China’s biggest electricity company, State Grid (國家電網), says it is paying US$989 million for seven Brazilian power companies and their transmission lines as it seeks to expand overseas.
The investment includes a 30-year concession to operate the Brazilian power grids that can be renewed for 20 years once it expires, according to a notice seen yesterday on the Web site of the Chinese government agency that manages state assets.
The deal marks a further expansion of State Grid into overseas markets following a US$3.9 billion, 25-year contract with the Philippines to run that country’s power grid.
Though not well known abroad, State Grid says it is ranked eighth among the Fortune 500 and operates power lines across 26 of China’s 32 provinces and regions. It is among many state-owned businesses that are heeding the government’s call to “go out” by investing overseas.
The investment in Brazil will suit the “strategic cooperation” between the two countries and is expected to yield an average annual profit of US$110 million, State Grid said.
Brazil relies heavily on power from Itaipu, the world’s second-largest hydroelectric dam after China’s Three Gorges. It has faced intermittent blackouts in recent years, though the government says it has invested heavily in transmission lines since Brazilian President Luiz Inacio Lula da Silva took office in 2003.
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