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News & Knowledge

Brazil: New bid for power transmission lines

3rd April 2017
Vieira Coelho Advogados

On 9 March 2017, the Brazilian electricity regulatory agency ANEEL approved a new bid process for granting transmission power line concessions in 35 areas. The first bid under the new process is scheduled to take place on 24 April 2017. MSI's Brazilian law member Vieira Coelho Advogados explains.

The transmission power lines will be located in the States of Alagoas, Bahia, Ceará, Goiás, Maranhão, Mato Grosso do Sul, Pará, Paraná, Pernambuco, Piauí, Rio de Janeiro, Rio Grande do Norte, Rio Grande do Sul, Santa Catarina, São Paulo and Sergipe. A total of approximately 7.4 thousand km of transmission power lines and substations with a transform capacity of 13,170 MVA are expected to be auctioned. Commercial operation is expected to start in 3-5 years from the execution of the concession agreements.

The new bid process no longer requires a company business plan for financial qualification and alters execution and return conditions for the performance guarantees.

The minimum term for the progressive execution of guarantees for a delay has been extended from 60 to 90 days and there shall be no guarantee execution for milestone delays for presentation of the basic project, obtaining environmental licenses, and equipment acquisition and delivery. The only remaining penalties shall be those for the delay in starting civil works and electromagnetic assembly and commissioning. Further, the performance bond shall be substituted for another guarantee with a progressively smaller amount. This is the procedure already adopted for the power generation concessionaires from the regulated bids.

There is also a possibility that areas that did not receive a valid offer during the bid process will be auctioned again at the end of the period.

About Vieira Coelho Advogados - Rio de Janeiro

Vieira Coelho Advogados is a multidisciplinary legal practice dedicated to business law, with a high expertise in both advisory and litigation issues.

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