July 18, 2005

Portugal pins energy hopes on wind farm licenses

By Henrique Simoes de Almeida

LISBON (Reuters) - Portugal's Socialist government said on
Monday it would grant licenses within six months to build
massive stretches of wind farms, as part of a 2.5 billion-euro
($3-billion) investment plan in renewable energy.

A Economy Ministry spokesman said the licenses, to be
awarded to business consortiums, would allow for the generation
of 1,700 Megawatts (MW) of energy. That's more than the
capacity of a new nuclear power plant proposed by private
investors last month, and immediately rejected by the

Officials did not say when the wind plants would be ready
or how much government spending would be needed for the

But the ministry saw direct investment of 900 million euros
($1.09 billion), with most of the funds coming directly from
the companies, and a portion from public coffers.

"If there is an area that is of utmost importance for our
future, that area is renewable energy," said Prime Minister
Jose Socrates, calling for private-sector investment.

The government approved last month a 25 billion-euro plan
for infrastructure investment, including 2.5 billion euros in
spending for renewable energy. The plan was part of the
Socialist campaign platform ahead of February elections in
which the party ousted a center-right coalition.

The rise in oil prices to record levels of around $60 a
barrel has put the spotlight on alternative sources of energy.
Portugal's state-owned electricity generator EDP is a heavy
user of fuel oil for power generation.

Last month investors headed by tycoon Patrick Monteiro de
Barros said they would seek to build a nuclear power plant with
a capacity of 1,600 megawatts -- without public funds. But the
government ruled out nuclear power projects.

EDP, Portugal's biggest industrial group, called the wind
farm project "ambitious."

"EDP has always been interested," said CEO Joao Talone, who
attended the press conference in Lisbon.

Analysts believe other companies will also be interested in
the wind farm project, including Spanish firms Endesa,
Iberdrola and Gamesa .

Portugal's budget deficit this year is estimated at 6.2
percent of gross domestic product, just over twice the euro
currency zone limit.