E.ON to buy 10 % of Brazil’s MPX Energia, form JV for power plants in South America

Germany's E.ON yesterday said it would buy a 10-per cent stake in Brazil's MPX Energia, as the world's largest power and gas company looks overseas for growth after Germany's decided last year to exit nuclear power by 2025.

Düsseldorf-based E.ON, a member of the Global Titans 50 index, will pay about 850 million reais ($471 million) for the stake as part of a 1 billion reais capital increase at MPX, a unit of the EBX Group, which is controlled by Brazil's wealthiest man Eike Batista.

E.ON and MPX will form a 50:50 joint venture (JV) for developing 20.000 MW thermal and renewable energy capacity in Brazil and Chile, thereby becoming the largest private energy company in Brazil. The planned generation capacity represents around 20 per cent of Brazil's current exisitng capacity.

The joint venture would enable MPX gain access to E.ON's expertise in building and operating coal-and gas-fired power plants and its know-how on renewable energy such as wind and solar power. The venture would also provide MPX a partner to bear the capital costs, which will also be supported by Brazilian development bank BNDES.

According to analysts, this ambitious JV to build 20.000 MW capacity could cost $34-billion, but Brazil, an emerging economic power, needed the added capacity as it is already the world's sixth-largest electricity consumer.

The JV plans to build the 11 gigawatts of coal and gas-fired power plants for which MPX already holds licenses in Brazil and Chile. This would be at a cost of around $22-billion.