State-run companies dominate transmission lines auction in Brazil

Nov 07, 2007 01:00 AM

Brazilian government-controlled power companies have won licenses to build and operate five of the seven transmission lines offered in the November 7 government auction hosted by power regulator Aneel. Specifically, Aneel auctioned rights for a total of 1,941 km in transmission lines crossing 10 Brazilian states.
"This was a complete success as it was very competitive and we saw an average discount of 51 % from the starting prices Aneel established for this auction," Aneel director Romeu Rufino told.

According to bidding rules, Aneel set a maximum annual revenue that operators could earn from operating the line on offer. The company that submits the lowest revenue under Aneel's reference price won. The dominance of state-owned companies at the auction was normal, Rufino said.
"It was expected since most of the power transmission systems in Brazil are controlled by state-owned companies. It is normal for them to expand their systems," Rufino said.

Auction winners were: state-run Jauru consortium, CTEEP, CYMI of Spain, federal companies Eletrosul, Chesf and Eletronorte as well as state-run Copel. The Jauru consortium, made up of federal power company Eletronorte (45 %), equipment supplier Bimetal (20 %) and Italy's Terna (35 %), won the right to build and operate two 230 kV transmission lines and two substations in Mato Grosso state.
This was the auction's most disputed round as the Jauru consortium outbid eight other competitors. Jauru offered reais 14.9 mm ($ 8.6 mm) in annual revenue for the 402 km line, 53 % below the 32 mm-real starting price. The project is due to start operations in 18 months with investment estimated at reais 229 mm, Aneel said. The project will boost Mato Grosso's power system.

Brazilian power transmission company CTEEP, controlled by Colombia's state-run ISA, won the right to build two 500 kV transmission lines in Tocantins and Piaui states. CTEEP offered to build and operate the project for an annual revenue of reais 28.9 mm, 57 % below the reais 67 mm of Aneel's initial offer.
The 720 km-long lines will start operating in 21 months and investments in the project will reach reais 471 mm, Aneel said. The firm's transmission lines will boost reliability of the north-northeast transmission system. CTEEP outbid nine other groups for this line.

Spain's CYMI won bidding for one 500 kV transmission line in Piaui and Ceara states. The company accepted annual revenue of reais 13.8 mm for the project, 57 % below the reais 32 mm of Aneel's starting price.
The 400 km-transmission line is due to start operating in 21 months, with investments in the project reaching reais 223 mm. The transmission line will increase the reliability of the north-northeast transmission systems and help move power from the lower part of the Sao Fransico river to the country's northeast, Aneel said. CYMI outbid nine other groups for the line.

Federal power company Eletrosul won the right to build a 230 kV transmission line in Rio Grande do Sul state. The company offered to build and operate the project for annual revenue of reais 3.8 mm, 48 % below the reais 7.4 mm of Aneel's initial offer.
The 233 km-long line is due to start operating in 18 months, with investments in the project reaching reais 53 mm. Eletrosul's transmission lines will improve flow from the coal-fired Candiota plant to the cities of Porto Alegre and Caxias do Sul in Rio Grande do Sul state. Thirteen other companies signed up to bid for the line, although four did not end up presenting offers.

Federal power company Chesf won the right to build and operate one 230 kV, 110 km transmission line in Sergipe and Alagoas states. The company offered annual revenue of reais 2.8 mm, 40 % below the 4.7 mm-real asking revenue. The line is due to start operating in 18 months, with investments reaching reais 34 mm, Aneel said.
The project will improve power supply systems in southern Alagoas. Ten other companies signed up to bid for the line, although eight did not present offers.

Parana state-run power company Copel had the winning bid to build one 230 kV transmission line in Parana state. The company accepted annual revenue of reais 666,000 for the project, 53 % below the 1.4 mm-real asking price. The 29 km-long line is due to start operating in 15 months, requiring investments of reais 10 mm, Aneel said.
Ten other companies were shortlisted to bid for the line, but only one placed an offer in addition to Copel. The line is designed to help improve power supply in the cities of Curitiba and Sao José dos Pinhais.

Federal power company Eletronorte won the right to build one 230 kV transmission line and one substation in Maranhao state. The company accepted annual revenue of reais 2.1 mm for the 36 km-long line, 51 % below the 4.3 mm-real asking price. The transmission line is due to start operating in 18 months, with investments reaching reais 31 mm, Aneel said.
Eight other companies were shortlisted to bid for this line, although only one group placed an offer in addition to the winner. The project is designed to improve power supply quality in Maranhao state capital Sao Luiz.

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