By Marco Aquino
LIMA (Reuters) – A Peruvian industry group said on Tuesday that a major Chinese deal to buy two local power suppliers would hand the Asian country a near monopoly over the sector in Peru, particularly in and around populous capital Lima.
Italy’s biggest utility Enel said on Friday it had agreed to sell its equity stakes in the two Peruvian assets for $2.9 billion to China’s state-owned Southern Power Grid International (CSGI).
The deal still needs regulatory approval.
Under the agreement, Enel’s Peruvian subsidiary will sell its entire stake of 83.15% in power distribution and supply company Enel Distribucion Peru and 100% of Enel X Peru, which provides advanced energy services.
The two Peruvian firms generate and supply electricity for just over half the population of Lima, as well as other parts of the Andean nation, according to data from the national statistics institute and Enel.
The deal would add to the 2020 purchase by Chinese state-owned Three Gorges Corporation of Luz del Sur, which supplies power to the other half of Lima, and a 2018 deal for the Chaglla hydroelectric plant, Peru’s third largest power generator.
“If approved, it would lead to a concentration of 100% of Lima’s electricity distribution market in the hands of the People’s Republic of China,” the Peruvian National Society of Industries, a chamber of private companies, said in a statement.
It called on the domestic antitrust agency, INDECOPI, to closely scrutinize the deal.
INDECOPI said in a statement that it had not yet received a merger authorization request from the companies.
Merger evaluations can take between 30-150 days, according to a company source, and follow technical and objective criteria to safeguard the operation of the markets and the well-being of consumers.
Representatives of the firms involved and the Chinese embassy in Lima were not immediately available for comment.
China is one of Peru’s most important trading partners.
The Asian country is the biggest destination for copper shipments from Peru, the world’s second largest producer of the metal, and a major investor in the country’s mining sector.
(This story has been corrected to change the source for the timeline of the merger evaluation in paragraph 8)
(Reporting by Marco Aquino; Writing by Lucinda Elliott; Editing by Rosalba O’Brien)
