April 11, 2021

Controversy in Portugal over the sale of six EDP hydroelectric plants for 2,200 million euros


Correspondent in Lisbon

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The business has closed, but the controversy has only just begun. The emblematic EDP (Energías de Portugal) has sold six hydraulic power plantssa a French consortium headed by Engie and Credit Agricole for 2,200 million euros. A round operation from the business point of view, but that brings political-economic consequences for the neighboring country.

The Bloco de Esquerda is going to question the (socialist) ministers of Environment and Finance in the Assembly of the Republic to ask them: Was there an EDP plan to evade taxes? Have all the control mechanisms been activated? To what extent was the government aware of the transaction and did nothing to tighten the conditions?

The answers are not simple and can compromise the Executive of Antonio Costa, who could have allowed to forgive 110 million of euros upon signature as stamp duty.

So much so that the Minister of the Environment and Energy Transition, Joao Pedro Matos Fernandes, recently declared in Parliament: “Despite being the minister’s obligation to know this process from end to end, I didn’t even know about the contracts». Words that raised blisters whether they were strictly true or not.

Beyond the division of opinions, the prime minister is in the spotlight for signs that he “unprotected the public interest in favor of EDP.”

Deputies from various parties demand absolute transparency and even that the contracts signed between the Portuguese energy company and the French conglomerate come to light.

The six hydroelectric plants are successively distributed along the Douro river basin, that is, from the exit of Porto to the border with Zamora. All are located in the Portuguese region of Trás-os-Montes, where a group made up of mayors of the area expressed concern about the consequences that the business may carry in the medium term.

In addition to Engie and Crédit Agricole, Mirova-Grupo Natixis is listed as the third vertex in the buying party. Complaints are directed at them This set of circumstances has motivated the intervention of the recently emerged Cultural Movement of the Land of Miranda, which defends local interests and requests the mediation of the President of the Republic, Marcelo Rebelo de Sousa. that “use its influence and guarantee a transparent business and that does not harm the Portuguese.”

EDP ​​is the leading energy company in Portugal and has expanded into Spain to reach fourth place in this segment. In recent years it has focused on promoting sustainable production.

Along these lines, the company has announced an investment of 24 million euros between now and 2025, with the aim of completely forgetting about coal that year. Likewise, it plans to obtain 47% of the energy from the solar source.

Nothing strange, therefore, that its subsidiary called EDP Renovables has become the ‘jewel in the crown’ and a claim for American and Japanese multinationals, as if it were a reissue of ‘La presa’, the masterpiece of the writer Kenzaburo Oé.

Following these guidelines, the Portuguese business icon took over from Repsol in an offshore wind macroproject being built in Scotland, with a global investment of more than 2.2 billion euros. Its partner is the giant China Three Gorges (CTG), which leads the largest volume of this type of business in the Asian power.

Repsol owned 33.3% of the shares of Moray Offshore Renewable (MOR), but divested the entire package. For this reason, EDP saw the opportunity to broaden its horizons through works that involve setting up an offshore power plant with a capacity of 1,116 megawatts.

The redistribution of the ‘cake’ places the Chinese in first place, owners of 70% of MOR, while the Portuguese take charge of the remaining 30%, in accordance with the conditions reflected in the contract.

It was EDP’s first large-scale operation, after the previously public group was privatized. The strategies are chaining together and, precisely, CTG did not hesitate to take positions as its main shareholder thanks to the fact that it holds 21.35% of the capital.

The all-powerful Chinese conglomerate currently has two similar offshores in operation in its country (Fujian and Hebei), which require a large economic amount. over 2,000 million of euros.

22 kilometers off the coast of the Moray Firth, the complex Scottish project should be close to completion, which has been delayed by the current exceptional context of the international coronavirus pandemic. In total, it will involve an annual electricity production of between 4 and 5 megawatts per hour and almost a million inhabitants will benefit from this ambitious work, a true engineering marvel.

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