Eletrobras Consortia Bag Brazil Transmission

Subsidiaries of state-controlled Eletrobras won 5 of the 7 packages of transmission lines to connect the Rio Madeira hydroelectric projects to the national electricity grid in a BRL724.6m auction last Wednesday. The results suggest that the government will ramp up investment in the sector and act as a guarantor for private investment to avert a slowdown as demand for power is poised to drop in 2009, says a Brazil infrastructure industry executive. State-controlled Energy Research recently cut its 2009 growth estimate for domestic consumption to 4.8% from 5.2%. The Norte Brasil consortium, led by state companies Eletronorte and Eletrosul, and Andrade Gutierrez, bid a total BRL363.4m to operate 3 of the transmission line projects. Madeira Transmissao, led by Cteep and state-owned Furnas, will pay BRL328.3m for 2 packages, while Cymi Holding won the remaining 2 for BRL50.9m. The auction, which Aneel director Jerson Kelman calls a success, was delayed repeatedly in recent weeks as the global credit crisis limited funding options for bidders. Private interest in the auction ensured its success, according to Kelman, who plays down the fact that some Eletrobras subsidiaries were part of the winning consortia. Projects were awarded at an average 7.1% discount to the government’s maximum price – among the lowest since electricity projects were offered through auctions. The 2,375km of transmission lines will link the Jirau and Santo Antonio dams in the Amazon to the city of Araraquara in southeast Brazil. The required investment to put the lines in operation nears BRL7bn, and consortia will be eligible for BNDES funding.