Chinese Control Over Peru's Electricity Sector Raises Concerns

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--The Financial Times published a story highlighting the United States' concerns about Chinese electricity investments in Peru. Based on the story, Chinese companies would control Lima's power supply, though control of electricity generation across the country remains spread out.

In April, the Peruvian National Society of Industries (SNI) warned that electricity transmission in Lima could be 100% controlled by China if a US$2.9 billion acquisition of Enel's (Rome, Italy) Peruvian power assets by China Southern Power Grid International (CSGI) was approved.

Grupo Enel in Peru includes Enel distribution, Enel Generacion Peru, Enel Generacion Piura and Enel Green Power. The company has about 1.5 million customers in northern Lima.

On the power generation side, Enel Generacion Peru has seven hydroelectric plants and two thermal plants with a generation capacity of 1,682 megawatts (MW). Enel Generation Piura has three thermoelectric plants that can generate about 326.12 MW. Finally, Enel Green Power is investing $400 million to develop 332 MW of renewable energy.

If the transaction is approved, Chinese companies would control the capital's electricity. In 2020, China Three Gorges Corporation acquired Luz del Sur, Lima's other main electricity transmission supplier.

The sale has raised concerns in the U.S., according to the Financial Times, due to China's growing power Peru, which is rich in minerals, especially copper.

Enel's deal will have to be approved by INDECOPI, the Peruvian organization that oversees competition and private property. Peru's SNI has asked the government to consider the situation in Lima beyond just the technical issues.

In April, INDECOPI said the situation with Enel "is not about the generation of a 'monopoly' in private hands, but rather the 'creation of a monopoly' in the ownership of the distribution of electrical energy in the hands of a foreign power."

On the power generation side in Peru, ownership is more scattered. According to the Committee of Economic Operations of the National Grid (COES), more than 60 companies generated electricity in Peru in 2022.

The largest electricity producers were Kallpa with 18.37% of the share, followed by ENGIE with 12.66%, Enel Generación Peru with 12.65% and Electroperu with 12.04%.

The acquisition of Peru's Grupo Enel would give China significant control over the power generation sector, though the key concern remains Lima's power distribution.

Industrial Info is tracking 47 Enel projects in Peru, worth more than US$4 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a list of detailed project reports.

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