Renewal of CDP’s China pact to sharpen focus on Italy’s energy assets

By Giuseppe Fonte

ROME (Reuters) – Italian state lender Cassa Depositi e Prestiti (CDP) and China’s State Grid Corp are poised to renew their agreement on corporate governance of their co-owned Italian power and gas grid company, sources close to the matter said.

The looming renewal has drawn fresh scrutiny from Italy’s government over Chinese influence on strategic companies.

Italy has recently adopted a harder line towards Chinese forays into its companies, with Prime Minister Giorgia Meloni’s administration last month imposing measures to limit the influence of China’s Sinochem on tyre maker Pirelli.

Rome did so using the so-called golden power regulation aimed at shielding critical assets.

In 2014 CDP sold to State Grid Corporation of China a 35% stake in CDP Reti, a holding company that owns roughly a third of Italian power and gas grid operators Terna and Snam. At the time the parties also signed a pact detailing CDP Reti’s corporate governance.

That pact is due to expire at the end of November but will renew automatically after neither party made use of an option to decline renewal six months before the expiry date, the sources said on condition of anonymity owing to the sensitivity of the matter.

CDP Reti is among the most prized of Italy’s state-backed companies. It owns a 29.85% stake in Terna, 31.35% of Snam and about 26% of Italgas, Italy’s biggest gas distributor.

Prime Minister Meloni’s administration is aware of the situation, one of the sources said without clarifying whether Rome intends to set conditions for endorsing renewal.

The Chinese embassy in Rome did not respond to a request for comment.

Another decision that could affect relations between Italy and China is expected later in the year, with Meloni due to decide whether or not to extend Rome’s partnership with Beijing on the Belt and Road Initiative (BRI).

Italy in 2019 became the first and so far only G7 nation to join the hugely ambitious BRI programme, which critics said would enable China to gain get control of sensitive technologies and vital infrastructure.

(Reporting by Giuseppe Fonte; Editing by David Goodman)