State Grid Corp. of China plans to enter electricity distribution market in Brazil

9 March 2016

China’s State Grid Corp. may become the first Chinese company to enter the power distribution market in Brazil, Brazilian daily newspaper Folha de São Paulo reported Tuesday.

The Chinese group is eyeing at least one of three distribution companies – Celg Distribuição (Celg D), estado de Goiás, Eletropaulo (São Paulo) and CPFL Energia (São Paulo) – and the group has set aside, according to the newspaper, about US$4 billion to invest in the sector.

The most likely candidate is the Goiás state company, which this month is expected to be sold by the state government, with State Grid taking part in the auction through a consortium with Brazilian companies.

Charles Tang, president of the Brazil-China Chamber of Commerce, said, according to Folha de São Paulo, that negotiations with distributors, particularly CPFL and Eletropaulo, were underway.

Alexei Vivan, of the Brazilian Association of Electric Power Companies, said the time is ideal for the entry of the State Grid Corp in distribution, as assets in the electricity sector are cheap due to the devaluation of the real.

There are currently four foreign groups involved in the distribution of electricity in Brazil – AES Corp. of the United States (São Paulo and Rio Grande do Sul), EDP – Energias de Portugal (São Paulo and Espírito Santo), Enel of Italy (Rio de Janeiro) and Iberdrola of Spain (São Paulo).

The China Three Gorges Group is also indirectly involved in distribution as it has been the main shareholder of EDP – Energias de Portugal since 2011. (macauhub/BR/CN/EN)