Solar energy and water and sanitation are the new business areas for Chinese companies in Portugal, where the country already has a presence in power generation and distribution. Last week the Hanergy Solar Group said in a Hong Kong market filing that it had agreed to buy solar energy parks in Portugal, without naming the seller.
The parks that have been bought have a total capacity of 2.2 megawatts.
On 2 March, the Portuguese secretary of state for Energy, Artur Trindade, told weekly newspaper Expresso that Portugal was attracting investments of “several hundreds of millions of dollars,” in photovoltaic parks, mainly in the Alentejo region.
Also in March, French company Veolia announced the sale of its water business in Portugal, Veolia Water Portugal, for 95 million euros, to China’s Beijing Enterprises Water Group, the leader in water treatment systems in China.
Beijing Enterprises Water Group will be responsible for supplying water in four areas (Mafra, Ourém, Paredes and Valongo) and for waste water treatment in three areas of the Algarve, Portugal’s southernmost region.
This deal was the biggest in the Iberian water sector since 2009, the biggest in Portugal since 2008 and the first involving a Chinese investor in the Iberian water sector.
Recently, the Morning Whistle website reported that the board of China Mobile had started the process of analysing the macroeconomic and economic climate of five countries with a view to investing in them, including Portugal.
In an analysis issued following the news, analysts from Portuguese bank BPI said that, if the investment went ahead, “Portugal Telecom would be the most likely candidate given its international presence both in Brazil and in Africa.”
Despite a lack of “visibility about China Mobile’s availability to invest overseas,” analysts Pedro Oliveira and João Urbano expect the news to have an impact on investors’ interest in trading Portugal Telecom shares.
China Mobile is the world’s largest mobile phone operator by number of customers and Portugal Telecom, which has a market capitalisation of US$5 billion, is within the company’s grasp.
“Portugal is going through a big recession and record unemployment, it may not make financial sense to enter the market at this stage but comparatively low valuations may lead China Mobile to put its foot in the door of a developed market,” the analysts said.
The latest privatisation operations in Portugal, which have become necessary because of the country’s economic and financial crisis, have led to Chinese companies entering the market.
China Three Gorges paid around US$2.7 billion for 21.35 percent of EDP, thus becoming the Portuguese power company’s largest shareholder. Another large Chinese state company, China State Grid Corp, acquired 25 percent of Portuguese power grid company Redes Energéticas Nacionais (REN) for 287.15 million euros.
The Development Bank of China recently provided a loan to EDP worth 1 billion euros and will provide a further billion euros at the beginning of 2014, as agreed when the company was privatised.
Portugal’s new ambassador to China, Jorge Ryder Torres Pereira, took on his new role last week and his predecessor, José Tadeu Soares noted the positive situation in two-way relations, with no outstanding issues, and expansion of trade relations.
Chinese investment in Portugal is an “advantage to both sides,” said the diplomat, who was in Beijing for three years, during which Portuguese reports to China more than doubled, exceeding a record of 1.1 billion euros in 2012.
