China Three Gorges, State Grid vying with Canadian rival for stake in Santo Antonio plant

Two Chinese companies are bidding for a major stake in Brazil's fourth largest energy generator Santo Antonio Energia SA, amongst other suitors such as a Canadian asset management company, according to sources quoted by Bloomberg.

The two companies, China Three Gorges Corp and State Grid Corp of China, are competing with Canada's Brookfield Asset Management Inc for 28.6 percent of shares in the Brazilian company, the report said.

The Santo Antonio hydropower plant has 3,150 megawatts of generating capacity, which is sufficient for 40 million people, according to its website.

The Santo Antonio Hydroelectric Plant is being constructed on the river Madeira in Brazil. When fully operational, the Santo Antonio plant will be the third largest power plant in Brazil in terms of electricity generation and the sixth-largest hydroelectric plant in terms of installed capacity.

Whether the Chinese companies are able to win the first-round tender remains unknown until the end of this week, but the move signals that more mergers and acquisitions are likely in the pipeline in the biggest economy in South America as the two countries are seeking deeper cooperation, especially in the new energy sector.

Hydropower is currently the largest source of power in Brazil, accounting for over 80 percent in the total energy mix, but the country also has very rich wind power resource, Lin Chuxue, the executive vice president of CTG, told media earlier in Beijing.

Both local and international investors are looking into opportunities in Brazil's northeast and southern regions for wind power development, he said.

"We will consider other possibilities of wind and solar power projects if the right time comes," he said.

Liu Zhenya, former chairman of the Beijing-based State Grid, said that South America has become a major target for the company's foreign takeovers because the foreign assets generally have higher returns with double-digit growth every year.

Liu Ximei, an assistant professor at North China Electric Power University, said that Brazil has the largest electricity market in South America with an open competition environment for investors.

"Currently, the US is a major foreign investor in the Latin American country, but China has competitive edges in terms of financing capability and project management," he said. "Chinese companies should work together in Brazil and form a united alliance, especially in the aspects of electricity development, infrastructure construction and heavy equipment manufacturing."

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