The National Society of Industries (SNI) expressed its concern about a possible “concentration in the distribution of electrical energy in Lima”, after the announcement of the signing of a purchase-sale contract between China Southern Power Grid and the Enel group for the latter’s participation in Peru.
As you warned at first The Republicthe capitals of the Asian giant -which wields various levels of control over its state energy companies- would start to operate 70% of the electricity distribution market in our country, after Luz del Sur was purchased in 2019 by China Three Gorges Corporation .
“In 2020, Luz del Sur was sold to the China Three Gorges Corporation group, a Chinese state-owned company, and now in 2023, the Guangzhou-based China Southern Power Grid company, also a Chinese state-owned company, has signed a contract purchase-sale agreement with Enel, which if approved, would lead to a concentration of 100% of the electricity distribution market in Lima in the hands of the People’s Republic of China,” he said in a statement.
The Italian group Enel has agreed to sell two assets in Peru to China Southern Power Grid International (CSGI) for US$2.9 billion.
SNI recalled that the purchase of Enel Perú assets by Southern Power Grid, according to Peruvian law, is subject to the approval of Indecopi, which must analyze all the edges that imply that “two companies owned by the same foreign state concentrate the operation of such an important service for domestic and industrial consumers”, such as electricity distribution.
For the manufacturing business association, “it is not about the generation of a monopoly in private hands”, but about the “creation of a monopoly” in the ownership of the distribution of electrical energy in the hands of a foreign power.
“The SNI invokes the Peruvian State, beyond technical considerations, to have sufficient vision to understand and, consequently, act in a situation that could expose consumers to paying excessive prices for electrical energy, as a consequence of the absence competition,” the document states.
“The concentration of property in a given market should be a matter of concern for every citizen. Even more so if it is a non-tradable strategic asset, in the most concentrated demographic space in the country and with the highest incidence due to the economic activities that it brings together, as is the electrical distribution in Lima”, added the SNI.
The Chinese Southern Power Grid and Three Gorges Corporation would control the electricity supply in Lima. Meanwhile, Enel’s shares soared the day before the deal was announced.
Enel Perú passes to China’s Southern Power Grid
For the former Vice Minister of Energy, Pedro Gamiothe adoption of this “hegemonic role” by China in Peru, through its investments in the electrical, mining, technological and infrastructure sectors, among others, puts the current rules in local legislation to the test.
“It is something that is happening in the world: China is fighting for the first position of global leadership and tops the list of early investors, and in Peru today it is the first. The State must know how to deal with its capital,” he said for La República. .
Gamio maintains that the possible acquisition of Enel Perú by Southern Power Grid is a sign that “design [de los contratos del sector eléctrico] It is not enough, according to the model of the nineties”.
“Peru should do the same as Germany. Before authorizing Chinese investments in a strategic port, it has achieved conditions to ensure that both nations win and that there is no abuse of a dominant position. The worst that could happen is that Peru does not know negotiate and that the standard of environmental protection and the relationship with suppliers, workers and consumers worsens,” said the specialist.
“It would be lucid to reject Chinese investment. What you have to do is know how to channel it in a transparent way, to ensure that Peruvian standards will be respected and help improve. Instead, we should make more progress in the conditions that regulate the relationship with that country, because there have been problems between some Chinese companies and regional governments,” he added.
However, Gamio Aita believes that China’s Southern Power Grid will pass Indecopi’s legal examination, as it complies with not exceed the permitted percentage of vertical integration under a constitutional model “that does not prohibit monopolies, but rather the abuse of the dominant position”.
“In generation, the price is free. It is a competition and that is where we have to move towards renewable energy. Instead, the transmission and distribution They are regulated, and it is up to Osinergmin to ensure that this regulation ensures more competitive rates for consumers. However, if we do not move towards renewable energy we are not going to improve electricity prices, and that is an issue that favors citizens. We must ask China, then, for a commitment to this type of generation and our principles of sustainable development,” he remarked.
Source: Larepublica
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