Chinese firm State Grid announced it had bought seven Brazilian power distributors for a $1 billion, the latest in a string of Chinese takeovers of South American energy assets betting on rapid growth. State Grid has also won a 30-year license to operate power lines and other infrastructure in Brazil's heavily populated southeast, the Chinese Assets Supervision and Administration Commission said.

The government-owned State Grid will also provide power services to Brasilia, Rio de Janeiro and Sao Paulo, it said in a statement. Brazil has a stable political environment, great development potential and a huge market, with demand for electricity surging rapidly, the firm said.

Brazil's ANEEL electricity regulator confirmed the deal to AFP and said the purchase of the power distributors was approved in September. A spokesman for ANEEL said the distributors had been bought from the Plena Group, which is controlled by Spanish capital. The takeover is expected to open up access for Chinese companies to more Brazilian power projects and expand exports to the booming South American market, the Chinese statement said.

It is also expected to earn State Grid more than 110 million dollars in annual profits. Chinese firms have ramped up investment in South America in an effort to tap the region's rapid economic growth. Sinopec, Asia's top refiner, said earlier this month that it would buy the Argentine arm of US Occidental Petroleum Corporation for 2.45 billion dollars.

The announcement came less than two weeks after China National Offshore Oil Company and Bridas Energy Holdings agreed to buy a 60-percent stake in Argentina-based Pan American Energy from BP for 7.06 billion dollars.

Just recently, the Chinese firm established the State Grid Brazil Holding S.A. According to the firm, the move shows the company’s confidence in Brazilian market. In the future, State Grid would take it as a platform to cooperate with local companies in various forms, actively participate in investing in the power industry in Brazil and promote the development of the industry of the two countries, said the firm.

Brazil and China are BRIC countries. As the demand for electricity grows with rapid economic development, both countries may face uneven distribution of energy resources and demand. Therefore, there is a great potential for cooperation in the power sector. During Chinese President Hu Jintao’s visit to Brazil in April 2010, he signed the 2010-2014 Joint Action Plan with President Lula, in which energy cooperation was an important part.

22 Dec 2010.