State Grid Corp. of China completed the purchase of seven electricity distribution businesses in Brazil for $989 million, the government said.
Beijing-based State Grid will run electricity transmission services in the southeast of Brazil and supply power to Brasilia, Sao Paolo and Rio de Janeiro, according to a statement on the website of the Chinese government’s State-Owned Assets Supervision and Administration Commission yesterday.
China’s biggest electricity network operator agreed in May to buy controlling stakes in seven power transmission units in Brazil from Elecnor SA, Abengoa SA, Isolux Ingenieria SA and Cobra Instalaciones y Servicos SA. Latin America’s biggest economy is attracting local and overseas investors to develop its energy infrastructure to help meet power demand as its gross domestic product expands more than 7 percent a year.
State Grid has obtained a 30-year right to transmit power to the southeastern region of Brazil, and the electricity distribution businesses will generate annual profit of about $110 million, according to yesterday’s statement.
Brazil’s electricity regulator had said in an Aug. 20 interview that State Grid’s 3.1 billion reais ($1.8 billion) purchase of seven energy companies would be approved by October. Liu Xinfang, a Beijing-based spokesman for State Grid, said by telephone today the figure reported then was incorrect and confirmed that the deal was worth $989 million.
The deal will help increase the Chinese company’s competitiveness in the global electricity transmission market, according to the government statement. A State Grid unit won the right in 2007 with local partners to run an electricity distribution network in the Philippines.
---John Duce in Hong Kong and Winnie Zhu in Shanghai. Editors: Amit Prakash, Aaron Sheldrick.