EDP Chinese shareholder on US blacklist

China Three Gorges (CTG), the largest shareholder in Portugal’s energy giant EDP with 21.55% capital has been placed on the US Government’s ‘black list’ since 28 August.

This list, which is public and updated on a regular basis by the US Ministry of Defence, includes dozens of companies that are considered ‘Chinese communist military companies’. The US market is currently the most important for EDP because of its subsidiary EDP Renewables.
The compilation of a list of Chinese companies that operate directly or indirectly in the US is nothing new. In fact it had been organised under the ‘National Defence Authorisation Act Fiscal Year 1999’ but more recently, and in reply to calls from a US senator, the Government published a first list in June 2020 which includes Huawei in addition to companies in various sectors such as technology, aerospace construction, energy and nuclear.
On 28 August the list was updated and this time included CTG as a company which has military interests.
The ‘black list’ has been compiled with a particular emphasis on protecting US State public contracts. If a company appears on the list, it can be prevented from selling goods or services to the US Government because it is then considered a ‘supply chain risk’ which means a risk in the logistics chain for reasons of State security, and in areas of technology and energy these companies and contracts are even more tightly scrutinised.
The inclusion of CTG on the list does not mean the expectation of immediate sanctions by the US Government and certainly not on companies like EDP of which CTG has a stake-holding, but does constitute a risk for private partners that have or may have business with the State or companies depending on such contracts in the future.
Officially, there have been no comments, but the EDP’s senior management is unlikely to expect consequences from this decision by the US Ministry of Defence in relation to CTG. EDP has recently closed at least one big transaction since the list was published — an agreement for the sale of 80% of a wind and solar park portfolio in the US for €570 million.