Brazil’s federal power sector holding company Eletrobrás plans to raise about US$500mn on international markets in 2004 to beef up its R4.33bn (US$1.50bn) investment programme and finance possible partnerships in generation and transmission projects, the company’s CFO Jose Drummond Saraiva has declared.
“We have to analyse the market conditions,” he says, without saying whether the money would be raised through the sale of debt securities or through loans.
Eletrobrás is studying a series of financial operations after congress approved the removal of the company from the national privatisation programme. This allows it to obtain financing on top of the R4.33bn it plans to invest this year and form partnerships with private companies for upcoming tenders of transmission and generation concessions. The financial operations have still to be approved by the company’s board.
The first scheduled auctions in September are for 11 transmission line concessions totalling some 3,800km.
Eletrobrás has to form specific purpose companies with private firms to carry out investments in new projects since it is not allowed by law to have controlling stakes in the projects.
The main source of financing will come from national development bank BNDES, although the company is seeking to tap international financial markets.
Eletrobrás has assets of R65bn and accounts for 34,792MW of Brazil’s 86,921MW installed capacity and 48,511km of its transmission lines. The company also has about R38bn in receivables, against R4bn in debts, which can be used as collateral or guarantees for the financing.
“This allows us to leverage an enormous amount in financing,” he says. About R18bn of the receivables come from the Itaipu bi-national dam with Paraguay and are dollar-denominated.
One subsidiary that is already seeking partners for generation projects is wholly-owned southern transmission company Eletrosul, which has just been authorized by congress to renew investments in generation projects.
The R4.33bn investment programme will come from the company’s own resources. Of the total, R2.19bn will go on generation projects and R1.58bn on transmission projects. The company also plans to invest R386mn in infrastructure, R120mn in the eight small distribution companies it controls, R33mn in environmental controls and R13mn in research.
Of the company’s generation and transmission subsidiaries, Furnas, which operates in the southeast region of the country, will invest R1.02bn, Eletronorte in the north, R1.16bn, Chesf in the northeast, R858mn, and Eletrosul in the south, R208mn.
Additionally, the holding company will also seek to expand its presence in the international market, offering power consulting and engineering services. “We have expertise in the construction of hydroelectric dams, transmission lines and the operation of a nationwide grid,” Saraiva says.
The company plans to participate in international tenders, for example in Central America, for the construction of a region-wide power transmission network.