China’s State Grid Expands in Brazil With Belo Monte Contract

State Grid Corp. of China won a contract to build a 2,500-kilometer (1,553-mile) power line in Brazil that will link the world’s third-biggest hydroelectric dam to the country’s largest market.

China’s biggest power distributor offered to operate the transmission line to the Belo Monte hydroelectric project for 988 million reais ($309 million) a year, the lowest bid at an auction Friday at the Sao Paulo Stock Exchange, regulators said.

A group formed by State Grid and Brazil’s state-controlled power company Centrais Eletricas Brasileiras SA, or Eletrobras, won the contract last year for another section of the Belo Monte transmission line. The Beijing-based company is seeking a local partner for the project awarded Friday, and is in talks with Eletrobras.

“State Grid is seeking a partner in Brazil, given the complexity of the project,” Ramon Haddad, vice president for operations at the company’s local unit State Grid Brazil Holding, told reporters. It will cost about 7 billion reais to build, he said.

State Grid is interested Brazil’s power-generation and distribution industries, Haddad said. It’s evaluating an acquisition of Eletrobras distribution assets, and is also looking at the solar market.

The 11.2-gigawatt Belo Monte project on the Xingu River, in the Amazon Basin, is expected to begin operation by the end of the year. It will be the biggest in the world after China’s Three Gorges dam and the Itaipu hydropower plant, also in Brazil.

State Grid beat out Spain’s Abengoa SA for the contract and will have 50 months to complete the transmission line from the site in northern Brazil’s Para state to Rio de Janeiro state in the southeast, the country’s most populous region.

State Grid is seeking financing from Brazil’s development bank, BNDES, for as much as half the project and is also pursuing other sources of funding, such as infrastructure bonds, Haddad said.

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