Brazil and China begin cooperating on power infrastructures

12 June 2006

Beijing, 12 June – Brazil and China plan to work together on refurbishing the thermoelectric generation parks of Manaus and Macapá, in the state of Amapá and Candiota, in Rio Grande do Sul, the economic advisor to the Brazilian embassy in Beijing, Márcia Donner said Monday.

According to Donner, the two countries will also cooperate on building Gasene (Southeast-Northeast Gas Pipeline), the natural gas distribution network stretching over 1,200 kilometers between the regions of North-eastern and South-eastern Brazil, which will be operated by Petrobras, Brazil’s national oil company, and will be built by the infrastructure construction unit of state Chinese oil company Sinopec, which is Asia’s largest oil company in terms of refinery capacity.

The new cooperation projects between the two countries are a result of the recent formalization of an agreement for building infrastructures for power generation, which was signed in Beijing by the Brazilian minister for Mining and Energy, Silas Rondeau and Zhang Guobau, one of the vice-presidents of the National Commission for Reform and Development (NCRD), the Chinese government department responsible for energy policy and coordination and economic planning.

“It is a cooperation agreement between the two governments, which sets up an institutional umbrella to make cooperation easier between companies from the two countries and will make it possible to revitalize Brazilian thermoelectric parks, an area in which China has notable skills, due to the importance of coal as a fuel in China’s power profile,” said Donner.

The two countries have thus set up a base for what will be an import and financing operation for Chinese equipment for the refurbishing work on the Brazilian plants, Donner added.

“It is an agreement for very specific projects, which are of great importance for Brazilian development and of great economic value,” Donner said. Chinese power sector sources contacted by Macauhub said that the value of the business agreed between the two countries could reach US$3 billion.

According to the document signed by the two countries, the China International Trust and Investment Corporation (CITIC) will provide the financing and equipment needed for the projects, while the work will be carried out by Brazil’s Electrobrás.

The political representatives of both countries also agreed to set up a governmental panel to coordinate cooperation in the power sector between Brazil and China, by signing a memorandum of understanding to create a power and mining sub-commission at the level of COSBAN, the high-level commission that coordinates the bilateral relations between China and Brazil, set up on May 24, 2004 when Brazilian President Luís Inácio Lula da Silva visited China.

“The memorandum of understanding identifies priority projects and new ideas and areas to explore in all sectors of power generation, mining and geology and exploration of mineral resources.

The commission, a press statement published on the NCRD’s web page, will promote “the exchange of information about policies and regulations, development strategies and important projects in the areas of power and mining.”

The Chinese economy is three times larger than Brazil’s, and every year the two countries have intensified their economic relations. Bilateral trade totalled US$14.817 billion in 2005, with Brazil exporting US$9.989 billion and importing US$4.827 billion, according to figures from the Chinese Customs Department.
Brazil exports mainly raw materials to China, with iron ore, soy, soy oil and steel working products as the most exported products.

Brazil is China’s largest Latin American trading partner, while China is Brazil’s third-largest trading partner overall. (macauhub)