EDP’s Chinese shareholder joins the US blacklist

  • ECO News
  • 21 September 2020

The China Three Gorges (CTG) has over 20% of EDP and has been on the US government's blacklist since August 28.

China Three Gorges (CTG) is EDP’s largest shareholder with a 21.55% stake and has been on the US government’s so-called “blacklist” since 28 August. This list, published and regularly updated by the US Ministry of Defence, includes dozens of companies that are considered “Chinese communist military companies”. The American market, it should be noted, is the most important for EDP, through EDP Renováveis.

The drafting of lists of Chinese companies operating directly or indirectly in the US is not new to the National Defense Authorization Act for Fiscal Year 1999, but only recently, and in response to an American senator, the government released the first list in June, highlighting Huawei, as well as companies from various sectors such as technology, construction, aerospace, energy, and nuclear. On August 28, the list was updated, this time including CTG as a company with military interests.

What is this “blacklist” for? It is specially developed to be taken into account in US public procurement. If a company is on the list, it may be prevented from selling goods or services to the US government because it is now considered a “supply chain risk”, i.e. a risk in the logistics chain for reasons of state security, and the areas of technology and energy are among the most scrutinised.

The inclusion of CTG in this list does not mean that there are immediate sanctions by the US government, even less for affiliated companies, such as EDP, but it is immediately a risk stamp for private partners that have or will have business with the state or depend on it.

Officially, no one comments, but the company’s management does not expect consequences from this decision by the US Department of Defence in relation to the CTG. EDP Renováveis has already closed at least one major transaction after publishing this list, an agreement to sell 80% of a portfolio of wind and solar parks in the US for 570 million euros.

In any case, it should be remembered that the US market is the most important for EDP Renováveis, the company which is more than 80% controlled by EDP itself.