grottaferrata, Rocca di Papa and Frascati, including the distribution networks (around 5,300 km in length) and relevant plants, around 1.3 million delivery points (approximately 28% of users served) and some 800 staff.
The contract provided for completion of the transaction through the transfer by Italgas of said business unit into Rete Gas Roma S.r.l. (an ad hoc company set up on 26 November 2008 and wholly owned by Italgas) and for the transaction to be suspended pending approval from the Municipality of Rome on the transfer of the concession by 30 June 2009, with the buyer able to extend this deadline to 31 August 2009.
By executive order No. 1231 of 25 June 2009, the Municipality of Rome gave its approval to the transfer of the concession agreement for the distribution of gas in the municipality to the above-mentioned Rete Gas Roma, recognising the will of Italgas to sell the entire share capital of Rete Gas Roma to GdF Suez.
By communication of 6 July 2009, the Mayor of Rome then specified that said executive order was the only act able to legitimately and effectively express the approval of the municipal authorities to the transfer, and that said transfer shall be notified to the Municipal Council.
However, on 13 July 2009, GdF Suez informed Italgas that it did not consider the conditions for the transfer of the gas distribution business in the metropolitan area of Rome to be satisfied within the agreed timeframe, and that it would therefore not complete the acquisition pursuant to the contract signed by the two parties on 30 October 2008.
Following extensive and detailed negotiations with GdF Suez, on 13 December 2011 Eni announced it had signed a settlement agreement with GdF Suez, in which the latter agreed to pay Eni €40 million to suppress any claim and/or damage that may arise from the previous agreements, including the above-mentioned contract to which Italgas was party. In relation to this, and to Italgas’ involvement in said agreements, Eni paid Italgas €10 million to fully cover any claim.
Other commitments include the commitment deriving from an option for the banks (the lending banks) to sell to Italgas and Iren (the grantors) the loans awarded by said banks to associate company AES Torino S.p.A.. The put option of the lending banks, separately and each limited to its own share of the loan, is subordinate to AES S.p.A. losing the gas distribution concession in the municipality of Turin, which expires in 2012. If the option is exercised, the grantors must pay the total nominal loan amount of €250 million, plus interests and auxiliary expenses. At present, it is not thought likely that said option will be exercised.
Legislative Decree No. 216 of 4 April 2006 transposed Emissions Trading Directive 2003/87/EC on greenhouse gas emission and Directive 2004/101/EC on the use of carbon credits arising from projects in respect of the Kyoto Protocol’s flexible mechanisms. In relation to the EU Emissions Trading System, which has been in force since 1 January 2005, on 27 November 2008 the national committee on emissions trading issued Resolution 20/2008 on allocating emission permits for the 2008-2012 period to existing plants. Snam was allocated emission permits equivalent to around 4.4 million tonnes of carbon dioxide (approximately 0.88 million tonnes per year from 2008 to 2012), in addition to permits for around 0.6 million tonnes for plants entering into service between 2008 and 2012. Quotas relating to these new plants include only those physically allocated and recorded in the emissions register.
In 2011, the carbon dioxide emissions from Snam facilities were, overall, lower than the emission permits allocated. Some 0.6 million tonnes of carbon dioxide was emitted into the atmosphere, whereas about 1 million tonnes had been allocated in emission permits, including permits for new plants. This meant a surplus of 0.4 million tonnes.