Brazil power-line auction sells only 4 of 12 lots on offer

miércoles 18 de noviembre de 2015 17:39 GYT

By Luciano Costa

SAO PAULO Nov 18 (Reuters) - Brazil sold only four of 12 concessions to build and operate new electrical-power transmission lines at an auction on Wednesday as tight financing and regulatory concerns kept potential entrants on the sidelines.

Spanish companies Cymi and Cobra won the largest lot on offer, a 30-year concession for lines and electrical substations in Minas Gerais state, according to official auction results. They will be able to charge 448.8 million reais ($119.2 million) per year in tariffs. Investment is estimated at 2.5 billion reais.

Three smaller lots were won by Brazilian companies Copel , Planova and Firminópolis. The other eight lots received no offers. The result was almost identical to a similar August auction, when only four out of 11 lots were sold.

"The situation has not been easy for construction projects," said José Jurhosa, a director of Brazil's electricity watchdog Aneel. "It is not just the price (the allowed return to investors) but other aspects such as environmental licenses and financing," Jurhosa added.

A lack of transmission lines has been a key contributor to Brazil's electricity crisis, restricting the supply of power, driving prices higher, in a hydroelectricity-dominated system already struggling with a record drought.

Meanwhile, a giant price-fixing and bribery scandal at state-run energy companies has bankrupted construction companies. Brazil's recession has led to cuts to infrastructure spending and loans and a declining Brazilian credit rating has raised borrowing costs.

"There was an exhaustion of financial capacity from traditional companies in the sector," said Roberto Brandão, a power sector expert at the Federal University of Rio de Janeiro. "It has not been easy to attract new companies in a moment of economic weakness."

Aneel's Jurhosa said companies are struggling to adapt to current credit tightening after Brazil's development bank BNDES, by far the largest lender for infrastructure projects, reduced its lines adjusting to spending cuts promoted by the government.

"The problem is that in Brazil we basically have just one long-term lender," said the director referring to BNDES.

($1 = 3.7654 Brazilian reais) (Writing by Marcelo Teixeira; Editing by Jeb Blount, Bernard Orr)