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China Three Gorges and Energias de Portugal (EDP) begin joint investments in Africa

Joint investment projects in Africa are beginning to take shape nearly two years after China Three Gorges became the main shareholder in EDP – Energias de Portugal, indicate officials from the two companies.

Joint investment in Africa should amount to US$2 billion in the next six years up to 2020, EDP executive director João Marques da Cruz said recently in Hong Kong.

“This is a partnership between China, Europe and Africa, and the latter continent is the main destination of our common investment,” Marques da Cruz said during a business conference in Hong Kong, cited by the local press.

The investment will be shared equally by the companies and mainly involve dams that Three Gorges will help build, he added.

Mozambique is often cited as being an African country with unexploited hydroelectric potential, especially in the Zambezi valley. Its use could make the country a key exporter of electric power to neighbouring countries.

Angola, where major river basins such as the Cuanza or Cunene are also largely unexploited, has likewise made upping power generation capacity a priority.

EDP is already present in Africa and Latin America and may eventually take part in projects in the Asian market, where China Three Gorges is also interested in expanding.

Adam Cheng, a lawyer from the US firm Skadden, Arps, Slate, Meagher & Flom, which represented Three Gorges in the privatisation of EDP, told the South China Morning Post that the deal was grounded in international expansion.

“Although Three Gorges is justly famous for the Three Gorges Dam, it is a local enterprise and wants to join up with a partner that has international experience,” Cheng said.

João Soares da Silva, a managing partner from the law firm Morais Leitão, Galvão Teles, Soares da Silva & Associados, which represented EDP in what was Portugal’s biggest ever privatisation process, said the deal envisaged the entry into Portugal of major Chinese banks, the Industrial and Commercial Bank of China and the Bank of China.

Besides paying 2.69 billion euros for 21.35 percent of EDP, Three Gorges committed itself to investing 2 billion euros in EDP’s renewable energy projects by 2015.

A Three Gorges subsidiary, CWEI (Hong Kong) now holds a 49 percent stake in EDP Renováveis, which is present in 11 countries and is considered the world’s third largest renewable energies company.

The chairman of EDP Renováveis, João Manso Neto, recently told the Lisbon newspaper Diário Económico that EDP maintains its goal to divest a billion euros in assets to China Three Gorges this year. The other minority interests that will be ceded to EDP’s reference shareholder have already been identified, he said.

The chairwoman of EDP Brasil, Ana Maria Fernandes, had indicated that the Chinese group was studying the Brazilian market, especially hydroelectric production, and that African markets were also being examined.

Early this year the state holding company Participações Públicas (Parpública) sold to institutional investors the 4.144 percent stake that the Portuguese state still held in EDP.

China Three Gorges had submitted a proposal for this last share bloc, which was rejected by Parpública’s administration, allegedly due to the price offered. (macauhub)

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