Italy's new government, headed by former European competition commissioner Mario Monti, could seek to speed up energy sector privatizations and boost competition in the gas and power markets, according to analysts at Citi Investment Research Monday.
In a note the analysts said that the new government appointed to reform Italy's economy amid Eurozone debt struggles might look to accelerate privatizations and focus on competition.
"We expect the new government to speed up the privatization process with regards to the placement of stakes in state-owned companies," the analysts said, including power giant Enel and oil and gas giant Eni.
The state owns around 30% of both Eni and Enel.
The government might also call on local governments to privatize local utilities, such as A2A, ACEA and Hera.
Monti could also "focus on competition in the Italian energy market," the analysts said.
"Electricity and gas prices in Italy are some 20-30% higher than in the other countries because of a lack of real competition and difficult access to the market for newcomers," they said. "We believe that some mechanism to accelerate the opening of the market will be implemented."
In October the average Platts day-ahead gas price at Italy's PSV spot gas trading hub was Eur32.26/MWh, some 43% higher than the Eur22.52/MWh average at the Dutch TTF gas hub, a key benchmark for northwest Europe.
Former Italian prime minister Silvio Berlusconi resigned last week in a bid to restore market confidence after bond yields on Italian debt reached levels at which Ireland and Greece had required bail-outs.
The changeover of leaders in Rome may also impact Russo-Italian relations. Italy imports large volumes of Russian gas, and Berlusconi had enjoyed good relations with Russian Prime Minister Vladimir Putin.
