By Leticia Fucuchima
SAO PAULO (Reuters) -China’s State Grid emerged as the big winner in Brazil’s largest-ever electricity transmission line auction on Friday, snapping up the largest batch of projects up for grabs.
State Grid won a bid to build and operate 1,500 kilometers of lines, followed by a consortium led by Alupar to build 1,100 km of power lines.
The auction is the second of a series of tenders planned by the government of President Luiz Inacio Lula da Silva to increase the electricity transmitted from renewable sources generated in the northeast of the country to demand from southern sources. The northeast boasts both abundant sunshine and wind.
“These lines will allow the northeast to continue to be the new frontier for the development of renewable energy in Brazil,” said Sandoval Feitosa, head of electricity regulator Aneel, in a statement.
State Grid, which only operates transmission lines in Latin America’s largest economy, offered a discount of nearly 40% on the first lot’s maximum annual revenue to build and operate 1,500 kilometers of lines.
The winning bids for each lot were determined by the largest discount offered on the annual revenue, paid once facilities start operations.
The tender, held at Sao Paulo’s stock exchange building, saw little competition as the need for large-scale investments and tech expertise dissuaded bidders including Neoenergia, Engie Brasil and Isa Cteep.
Eletrobras, Brazil’s largest transmission line operator, did not submit any winning bids.
State Grid already held 24 transmission concessions, 19 by itself and five in joint ventures, and overall operates more than 16,000 kilometers of power lines in Brazil.
“We now have a very large project in our hands that we have a responsibility to implement, but we won’t stop looking ahead to the next auctions,” said State Grid’s local vice president, Ramon Sade Haddad, specifically pointing to one scheduled for March.
Other winners included consortium Olympus XVI, comprised of transmission firm Alupar and investment fund Mercury, which was awarded the second lot auctioned with an offered discount of 47%.
The second lot covers 1,100 km of power lines in Goias, Minas Gerais and Sao Paulo states and will require a nearly 2.6 billion reais investment.
Lastly, Celeo Redes won the third and smallest lot covering 388 km in Minas Gerais state by offering a 42.4% discount, with an estimated investment of around 1 billion reais.
All three projects should start five to six years after the 30-year contracts are signed.
($1 = 4.9417 reais)
(Reporting by Leticia Fucuchima; Writing by Peter Frontini and Gabriel Araujo; Editing by Isabel Woodford, David Alire Garcia and Leslie Adler)