Enel Is Said to Rule Out Russian Buyers for Slovak Unit

Enel SpA is shutting out potential Russian buyers for its unit in Slovakia, the nation’s biggest electricity supplier, amid European Union pressure over the crisis in Ukraine, people familiar with the situation said.

The largest Italian utility has ruled out a deal to sell the operations -- which include nuclear plants and may be worth as much as $3.6 billion -- to Russian companies including state-owned Rosatom Corp., the people said, asking not to be identified discussing a private matter.

Enel, based in Rome, made the decision due to EU concerns about selling strategic infrastructure to Russian firms, which already supply Europe with much of its energy, the people said.

Enel’s wariness shows the strain on business links between Russia and Europe as the EU and U.S. seek to punish President Vladimir Putin for what they say is aggressive behavior in Ukraine. This week the German government instructed defense contractor Rheinmetall AG to halt work on a military training center outside Moscow, and the EU has banned exports of high-tech equipment for oil exploration, among other products.

A spokesman for the European Commission, the EU’s executive arm, declined to comment. A spokeswoman for Enel said the sale process of Slovenske Elektrarne AS is ongoing, declining to comment on potential bidders, and a spokesman for Rosatom said the company hasn’t held negotiations with Enel on the Slovak asset, declining to comment further.

With Russian companies out of the picture, Enel is looking for a European or Chinese buyer for its 66 percent stake in Slovenske Elektrarne, even though its Russian-designed nuclear reactors would make Rosatom a logical buyer, the people said.

Enel owns Slovenske Elektrarne along with the Slovak government, which holds the remainder of its shares. The Enel stake could be worth about 2.7 billion euros ($3.6 billion), people familiar with the matter said earlier this year.

Francesco Starace, Enel’s chief executive officer, is seeking asset sales to cut debt at the company, which totals more than 40 billion euros. Last year it raised 1.3 billion euros selling its shares in natural gas producer SeverEnergia to Russia’s OAO Rosneft, which has been targeted by U.S. sanctions.

Slovenske Elektrarne provided about 77 percent of Slovakia’s electricity and operates four nuclear reactors with two more under construction. Enel and the Slovak government have clashed over cost overruns at the Mochovce plant where they’re being constructed, which is set to exceed its 3.8 billion euro budget.

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