BNB to lend $ 175 mm to Brazilian power projects by yearend

Oct 14, 2004 02:00 AM

Brazilian regional development bank Banco do Nordeste (BNB) expects to approve 500 mm reais ($ 175 mm) in loans for electricity projects in the north-eastern region by the end of the year, the bank's special projects superintendent Claudio Frota told. The projects include wind and small-scale hydroelectric generation projects under the federal government's alternative energy source incentive program Proinfa and power distribution expansion projects, all located in the north-eastern region where BNB operates, he said.
"The projects are in various stages of approval, but they should be cleared by the end of the year to meet our 2004 target," Frota said.

The bank's current power sector portfolio is 386 mm reais, of which 300 mm reais is financing for the 545 km, 500 kV line that will be built between the towns of Teresina and Fortaleza by the TSN consortium -- a group controlled by Brazilian engineering company Alusa (51 %) and federal power company Chesf (49 %). The other projects in the portfolio are mostly for distribution companies' expansion plans.
The bank's 2004 overall portfolio target is 3 bn reais in loans to "basic industry," that besides the power sector includes petrochemical, oil and gas and metals industries, he said.

The only small-scale hydroelectric projects approved under Proinfa in the region were proposed by Brazilian engineering company Enerbras. They are the 14.8 MW Cachoeira de Lina, 11 MW Colino 1 and 11 MW Colino 2 projects in Bahia state. The north-eastern states are home to at least a dozen Proinfa projects with 340 MW capacity in five states.
"The financing we are offering for Proinfa projects does not interfere with the financing from the [national development bank] BNDES," he said, referring to a BNDES-announced program to finance as much as 70 % of the value of each Proinfa project. Power distributors planning expansion in the region are Iberdrola's Cosern, Coelba and Celpe and Endesa's Coelce, among others.

BNB offers below-market rates on its loans since it is funded from the federal northeast fund (FNE) composed of federal budget money to develop the poverty-stricken region. The bank charges 8.75 % to 14 % interest a year with maximum maturity of 12 years and a grace period of up to four years.
The 300 mm-real loan for TSN has already started to be disbursed since the group has ordered the manufacture of transmission towers. Environmental licensing should not be too complex since the new line will run parallel to an existing 500 kV line, Frota said.

In 2005, BNB will seek alternative ways to offer financing for important north-eastern development projects such as the two transmission lines for which Chesf recently obtained concessions and the 900 km natural gas pipeline expansion project that federal energy company Petrobras is preparing to build in the region.
"By law, we cannot directly finance federal companies, but we could find a way to finance the projects through partners or subcontractors," he said. Current legislation prohibits federal banks from financing federal companies.

Chesf pledged to invest 67.3 mm reais in the 200 km Milagres-Taua 230 kV line and 37.4 mm reais in the 120 km Milagres-Corema 230 kV line.
The power company recently said it would seek financing alternatives or use its own resources to finance the construction of the lines.

Source: BNamericas
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