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State Grid-Led Group Wins Brazilian Dam Power-Line Auction

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Feb. 7 (Bloomberg) -- A group led by State Grid Corp. of China won the rights to build power lines to the Belo Monte Amazon dam that’s set to be the world’s third-biggest hydropower plant.

The group that also includes Furnas and Eletronorte, two units of state-controlled Centrais Eletricas Brasileiras SA, or Eletrobras, offered to limit annual revenue to 434.6 million reais ($182 million), 38 percent below the 701 million-real ceiling, according to the bid opened today at the Sao Paulo Stock Exchange. Executives from State Grid hollered and gave each other high fives after beating out two other consortiums.

Eletrobras and State Grid, which has a 51 percent stake in the group, are betting they can avoid construction delays that have plagued other power projects in Brazil and build the network for about 4.5 billion reais, Eletrobras Chief Executive Officer Jose da Costa Carvalho Neto said in a press conference after the results were announced. That’s 10 percent below the estimated 5 billion reais in investments that state regulator Aneel said would be needed.

The companies will have 46 months to complete the project to connect Belo Monte, which is being built along the Xingu River in the Amazon Basin, to Brazil’s Southeast, including Sao Paulo and Rio de Janeiro. The contract extends for 30 years.

Aneel will hold one more auction for transmission lines to Belo Monte in the second half of this year, Andre Pepitone da Nobrega, director of the agency, said at the press conference.

Other bidders in today’s auction included Spain’s Abengoa SA and a partnership between Transmissora Alianca de Energia Eletrica SA and Alupar Investimento SA.

Belo Monte is planned to generate more than 11 gigawatts of power in peak production months. It’s being built by Norte Energia SA, a company formed by Eletrobras, pension funds such as Petros and Funcef and minority shares from Vale SA, Cia. Energetica de Minas Gerais, Light SA and Neoenergia SA.

To contact the reporters on this story: Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net; Christiana Sciaudone in Sao Paulo at csciaudone@bloomberg.net

To contact the editor responsible for this story: Telma Marotto at tmarotto1@bloomberg.net