Short of funds, Brazil's Chesf delays transmission line project
By Luciano Costa
SAO PAULO, July 25 (Reuters) - State-run energy company Chesf, a subsidiary of Brazil's federal energy holding company Eletrobras, has delayed the delivery of more than 1,000 kilometers of transmission line projects for lack of funds to complete the work, data compiled by Reuters showed.
The delay is likely to crimp the national grid in the country's Northeast, where Centrais Eletricas do Brasil SA , as Eletrobras is known officially, plans to sell many of its distribution assets. It will also generate company fines.
Chesf has racked up 1,500 days in project delays, which specialists say is due to overly ambitious expansion. Other subsidiaries of Eletrobras are in similar straits after the government pushed hard to lower rates of return for projects up for auction in recent years.
"It's a result of Chesf's taking on too many projects and weak returns on investment," Bernardo Bezerra, director at PSR consultants, said. "The discounts offered by bidders were hefty."
According to data compiled by Reuters from electric sector regulator Aneel, Chesf won 30 percent of the transmission projects that sold in auction between 2010 and 2012, after which the company was banned from further participation in auctions due to its growing backlog.
Over the same period, consortiums with one of Eletrobras' subsidiaries as partner accounted for 60 percent of all generation and transmission line projects won in auction. Nearly all the winning bids aggressively discounted the maximum profits allowed by the auction.
Brazil's Electric Sector Oversight Committee (CMSE) says at least 11 projects of Chesf should be ready to operate but will only be concluded in 2017 and 2018 due to "limited financing."
Chesf did not reply to a request for comment by Reuters. Continuación...