How does the electricity market in Peru work and what does Enel’s sale to a Chinese company mean?

How does the electricity market in Peru work? Until 2021, the Ministry of Energy and Mines indicated that there are more than 80 generation companies, 21 transmission companies and 23 distribution companies. Luis Espinoza, a professor with a master’s degree in energy management at Esan, explains which are the most important.

“Both Enel and Luz del Sur have the largest distribution assets.. Lima has approximately 2.7 million customers, Lima accounts for 55% of distribution assets, of which Enel 23% and Luz del Sur 32% (…) In terms of the sale, Enel owns 27% of the total regulated market and Luz del Sur has 30%,” he said.

Recently In that, A company providing electricity services in the northern part of Lima, which includes areas such as Comas and San Martin de Porres, has agreed to sell its activities Southern Power Grid International, a Chinese state-owned company.

Although, on the one hand, the National Society of Industrialists (SNI) warns that this may expose consumers to increased about electricity prices, on the other hand, Marco Fragale, regional manager of Enel Perú, said in an exclusive interview for RPP news What This will not happen, since the person who determines the norms is Osinergmin.

The distribution market is tightly regulated Peruvian state through the regulatory body, which is Osinergmin.. So what’s up? Distribution companies can’t set tariffs, they never did, Osigermin, the regulatory body of the Peruvian state, does this. who has the duty and responsibility. In this sense, the claim that electricity tariffs will increase due to the sale operation is unrealistic for either a regulated client or a free client,” Fragale commented.

Fragale also said that Osinerming has a formula to determine the cost of fees for this service.

In this sense, former Vice Minister of Energy Pedro Gamio notes that the government should not stop these investments, but should ensure proper regulation.

“Selling in and of itself is not a negative, what needs to be ensured is that it brings in more investment, that best practices are secured and since this is the leading state in the world, this is an opportunity so that the best practices are not frozen and the best social and environmental practices are not lost, as well as the most competitive prices,” he said.

RPP news tried to contact Osinergmin and found out that at the moment this regulator will not make a decision on this issue.

The truth is that the closing of a deal to sell Enel to a Chinese company must be authorized by Indecopi under a law that establishes ex-ante control of business concentration operations and the time for this can reach up to 6 months, how did it happen in case southern light which was bought by another Chinese company.

For now, Indecopi has indicated that it has not yet received a request to evaluate the purchase of Enel Peru. a Chinese company.