Indecopi has this week to resolve the sale of Enel to the Chinese state company CSGI

After completing the transfer of its electricity generation business in Peru to the British investment fund Actis, the Italian capital company Enel is now preparing to sell its electricity distribution business to the Chinese state-owned Southern Power Grid (CSGI), an operation agreed for US$2.9 billion at the beginning of the year and which awaits the approval of Indecopi until this month.

Specifically, Enel Perú will sell the assets of Enel Distribución and Enel X to the company controlled by Xi Jinping’s Government. La República was able to talk with some executives of the company who They guaranteed that the sale was going welland that “internally they were preparing for the transfer” through multiple meetings with the buyers.

“The merger will happen. We have until the end of the year or the beginning of the first quarter of 2024 [para recibir respuesta], and if it comes back negative, we still have an appeal that we can make. But, as it goes, it goes,” said the source.

Another source from Enel business —distribution and generation—, but that now prevents them from selling “the whole package together.”

“As the corporation is for sale, They are not selling as a whole package, because in quotes it is prohibited due to monopolies. What it does is divide the company into generation and distribution. That’s the play. Better to split it so that it is more profitable than selling the entire package,” he said.

The controversy arises because Enel serves 54% of Lima; the other 46% is covered by Luz del Sur, acquired by the state-owned China Three Gorges Corporation (CTG).

Rafael Laca, Enerkory specialist, explains that the Law 31112 It prevents a single company or group from taking over the entire market, in order to avoid monopolies. However, there is a gap when the matrix is ​​the same State. All in all, Laca says he hopes the sale goes through.

The word of Indecopi

Mario Gonzales, general manager of Luz del Sur, said in a press conference organized in December that he did not find “any risk” of takeover, since both firms manage independent distribution rates set by Osinergmin, “something that will not change with the sale.”

“What could happen and is being analyzed is what happens if potential buyers carry out other activities that could influence the service. But we have different prices and rates; The Luz del Sur consumer consumes more energy on average than the Enel Distribución consumer. I don’t see any kind of relationship, although some people probably might not like it,” he said.

Gonzales refers to the first observation that, in July, the Commission for the Defense of Free Competition for the sale of Enel’s assets. An electric company cannot participate in distribution and generation at the same time, since it could buy the energy from itself and distort prices.

A risk of contracting supply with the three CTG generators in Peru (Huallaga-Chaglla, Inland Energy and Hydro Global) was detected, “excluding competing companies.” But Time is running out for Phase II analysis and 100% of the electricity distribution in Lima would remain in the hands of China.

It is worth mentioning that Enel and Indecopi were consulted by this means, but did not want to participate in the report.

China tempts 100% of electrical distribution in Lima

Through Resolution 072-2023/CLC-Indecopithe entity determined that CSGI is part of the same economic group as other companies, including Luz del Sur, Tecsur SA, Empresa de Generación Huallaga SA, Inland Energy SAC, Hydro Global Perú SAC and Grupo de Contratistas Internacionales SAC.

During the first evaluation phase, potential restrictive effects on horizontal competition were identified in the market of regulated users who decided to change their status to free user in Lima. In this market, the operation would allow China to align the trade policies of its companies and exert “competitive pressure” that would reduce the alternatives.

According to Indecopi, the sale of Enel assets could also generate incentives for China to privilege the companies Tecsur and Grupo de Contratistas as suppliers of electrical network maintenance services.