Economy Minister Refuses to Rule Out a Bigger State Stake in Galp After the Moeve Deal Collapses: "If I Say It Is Out of the Question, I Am Lying"

The Government has not ruled out raising the State's stake in Galp, the oil company that owns Portugal's only refinery, at Sines. Asked whether the State could strengthen its position, Economy Minister Manuel Castro Almeida would not commit either way: "If I tell you that is a possibility, Galp's shares will go up tomorrow. If I tell you it is out of the question, I am lying."

He was speaking in an interview with Jornal de Negócios and Antena 1 (the public radio station), published this weekend on their Conversa Capital programme and reported on Sunday by Observador. He gave no figure, no timetable and no sign that a purchase is being prepared.

What the State owns now

According to Galp's own shareholder page, the State holds its stake indirectly through Parpública, the State holding company that manages public shareholdings. Parpública's 58,079,514 unlisted shares are 8 percent of Galp's capital, and the company lists Parpública's qualifying holding at 8.42 percent of the voting rights. The largest shareholder is Amorim Energia, with 37.51 percent of the voting rights. Galp says Amorim Energia is owned 55 percent by companies controlled by the Amorim family and 45 percent by a company controlled by Sonangol, Angola's state oil company.

Why it comes up now

On Monday 26 October Galp ended talks with Spain's Moeve on combining their refining and fuel retail businesses. In the interview, Castro Almeida said the deal would have left Portuguese shareholders in a minority in the company holding the Sines refinery, and that the Government "did its duty" by insisting on guarantees that a change of ownership would not create risks if energy markets turned turbulent. The decision to end the talks was the companies' own, he said, but "along the way, the Government felt the need to intervene."

Galp has not closed the door to a partner. Its co-chief executives told analysts on 26 October that a partnership for the refinery remained "rational and attractive", Observador reported, though no deal was on the table. The minister said the Government will keep watching what Galp decides and whom it partners with: "We are not interested in who owns the company; what interests us is that the owner, whoever it is, is committed to a set of rules that defend the national interest."

According to Negócios, he also defended the State's move into grid operator REN, where Parpública agreed in October to buy shares that take the State to 19 percent, and ruled out doing the same at the bank BCP.

Fuel prices and the polls

In the same interview, reported separately by Negócios and RTP, Castro Almeida said "the petrol pump is fatal for governments" and that the Portuguese are "extremely sensitive" to fuel price rises, which he said colour public opinion of the Government. He called inflation, which reached 3.8 percent in October, "an undeniable problem," and pointed to the State paying towards farm diesel and professional hauliers' diesel to stop fuel costs reaching supermarket shelves more than they already have.

What it means for you

• Nothing changes yet. No purchase has been announced, and the minister did not say how large a stake the State might seek or what it would cost.
• Pump prices are a separate matter. The minister did not link a bigger State stake to cheaper fuel, and nothing he said suggests it would change what drivers pay.
• Sines is the issue to watch. The Government has made clear it wants a say over who controls the country's only refinery.