“The cabinet has chosen China Three Gorges to acquire 21.35 percent of the capital of EDP… for 2.7 billion euros,” Treasury Secretary Maria Albuquerque said after a government meeting.

China Three Gorges, which operates the world’s biggest hydro-electric dam of the same name, beat Germany’s EON and Brazilian firms Eletrobras and Cemig to become the single biggest shareholder in power generator EDP after Spain’s Iberdrola which holds 6.79 percent.

The Portuguese government has been progressively reducing its stake in EDP since 1997 to leave it with 25 percent which it has promised to sell off in an effort to bolster the state coffers.

The privatisation programme comes in return for an EU and International Monetary Fund debt bailout for Portugal worth 78 billion euros ($102 billion) agreed earlier this year.

The government has also committed to sell electric grid operator REN and national carrier TAP, aiming to raise some 5.0 billion euros to help ease the strain on the public finances.

China has been a major buyer of overseas assets to back its growth drive at home but it has also said it would help the eurozone overcome its debt problems.

Last month, China’s giant refiner Sinopec paid $3.54 billion for a 30 percent stake in the Brazilian unit of Portuguese oil giant Galp Energia.