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EFS Special Release - Eletrobras Debentures

Eletrobras plans to invest R$ 30.2 bi (USD 14.6 billion) until 2012

While discussing with the government the payment of withheld dividends, Eletrobrás has plans to invest USD 14.6 billion between 2009 and 2012, including partnerships, and other resources not fully agreed yet. Among the projects are the Angra 3 nuclear plant and the huge Belo Monte hydroelectric (11,181 MW) in the Xingu River. The investment budget for 2009 under the Eletrobras Strategic Action Program (PAE), adding resources of partners, is $ 8.7 billion. By 2012 it aims to increase its generation capacity to 6,459 megawatts (MW), building 10,386 more miles of power transmission lines and begining to build and test Angra 3, scheduled to start operating in 2014. Companies that are part of the Eletrobrás System are capable of generating 39,402 MW, including half of Itaipu Binational Dam, which represents 38% of the installed power generation capacity in Brazil, including103,033 MW generated by natural gas and coal thermal powered power plants.

The holding company controls Furnas, Chesf, Eletronorte, Eletrosul, Eletronuclear, the CGTEE and distribution Eletroacre (AC), CEAL (AL), CEPIS (PI), Ceron (RO), Energy Amazonas (AM) and Boa Vista Energia (RR) , not counting the center of research, the Cepel. Still controls 56% of transmission lines of the country, in addition to ongoing projects or the companies purchased in the auction conducted by the National Agency of Electrical Energy (Aneel) last week.

In addition to Belo Monte, the investment plan includes the dispute for the construction of six hydroelectric dams on the river Tapajós with 10,682 MW of generating capacity that will be bid until December 2010 and studies for the construction of the Marabá (2,160 MW) and Serra Quebrada ( 2328 MW) hydroelectric dams. The environmental impact assessment of Marabé and Serra Quebrada will be completed by December 2009.

For the complex of Tapajós, current main target of the president of Eletrobrás, José Antonio Muniz, the company struck a deal with the French EDF, which will take part of the technical and environmental feasibility studies. A document was signed during vist of Nicolas Sarkozy to Brazil, providing an exchange of information between Brazil and France through EDF and Eletrobrás. The agreement also provides for exchange of information on nuclear energy, which the French is one of the world's leading experts. Astrogildo Quental, chief financial officer of state, has proposed that EDF once they entered the project, but the evaluation was that it was still early.

For the Belo Monte Eletrobrás has already decided to participate only through one of its subsidiaries, Eletronorte, together with private partners, avoiding what happened in the auction of the hydroelectric Madeira, when subsidiaries competed with each other, each associated with a consortium of private companies. "If we lose, and this is the rule of the game, we will keep only the plants of Madeira," says Quental.

Besides the ambitious targets for expansion of its fleet of generation in Brazil, the company also has grandiose plans for other countries. The internationalization goal for Eletrobrás expectes to generate up to 18 thousand MW abroad and the construction of 11 thousand kilometers of power transmission lines by 2012. Last week the company set up an office in Lima, Peru, where it carries out studies of projects for the construction of six plants on the border with Brazil, the hydroelectric Inambari (2,000 MW), Sumabeni (1,074 MW), Paquitzapango (2,000 MW), Urubamba ( 940 MW), Vizcatán (750 MW), Cuquipampa (800 MW), a line of transmission. The construction of a hydroelectric plant in Africa is also being studied for the Angolan border with Namibia.

The funding for many projects, in large part, comes from the BNDES (Brazilian National Development Bank), despite Eletrobrás is currently on a new round of negotiations to allow the bank to lend USD 2.13 billion (R$ 4.5 billion) for the construction of Angra 3. Again, the BNDES is already at the limit of funding for the public sector, which will require a new loan of the National Monetary Council (CMN) for the loan to be granted. Of its USD 3.55 billion (R$ 7.5 billion) in the budget for the construction of the third nuclear plant in Brazil, are also scheduled an international loan of USD 0.71 billion(R$ 1.5 billion) tied to the purchase of equipment and additional $ 1.5 billion in resources from the Eletrobrás.
Quental explains that the BNDES also wants details of the model of energy marketing to be produced by Angra 3. Currently the whole generation of Angra 1 and Angra 2 has Furnas power plant as intermediate. Furnas buys the energy of Eletronuclear and passes the energy on to the market, not always with profit in the operation.

"This model is not good. Furnas has problems relating to contracts for importation with CIEN, the heat of the Pantanal and the nuclear plants," says the director.

Despite the large projects of generation and transmission of power to take most of Eletrobrás resources, the company is still receiving offers to increase its capital share or to acquire shares from the distribution companies. Quental admints conversations to increase participation in Celpe from 34% to 49%. According to him, Eletrobrás has had conversations with the states of Goiás, Roraima and Amapá on the issues of Celg distributors: Companhia Energética de Roraima (CER) and the Electricity Company of Amapa (CEA). In addition to default with the payments for the energy they consume, they want a share of Eletrobrás in its capital.

"I do not know how this will end up, no agreement has been closed, we have had just conversations," he explains. On the possibility of selling their stakes in distribution and to focus its activities to cash for investments, Quental says this is not the intention expressed by President Luiz Inácio Lula da Silva.

Besides controlling six distributors, Eletrobrás has stake in other companies such as Cemar in the State of Maranhão, the Power Plants in the State of Mato Grosso (Cemat), the Metropolitan Company for Water and Energy (EMAE), the Rio Grande do Sul State’s Electric Energy Company (CEEE) Company and Transmission of Electricity Paulista in the State of São Paulo (CTEEP).

Source: Valor Economico


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