Portugal sells stake in electricity company to China
The cash-strapped Portuguese government has made another sale of a key state asset to a mainland state company in the energy sector, to help finance its budget deficit and finance future expansion of its biggest energy distribution firm.
The strategic alliance stemming from the sale will give China easier access to some former Portuguese colonies in Africa, which are rich in natural resources highly-demanded by the mainland's fast-growing economy.
Lisbon has agreed to sell a 25 per cent stake in Redes Energeticas Nacionais to State Grid Corporation of China, the southern European government said in a statement.
A Redes spokesman said the selling price was Euro387.15 million (HK$3.9 billion). Another 15 per cent will be sold to state oil firm Oman Oil for Euro205.06 million.
State Grid has agreed to line up Euro1 billion of loan facilities from a mainland financial institution to finance Redes' capital expenditure and debt refinancing needs. Part of the funding will enhance Redes' role in inter-connecting Iberia with the rest of Europe and with North Africa.
The loan will also finance Redes' expansion in Portuguese-speaking Angola and Mozambique, through joint ventures.
Redes and State Grid will also cooperate on promoting Redes' role as a service provider and investor in Brazil and China's energy industry.
The Redes stake sale is part of various assets sales under Portugal's austerity program. Portugal obtained Euro78 billion of bailout money from the European Union and the International Monetary Fund, and has committed to cut its budget deficit from 9.8 per cent of gross domestic production 2010 to 3 per cent next year.
China Three Gorges, the developer of the world's largest hydropower project, won an auction in December to buy 21 per cent of EDP-Energias de Portugal for Euro2.69 billion. EDP is a major power producer in Brazil.
State-owned China Petrochemical last November agreed to buy a 30 per cent stake in the Brazil unit of Portugal's largest energy firm Galp Energia for US$4.8 billion.