A consortium including State Grid Corp of China, the mainland's largest power distributor, successfully bid US$3.95 billion for a 25-year concession to operate the Philippines' power grid yesterday.
The group, led by the Philippines' Monte Oro Grid Resources, beat the US$3.905 billion offer of the rival bidder, a consortium headed by food and beverage giant San Miguel Corp.
Mainland power companies are joining counterparts in the oil and resources industries in beefing up overseas assets. China Southern Power Grid last year agreed to spend US$900 million on a coal-fired power plant in Vietnam.
However, the risks of investing in the Philippines have raised speculation the grid deal is politically rather than commercially driven. Manila in October cancelled a US$330 million broadband contract with Shenzhen's ZTE Corp amid a bribery scandal.
The contract, which includes the right to operate 21,319km of transmission lines, will only be awarded after the bidder gets from Congress a franchise to operate the grid. This may take a year.
Opponents of President Gloria Macapagal-Arroyo are likely to give the deal a rough ride through the legislature amid allegations the consortium has close links to her, analysts said. The deal would be the biggest privatisation in the nation's history.
Zhang Long, an analyst at Essence Securities, said State Grid's investment in the grid, the National Transmission Corp (Transco), was more a government-backed move.