IPPToday #119: US$2.66 billion transmission projects auctioned in Brazil
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Brazil's Ministry of Mines and Energy has announced that the winning projects in the power transmission line auction that took place on Friday 15 December represent BRL8.75 billion (US$2.66 billion) in investments.
Eleven new lots were auctioned, which collectively include 4,919km of transmission lines and substations with a total capacity of 10,416 MVA. The successful bidders will sign 30-year concession agreements. The Ministry claim that the projects will directly and indirectly create 17,800 jobs.
Brazilian power holding Neoenergia SA was the biggest buyer with two lots purchased. Sterlite Power, an Indian power transmission company, won the largest lot of the auction, worth US$800 million. It concerns a 1800km transmission project to be built in the states of Pará and Tocantins, in the north of Brazil. Other participants in the auction included world-leading industry players State Grid of China, Engie and Elecnor.
The new transmission facilities, which are going to be built in ten states across the country, will enable the government to meet the growing power demand in these regions, allow the complete flow of energy from contracted plants and make it possible to connect more new generation projects. The Ministry expect construction of the power lines to take between 36 and 60 months.
This was Brazil's second power transmission line auction this year. In the first, held in April, a total 31 lots were offered. More than 20 companies participated, leading to BLR12.7 billion (US$3.85 billion) in investments.
This success follows a long period of auctions that did not attract much interest. The shift is thought to be due to regulatory changes made in recent months. The government have established clearer rules and reduced state intervention, encouraging companies to invest.
This activity has taken place through the partnership component of the Time to Move Forward programme. This national infrastructure programme has established a new regulatory framework, with clearer, more transparent and more competitive rules, to promote more partnerships with private companies for infrastructure projects in Brazil.
To date, the programme has included 145 projects, including airports, highways, hydroelectric power plants, ports and others. The expectation is that the estimated investments (amounting to BLR141 billion (US$42.8 billion)) will help drive economic and social development, employment and wealth for the country.
Also noteworthy, Sterlite Power's win brings its total investment in Brazil to US$1 billion. This is the largest investment made by an Indian company in Latin America.