China’s Three Gorges' offer to buy a controlling share of Portugal’s energy supplier, EDP, has hit the buffers with regulatory concerns and a lack of ready cash hampering the bidding process.
Regulatory problems have pushed the offer back to early next year, despite a final offer was due in late 2018.
The not inconsiderable matter of finding €9 billion also has caused concern for the Chinese State-owned company whose new chairman, Lei Mingshan, is charged with assessing whether to press ahead, or abandon the bid to raise Three Gorges’ stake from 23% to a controlling interest.
The wider political considerations are not working in Three Gorges’ favour with energy security a hot topic against a backdrop of a trade war.
In Europe, China is being scrutinised as, rather late in the day, governments have spotted that the Chinese plan is to control European infrastructure companies. Three Gorges already owns a significant share of Portugal’s energy network REN which supplies electricity and pipes gas to households and businesses.
EDP is struggling, despite its vast cash flow, with its combative CEO, António Mexia, presiding over a falling share price due the curtailment of the 'free money' deal. Taxpayers, under a deal agreed when the company was privatised, have been paying the company hundreds of millions of euros for keeping power plants on standby in case of emergency.
Mexia has warned that EDP’s Portuguese operation may make a loss on its domestic business this year, the first time since the company’s privatisation. Under Mexia's leadership the share price is trading lower than the Chinese offer price.
In June this year, France's 'Engie' was considering making an offer for EDP and was known to have had talks with EDP’s management.
