Brazilian government signs energy transmission contracts expecting BRL 21.7 billion in investments

Three lots were negotiated in an auction last December, contemplating 4,471 kilometers of transmission lines in the states of Goiás, Maranhão, Minas Gerais, São Paulo, and Tocantins

Published in Apr 05, 2024 05:12 PM

Ministers Rui Costa (Chief of Staff) and Alexandre Silveira (Mines and Energy) during the official signing ceremony of the energy transmission contracts that resulted from the Transmission Auction in December 2023 - Credit: MME

This Wednesday, 3 April, through the Ministry of Mines and Energy, the Brazilian Federal Government officially signed the energy transmission contracts that resulted from last December's second Transmission Auction. The auction was promoted by Brazil's National Agency of Electric Power (Agência Nacional de Energia Elétrica - Aneel), which resulted in the negotiation of the three lots which had been made available. In total, the contracts represent an investment preview of BRL 21.7 billion.

There will be constructions in Goiás, Maranhão, Minas Gerais, São Paulo, and Tocantins to strengthen the national electricity network. These investments represent our belief in the future of Brazil”
LUIZ INÁCIO LULA DA SILVA
Presidente of the Republic

The three negotiated lots contemplate an extension of 4,471 kilometers of transmission lines and substations with a transformation capacity of 9.840 MVA, located in the states of Goiás, Maranhão, Minas Gerais, São Paulo, and Tocantins. With an expected duration of 60 to 72 months, these constructions will generate thousands of direct and indirect jobs. They will also expand the interconnection capacity between Brazil's Northeastern and the Central-South regions.

On his X (former Twitter) social profile President Luiz Inácio Lula da Silva celebrated the signature of the energy transmission contracts. “There will be constructions in Goiás, Maranhão, Minas Gerais, São Paulo, and Tocantins to strengthen the national electricity network. These investments represent our belief in the future of Brazil,” the President stated.

The signing event took place at the Planalto Palace. Among the authorities were the Chief of Staff, Rui Costa; the Minister of Mines and Energy, Alexandre Silveira; the governors of Bahia, Jerônimo Rodrigues; Maranhão, Carlos Brandão; and Alagoas, Paulo Dantas; and the Chinese Ambassador to Brazil, Zhu Qingqiao.

SAVINGS OF BRL 37 BILLION – Lot number 1 was acquired by State Grid Brazil Holding S.A. for BRL 1.936 billion, reflecting a discount of 39.90%. Consortium Olympus XVI secured Lot number 2 for BRL 239.5 million, enjoying a markdown of 47.01%. Lot number 3 was awarded to Celeo Redes S.A. for BRL 101.2 million, with a discount of 42.39%. The average markdown amounted to 40.85%, resulting in a total saving of BRL 37.9 billion for the end consumer.

JOBS – According to Rui Costa, the moment inspires celebration, not only because of the BRL 60 billion investments that will be directed to the constructions through the three transmission auctions that have been concluded, but also for the impact these transactions will have over the production chain in the entire country.

There will be demands for productive units in several Brazilian states, generating the need to hire specialized personnel in the energy sector, including the production and distribution of solar and wind power.”
RUI COSTA
Chief of Staff

“This means generating jobs, not only in the actual construction sites of these projects, but also in the distribution to the entire production chain, including machinery, equipment, and other resources, a large part of which are already produced in Brazil. So there will be demand for productive units in several Brazilian states, generating the need to hire specialized personnel in the energy sector, including the production and distribution of solar and wind power,” the minister declared.

According to Alexandre Silveira, in addition to all the advantages foreseen for the energy sector, the actions results reinforce Brazil's credibility, which has been reestablished in both the national and the international scenarios.

“We held the three auctions, resulting in BRL 60 billion in hired construction projects. This is Brazil's largest infrastructure project, and we were successful in all of the auctions. The average markdown we obtained from the national and international companies that took part in them was of 39%. Beyond its effective results and what they mean to the industry of clean energy, these auctions have a symbolic aspect for the country: Brazil has regained credibility with national and international investors,” said the Minister of Mines and Energy.

“We congratulate the investors. We will work hard. There will be over 200 construction sites throughout Brazil, over 300 thousand direct and indirect jobs will be created. We will continue to make Brazil the great leader in the global energy transition,” added Silveira.

CHINA – Before the signing event, the Minister of Mines and Energy met with representatives from State Grid. The Chinese multinational declared its intention to invest an additional BRL 200 billion in the Brazilian energy sector. Having acquired the biggest lot in the Transmission Auction, State Grid became responsible for the construction of a bipole that will run 1.5 thousand kilometers through the states of Maranhão, Tocantins, and Goiás, with an investment of BRL 18.1 billion.

According to Silveira, the Federal Government policies have been attracting the investors’ interest since last year. “We have an excellent relationship with China and we are grateful for the investors who believe in Brazil. Our country respects the terms of our contracts, and we present stability and legal security, which are key elements for the electric sector,” he highlighted.