{"id":60075810,"date":"2025-04-07T18:31:39","date_gmt":"2025-04-07T17:31:39","guid":{"rendered":"https:\/\/dialogue.earth\/?p=60075810"},"modified":"2025-04-17T12:44:58","modified_gmt":"2025-04-17T11:44:58","slug":"chinas-role-in-perus-grids-stirs-debates","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/energy\/chinas-role-in-perus-grids-stirs-debates\/","title":{"rendered":"China\u2019s role in Peru\u2019s grids stirs debates"},"content":{"rendered":"\n<p>In the months before China Southern Power Grid International (CSGI) <a href=\"https:\/\/www.enel.com\/es\/medios\/explora\/busqueda-comunicados-de-prensa\/press\/2024\/06\/enel-finalized-agreement-signed-in-april-2023-relating-to-distribution-assets-in-peru-\">finalised<\/a> its purchase of Italian utility giant Enel\u2019s distribution operations in Peru in June 2024, discussions circled around Lima about the growing dominance of Chinese state-owned companies in the local electricity sector.<\/p>\n\n\n\n<p>With its USD 3.1 billion acquisition <a href=\"https:\/\/www.gob.pe\/institucion\/indecopi\/noticias\/902252-el-indecopi-autoriza-con-condiciones-la-operacion-de-adquisicion-de-enel-distribucion-por-parte-de-china-southern-power-grid-international\">cleared<\/a> by Peru\u2019s competition authority after 10 months of deliberation, CSGI, via its subsidiary North Lima Power Grid, took its share of Lima\u2019s distribution market to 54%. The remaining 46% is controlled by China Three Gorges Corporation, another Chinese state-owned power firm.<\/p>\n\n\n\n<p>This was seen as unsettling in certain sectors, igniting concerns over the role of foreign ownership in electricity distribution, its concentration among Chinese state-owned companies, and the threat of unfair competition. The National Society of Industries (SNI), a prominent business association, <a href=\"https:\/\/sni.org.pe\/la-sni-expresa-preocupacion-por-concentracion-en-la-distribucion-de-energia-electrica-en-lima\/\">repeatedly expressed<\/a> concerns, claiming that the move \u201cwould represent a concentration of 100% of the electricity distribution market in Lima in the hands of the People\u2019s Republic of China.\u201d Civil society organisations have also <a href=\"https:\/\/cooperaccion.org.pe\/opinion\/china-y-el-monopolio-de-la-electricidad-en-lima\/\">suggested<\/a> fears that this \u201cmonopoly\u201d, as some observers have described it, could impact future price-setting, and lead to rises in tariffs for consumers.<\/p>\n\n\n\n<p>Dialogue Earth asked leading figures in the sector about these discussions and heard that regulations may temper concerns, though there are areas that still require careful attention.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-monopoly-concerns-in-lima\">Monopoly concerns in Lima<\/h2>\n\n\n\n<p>Peru\u2019s electricity sector <a href=\"https:\/\/www.esan.edu.pe\/conexion-esan\/cual-es-la-situacion-de-la-energia-electrica-en-el-peru#:~:text=Hasta%20el%202021%2C%20el%20Ministerio,activos%20en%20materia%20de%20distribuci%C3%B3n.\">brings together<\/a> more than 80 generating companies, 21 transmission companies and 23 distributors. Of the latter group, which are responsible for building, operating and maintaining medium- and low-voltage networks, the biggest are Pluz Energ\u00eda \u2013 the company renamed by CSGI after its Enel purchase \u2013 and Luz del Sur, owned by China Three Gorges. Together, their assets in Lima and surrounding provinces serve nearly three million customers who represent <a href=\"https:\/\/documents.bvl.com.pe\/empresas\/alertas\/Informe%20de%20valoracion%20PLUZ%20ENERGIA.pdf\">a third<\/a> of the national market.<\/p>\n\n\n\n<p>Foreign participation in Peru\u2019s distribution is not entirely new: Enel had itself <a href=\"https:\/\/www.enel.com\/media\/explore\/search-press-releases\/press\/2014\/10\/sale-of-6062-of-enersis-from-endesa-to-enel-energy-europe-completed\">acquired<\/a> assets in the country in a 2014 purchase of Spanish utility company Endesa, which had been active in Peru since 1994. But on the announcement of Enel\u2019s sale to CSGI, local reaction was focused on the increasing role of state-owned companies from one nation.<\/p>\n\n\n\n<p>Specialists consulted by Dialogue Earth said that business concentration is prohibited in the country, and the rules under which foreign participation has been allowed are well regulated.<\/p>\n\n\n\n<p>Luis Espinoza, an expert in the sector and former vice-minister of energy at the Ministry of Energy and Mines (Minem), explained that although the regulations do not differentiate between national and foreign companies, Indecopi, the public body that regulates competition issues, \u201chas imposed rules of conduct that must be supervised\u201d.<\/p>\n\n\n\n<div class=\"wp-block-cd-pull-quote block--pull-quote\"><div class=\"block--pull-quote__wrapper\"><blockquote class=\"block--pull-quote__quote\">Peru cannot lose its capacity to regulate and oversee the electricity system<\/blockquote><cite class=\"block--pull-quote__cite\">C\u00e9sar Gamboa, executive director, Derecho, Ambiente y Recursos Naturales (DAR)<\/cite><\/div><\/div>\n\n\n\n<p>Indecopi finally <a href=\"https:\/\/rpp.pe\/economia\/economia\/indecopi-autoriza-la-adquisicion-de-enel-distribucion-por-parte-de-china-southern-power-grid-international-bajo-que-condiciones-noticia-1532343\">authorised<\/a> CSGI\u2019s purchase in February 2024, saying it complied with Peruvian anti-trust conditions. It had also <a href=\"https:\/\/chambers.com\/articles\/advisory-to-enel-in-the-sale-of-its-energy-distribution-business-in-peru-for-usd-3-1-billion\">met<\/a> the Chinese government\u2019s outbound direct investment regulations.<\/p>\n\n\n\n<p>Indecopi\u2019s authorisation required that CSGI obtain its energy supply through regulated tenders or transparent and competitive processes, rather than favouring the generation companies already affiliated with its acquisition, Enel Distribuci\u00f3n. In a statement to Dialogue Earth, Indecopi said: \u201cIf the conditions had not been imposed, Enel, in order to supply energy to its regulated users, could have favoured direct contracting of its generation companies linked to prices and conditions that are not the most competitive.\u201d<\/p>\n\n\n\n<p>The possibility of price hikes for customers are one of the most concerning potential issues around the Enel sale, the SNI suggested. The distribution network acquired by CSGI serves 1.6 million customers, across areas in the north of Metropolitan Lima and in the provinces of Callao, Huaura, Huaral, Barranca and Oy\u00f3n.<\/p>\n\n\n\n<div class=\"wp-block-cd-article-image aligncenter block--article-image block--article-image--article\" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><div class=\"block--article-image__column\"><div class=\"hide-expand block--article-image__image\"><img class=\"lazy\" data-src=\"https:\/\/dialogue.earth\/content\/uploads\/2025\/04\/Dina-Boluarte-Perus-president-and-the-president-of-China-Southern-Power-Grid_Presidencia-Peru_Flickr_beab8ede1c.jpg\" data-srcset=\"https:\/\/dialogue.earth\/content\/uploads\/2025\/04\/Dina-Boluarte-Perus-president-and-the-president-of-China-Southern-Power-Grid_Presidencia-Peru_Flickr_beab8ede1c-768x512.jpg 768w, https:\/\/dialogue.earth\/content\/uploads\/2025\/04\/Dina-Boluarte-Perus-president-and-the-president-of-China-Southern-Power-Grid_Presidencia-Peru_Flickr_beab8ede1c-1024x683.jpg 1024w, https:\/\/dialogue.earth\/content\/uploads\/2025\/04\/Dina-Boluarte-Perus-president-and-the-president-of-China-Southern-Power-Grid_Presidencia-Peru_Flickr_beab8ede1c.jpg 2447w\" data-sizes=\"(max-width: 600px) 768px, (max-width: 1024px) 1024px, 2447px\" alt=\"A man and woman shaking hands against a wall\"\/><\/div><div class=\"block--article-image__content\"><div itemprop=\"caption\" class=\"block--article-image__caption\">Peru\u2019s president, Dina Boluarte, visited China last June and met with the president of China Southern Power Grid, Meng Zhenping (Image: <a href=\"https:\/\/www.flickr.com\/photos\/presidenciaperu\/53818106922\/in\/album-72177720318295503\">Presidencia Per\u00fa<\/a>, <a href=\"https:\/\/www.flickr.com\/people\/presidenciaperu\/\">Flickr<\/a>, <a href=\"https:\/\/creativecommons.org\/licenses\/by-nc-sa\/2.0\/\">CC BY-NC-SA<\/a>)<\/div><\/div><\/div><meta itemprop=\"contentUrl\" content=\"https:\/\/dialogue.earth\/content\/uploads\/2025\/04\/Dina-Boluarte-Perus-president-and-the-president-of-China-Southern-Power-Grid_Presidencia-Peru_Flickr_beab8ede1c.jpg\"\/><meta itemprop=\"contentSize\" content=\"438 KB\"\/><meta itemprop=\"height\" content=\"1631\"\/><meta itemprop=\"width\" content=\"2447\"\/><meta itemprop=\"author\"\/><meta itemprop=\"representativeOfPage\" content=\"true\"\/><\/div>\n\n\n\n<p>Espinoza explains that in Peru, smaller customers \u2013 those whose annual demand is less than 200 kilowatts, and who represent a third of the market \u2013 are limited <a href=\"https:\/\/www.lexmundi.com\/CountryGuides\/PDF\/Guide_Peru.pdf\">under national law<\/a> to buying from distributors such as Pluz Energ\u00eda or Luz del Sur rather than directly from generators, \u201cbut in that circumstance there is the regulator\u201d to oversee pricing.<\/p>\n\n\n\n<p>This strong regulation on all distribution companies means price rises may be unlikely in the short term, experts say, but warn that Peru must remain strong on such regulation in future. C\u00e9sar Gamboa, executive director of the organisation Derecho, Ambiente y Recursos Naturales (DAR), told Dialogue Earth: \u201cThe distributing entity has to abide by the existing rules in the country. Peru cannot lose its capacity to regulate and oversee the electricity system.\u201d<\/p>\n\n\n\n<p>For its part, Indecopi <a href=\"https:\/\/www.gob.pe\/institucion\/indecopi\/noticias\/902252-el-indecopi-autoriza-con-condiciones-la-operacion-de-adquisicion-de-enel-distribucion-por-parte-de-china-southern-power-grid-international\">maintains<\/a> that any possible changes in pricing would be evaluated and regulated by the Supervisory Body for Investment in Energy and Mining (Osinergmin), the regulator for electricity companies in the country. Indecopi also points out that it seeks to guarantee competition among electricity generation companies to supply users and prevent tariffs from increasing in the future.<\/p>\n\n\n\n<p>It should also be noted that Pluz Energ\u00eda will not be able to make any changes to its power arrangements that could bring about increases in price until 2030, under the conditions of its agreement. It can then be assessed whether it is appropriate to modify them.<\/p>\n\n\n\n<p>Experts consulted by Dialogue Earth said that regulatory frameworks are not perfect, and that the regulator, Osinergmin, may not operate in the same way over time.<\/p>\n\n\n\n<p>Therefore, they pointed to a need to continue to monitor the situation carefully, ensuring that regulatory approaches to concentration of electricity distribution remain sufficient in future.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-china-in-latin-america-s-grids\">China in Latin America\u2019s grids<\/h2>\n\n\n\n<p>More hawkish critics have made claims that such control from Chinese state-owned companies over \u201cthe light switch\u201d presents a geopolitical risk for Peru. In 2023, authors for the US-based Atlantic Council think-tank <a href=\"https:\/\/www.atlanticcouncil.org\/in-depth-research-reports\/issue-brief\/beijings-influence-on-latin-americas-energy-mix-is-growing-especially-in-renewables\/\">wrote<\/a> that \u201cthe possibility that Beijing would use its monopoly of electricity markets to extract geopolitical concessions\u201d from Peru and other countries in which it has a strong presence in grid infrastructure was \u201cworrisome\u201d \u2013 though, to date, there is no firm evidence of power sector investments being leveraged in such a way.<\/p>\n\n\n\n<p>In Chinese media, by contrast, CSGI\u2019s purchase was <a href=\"https:\/\/en.ndrc.gov.cn\/netcoo\/goingout\/202304\/t20230421_1355464.html\">presented<\/a> as a good commercial opportunity, pointing more broadly to South American power infrastructure as a growth market \u2013 particularly in Peru and neighbouring Chile, where China\u2019s State Grid owns the largest electricity company, Compa\u00f1\u00eda General de Electricidad (CGE). <a href=\"https:\/\/dialogue.earth\/en\/energy\/39680-state-grid-grows-presence-in-chile-with-cge-purchase\/\">Similar debates<\/a> over the Chinese state\u2019s capacity to influence companies\u2019 overseas operations surfaced around that 2021 deal: experts told Dialogue Earth at the time that Chinese state enterprises do not take orders from the central government, but that discussions on limits to foreign investment in strategic sectors were warranted.<\/p>\n\n\n\n<a class=\"wp-block-cd-related-news alignright block--related-news loading\" data-post-id=\"50392147\"><div class=\"block--related-news__image\"><\/div><div class=\"block--related-news__content\"><span class=\"block--related-news__heading\">Recommended<\/span><span class=\"block--related-news__title\"><\/span><\/div><\/a>\n\n\n\n<p>State Grid also has a sizable <a href=\"https:\/\/dialogue.earth\/en\/energy\/392147-what-state-grid-new-power-line-means-for-brazil-energy-transition\/\">presence in the Brazilian electricity sector<\/a>, acquiring around 20 concessions in the country since arriving in 2010, including a successful bid in the largest power transmission auction in the country\u2019s history in 2024, which will see it invest USD 3.6 billion to build over 1,500 kilometres of power lines.<\/p>\n\n\n\n<p>Just as in Chile, experts consulted in Peru said that the increase of foreign investments in the electricity sector brings to the table pending challenges regarding governance rules, such as public participation and transparency. This also comes in a context of both domestic and broader geopolitical tensions, as well as changes to the country\u2019s energy system, which they say must continue to be well regulated by governments.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>With distribution in capital city Lima controlled by just two Chinese companies, questions over foreign investment, fair competition and future electricity prices have arisen<\/p>\n","protected":false},"author":40000214,"featured_media":60075823,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[50039923,757],"tags":[510,17073,50042156],"hashtags":[],"country":[20000110,50002601,50003557],"class_list":["post-60075810","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energia","category-energy","tag-china-in-the-world","tag-energy-transition","tag-overseas-investment","country-china","country-peru","country-peru-es"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v26.0) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>China\u2019s role in Peru\u2019s grids stirs debates | Dialogue Earth<\/title>\n<meta name=\"description\" content=\"With distribution in capital city Lima controlled by just two Chinese companies, questions over foreign 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