Lisbon, Portugal, 30 Jan – China State Grid is well-placed to become the biggest shareholder in Portuguese power grid group Redes Energéticas Nacionais (REN) and, via this route, to gain a stake in the Cahora Bassa Hydroelectric Dam (HCB), in Mozambique.
According to the Africa Monitor newsletter, half of the 15 percent owned by the Portuguese state in HCB is expected to be passed over to REN, but the transaction requires authorisation from the Mozambican state, which controls the company.
Taking a stake in HCB allowed REN to take part in the Cesul Project, in which US$2.4 billion is to be invested by 2016 to build an electricity transmission system between the province of Tete and the south of the country, but also to neighbouring nations.
Electricity production, of around 12,000 megawatts, will be focused on the future Tete energy hub, including a new dam on the Zambezi River – Mphanda Nkwa with 1,500 megawatts – the north plant of Cahora Bassa with 1,250 megawatts – and coal-fired thermal power plants in Moatize and Benga with a capacity of 600 megawatts each.
The biggest part of Cahora Bassa’s current production is carried along an exclusive line to South Africa (Apollo Plant) and remaining production is sent to Zimbabwe and northern parts of Mozambique.
South Africa will be the main destination of the future power production of the Zambezi Valley, which implies boosting the transmission capacity of existing lines.
At the recent Portuguese-Mozambican summit no agreement was reached on the sale of the remaining 7.5 percent stake held by Portugal to Mozambican interests in the Cesul Project consortium, including power company Electricidade de Moçambique (EdM), due to the terms and values involved in the transaction, according to Africa Monitor.
The stake set aside for REN in the Cesul Project involves construction of facilities and, at a later date, management of new networks (exploration and maintenance).
According to the Portuguese newsletter, China State Grid has shown interest from the start in the privatisation of REN, “an initiative that is heavily influenced by prospects of setting the company up in Mozambique.”
The proposal from the Chinese company, according to Portuguese newspaper Público, is for 25 percent of REN, and the remaining 15 percent would be held by another candidate; the Oman Oil Company.
Under the terms of the auction, which is due to end at the beginning of February, the two companies will not be able to sell their shares for the next four years.
Portuguese financial daily, Diário Económico reported Friday that in the race for REN China State Grid held the trump card of opening up the Asian market to the Portuguese company, as it is currently present in countries such as the Philippines Mongolia, Kyrgyzstan, Russia and India.
The offer is of 400 million euros and also includes a long term credit line from the China development Bank, at reduced interest rates, worth 1 billion euros.
The credit line guarantees REN’s refinancing needs as of 2013, according to the same source, and will allow the group to drive its internationalisation plan – focused on Mozambique, Angola, Brazil and Colombia – and expand the activities of its national suppliers. (macauhub)