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The Inter-American Development Bank (IADB) has approved up to US$66mn in financing to Novatrans Energia to fund a 1,200MW, 1,278km electricity transmission line from the state of Maranh to Brasilia.

By doubling the capacity of the existing north-south transmission link, the private sector project will increase the overall energy flow and improve system reliability, reduce energy shortages and interruptions, and generate fuel cost savings.

The project will follow right-of-way of the existing north-south interconnection line, sharing access for inspection, maintenance, and operation, thereby reducing environmental impact. It will connect the Imperatriz substation in the state of Maranh with the Samambaia substation in the Federal District.

IADB financing consists of an A loan of up to US$30mn from the IADB’s ordinary capital and B loan of up to US$36mn with funds provided by commercial banks or other financial institutions.

BNDES, the Brazilian national development bank, will provide a separate loan equivalent to about US$133mn, and ABN Amro will provide another loan equivalent to around US$33mn. The total project cost is US$338.1mn.

An important benefit of the project will be the increase of power flows between the southern and northern electrical regions, which have different climates and complementary seasonal hydropower capacity.