Doing it Right

"We are also studying four new natural gas-powered electrical power plants. That doesn´t mean that we´ll build them all"

New business at home and new opportunities abroad are fueling the expansion of EDP (Electricidade de Portugal), long the country´s largest electrical power provider and now becoming a major player in the energy sector in the rest of Europe where liberalization is the order of the day.

"Our strategy is based on four fundmental goals and the first of these is to further develop the electrical sector in Portugal and the Iberian peninsula which means Spain," explains EDP chairman of the board Francisco Sanchez. "Our core business is electrical power and we are pursuing these four goals through that core."

In 1999, the last year for which figures are available, EDP enjoyed a net income of 514 million euros, an increase of 62 million euros over the previous year. EDP´s shares are listed on the Lisbon Stock Exchange and on the New York Stock Exchange through American Depositary Receipts.

One of the company´s goals is to link up with local water and gas providers to enter those sectors and another is to expand abroad, both in Europe and further afield.

Early this year, EDP got the green light from the European Union Commission for its offer to buy the remaining shares in Spain´s Hidroelˇctrica del Cant‡brico, along with a Spanish bank and a pension fund, helping the company reach another of its goals.

This is the kind of cross border expansion the Lisbon government is urging companies to undertake so as to project Portuguese business within Europe as the small domestic market hinders local expansion.

"We understood that the European energy sector is going to grow in certain regional markets and one of those is the Iberian Peninsula, so it is logical for an operator like EDP in Portugal to want to move into Spain," the chairman argues.

"Overseas, our principal objective is Brazil because of cultural and linguistic reasons and also because that country is developing quickly and we want to be involved in that," the chairman says. "We began operating there in 1996 in Rio de Janeiro and two years later, in partnership with a Brazilian group, bought Bandeirante Energia of Sao Paulo."

"There have been other purchases and now we have almost five million customers in Brazil, the same number that we have in Portugal. We also have an important stake of 30 percent in an enterprise called Investgrup which is carrying out a hydroelectric project which will go into service late this year," he adds.

Mr. Sanchez says that EDP´s strategy in Brazil is to consolidate its activities in its electricity distribution companies and boost its energy generation.

"We are also studying four new natural gas-powered electrical power plants. That doesn´t mean that we´ll build all of them and we will be looking for partners to join us in those projects."

"These days companies have to look beyond not only their geographic borders, but also search out other sectors where they can be successful," explains Mr. Sanchez. "That is what EDP is doing and we think we´re doing it right."

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