Vattenfall privatization likely eventually: CEO

By Sarah Edmonds and Anna Ringstrom

STOCKHOLM (Reuters) - The head of Swedish state-owned utility Vattenfall VATN.UL believes the firm will eventually be floated by the government, although the political sensitivity of such a step makes it unlikely in the short run.

Vattenfall Chief Executive Lars Josefsson told the Reuters Global Energy Summit that while the state takes an arm's-length approach to Vattenfall, the decision to privatize the company would rest entirely in government hands.

Asked if he saw a share flotation as likely, Josefsson said: "In the short run, no. Over time, certainly."

Media reports have suggested a flotation of Vattenfall could be valued at some 325 billion Swedish crowns ($54.13 billion).

He said the government would have to handle any sell off carefully because the Swedish people took great pride in their rivers and landscape.

"This is also in a sense politically sensitive," Josefsson said. "Swedish hydropower assets are like a national treasure in the minds of many people, especially the people in the north."

There is a ban in Sweden against the damming of any more rivers for hydropower projects.

Josefsson said there were advantages and disadvantages for a state-owned company passing into private hands.

"Being in the energy business, this is a business for large companies," he said, saying the trend toward consolidation in Europe made scale even more necessary for long-term success.

"And of course the difference if you are a listed company is that you have access to equity capital, which you don't have as a 100 percent state-owned."

He said the downside of privatization was exposure to short-term uncertainty created by quarterly financial results cycles and the need to court investors in major financial centers like London and New York.

"So there are pros and cons," he said.

Sweden's centre-right government is in the midst of the country's largest-ever privatization effort but has ruled out selling Vattenfall in the foreseeable future.

(Reporting by Anna Ringstrom and Sarah Edmonds)