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State Grid makes connection in Brazil

Updated: 2012-05-30 10:54
By Du Juan (China Daily)
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Power company to buy transmission assets as part of overseas strategy

State Grid Corp of China, the country's largest power distributor and one of the world's largest utility companies, is going to buy electricity transmission assets in Brazil for $531 million and assume debt of $411 million, a senior official of the company said on Tuesday.

It is the latest step in the company's internationalization strategy, which will help State Grid become more international, said the senior official of the company, who spoke anonymously.

State Grid makes connection in Brazil

State Grid Corp pamphlets are displayed at the company's branch office in Nantong, Jiangsu province. The electricity distributor has recently been acquiring overseas assets. Earlier this year, State Grid paid 387 million euros ($485 million) for a 25 percent stake in the national electricity grid of Portugal.?[Photo / China Daily] 

The company will take over seven high-voltage electricity transmission assets from Spain's Actividades de Construccin y Servicios SA through acquisitions by wholly owned subsidiary State Grid International Development Ltd.

The transmission assets have a total length of about 2,800 kilometers, spanning eight states in Brazil.

Most are currently operating, with the rest due to start commercial operations by the end of this year, according to a statement by Bank of America Merrill Lynch, which is the exclusive financial adviser to State Grid on the deal.

This deal is State Grid's second in Brazil. In 2010, it invested $989 million in Brazilian power transmission lines, the company's first move into the market.

That deal brought State Grid a 30-year license to operate more than 3,000 km of electricity transmission lines in Brazil's largest cities.

Sources within State Grid said that returns on overseas projects were double or triple those available domestically, because of better power pricing policies in other countries.

In January 2009, State Grid led a consortium to pay $3.95 billion for a 25-year license to run parts of the Philippines' power transmission network, which was China's largest investment project in the Philippines.

It was also the first time that a grid company from China won a franchise to operate a national power grid in a foreign country.

Earlier this year, State Grid paid 387 million euros ($485 million) for a 25 percent stake in the national electricity grid of Portugal.

Analyst said the latest deal was just an early stage of the company's overseas expansion because Brazil, like China, is growing fast economically and has huge demand for energy.

dujuan@chinadaily.com.cn

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