Brazil’s Aneel auctions transmission lines

Brazil’s state electricity regulator Aneel auctioned three out of the four transmission line concessions up for offer in the latest round of concessions last Friday. The 30-year concessions were for 574 km of line that requires some $101m in investment.

Brazil’s Hot Line Instalacoes Eletricas won Lot A, a 51 km line between Goianina in Pernambuco state and Mussure in Paraiba state; Sao Paulo state transmission company CTEEP won Lot B, a 137 km line between Chavantes and Botucatu, both in Sao Paulo state; and Spanish consortium Instalaciones Inabensa won Lot D, a 386 km line connecting Xingo, Angelim and Campina Grande, Alagoas, Pernambuco and Paraiba states, respectively.

No bids were received for Lot C, running 179 km between Para state localities Vila do Conde and Santa Maria.

Aneel set a maximum price that the operators would be allowed to charge per year, and then sold the concessions in a Dutch auction, with the winning company the one that offered the lowest annual revenues.

Aneel director, Jose Maria Adbo, said the sale was a success, especially given the current economic environment. Various participants had requested the auction be postponed, but Aneel decided to proceed after judging there was sufficient interest, he said.

The devaluation of the real worried investors as their revenue is generated in Brazilian reais, but much of the equipment is linked to the US dollar.

Inabensa director Julio Maia said his company would procure as much equipment locally as possible, to offset the exchange rate costs. All the equipment needed is available locally, either from Brazilian companies or from the subsidiaries of international suppliers, he continued, adding Inabensa would seek financing from Brazil’s national development bank (BNDES).

Aneel’s target is to offer concessions covering more than 5000 km per year for the coming years, he said. He added that Aneel would publish the next list of transmission line concessions in early December, when it plans to tender 11 projects totalling 2100 km of transmission line and requiring approximately $374m investment.

Aneel and the National Privatization Commission (CND) review the projects that receive no bids, and can re-tender them or assign them to government-owned companies, as was the case with the Ouro Preto-Vitoria line from the last concession round, which was later placed with federal generator Furnas, Abdo said.

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