China's CYPC closes the acquisitions of Sempra's Peruvian businesses
Sempra Energy has completed the sale of its equity interests in its Peruvian businesses to China Yangtze Power Co. (CYPC), a subsidiary of China Three Gorges Power Corporation (CTGPC) for US$3.6bn in cash. The two parties signed an agreement in October 2019, on the sale of Sempra's 83.6% stake in the power distribution company Luz del Sur, Tecsur (electric construction and infrastructure services) and Inland Energy (Luz del Sur's generation business). The transaction was cleared by Peruvian authorities in April 2020.
Luz del Sur (LDS) is the largest listed power company in Peru. As a distribution company, LDS distributes around 9.1 TWh/year of electricity (around 29% of the domestic market) to around 1.13 million customers in the Lima region. LDS also owns 100 MW of hydropower capacity (Santa Teresa hydropower plant) and plans to add 704 MW of hydropower projects (including 268 MW at the Santa Teresa plant). CTGPC is already active in Peru through Empresa de Generación Huallaga, which operates the 460 MW Chaglla hydropower plant (commissioned in 2016). The group expects the acquisition to create synergies with its operations.
In November 2016, China and Peru entered into the Memorandum of the Mechanism for Development and Collaboration of the Energy Sector and CTGPC signed a Memorandum of Understanding for Enhancing Cooperation in the Energy Sector with the Ministry of Energy and Mines of Peru.
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