Brazil utilities inaugurate 452-MW Peixe Angical

Brazilian utility and government officials formally inaugurated the 452-MW Peixe Angical hydroelectric project November 27 on the Tocantins River.

Officials of 60 percent owner Energias do Brasil S.A. (EDB) and its parent, Energias de Portugal; 40 percent owner Furnas Centrais Eletricas S.A.; and Brazil Economy Minister Manuel Pinho took part in ceremonies formally commissioning the plant, which actually began commercial operation in September in Tocantins State (HNN 10/3/06)

A total of 1.6 billion reais (US$752 million) was invested in the project, including 670 million reais (US$315 million) by Brazilian investment bank BNDES and a pool of banks. The remaining 930 million reais (US$437 million) was supplied by EDB and Furnas on a 60-40 basis.

Energias do Brasil seeks to double capacity again

Noting that Peixe Angical nearly doubled EDB’s generating capacity in Brazil, utility officials said they intend to double capacity again in the next two to five years.

EDB Vice President for Generation Custodio Miguens said the company should invest about US$1.5 billion to reach that target and lift capacity from the current 1,043 MW.

“We are analyzing small and mid-size projects, in partnerships and not, new ones or via acquisitions,” he said.

The kinds of projects would depend on the strategy of the Brazilian government which is deciding whether to stick to Brazil’s predominant hydroelectric plants or to reduce the dependence on water and build more thermal, especially gas-fired, plants.

EDB President Antonio Martins da Costa said the company is committed to Brazil, but government policy in the sector is putting the brakes on investment and risking power shortages as soon as 2008 or 2009. He said environmental licensing is too complicated, too demanding, and taking too long, while the government’s public auction system with a price ceiling is discouraging private firms from investing.

“Brazil needs more power plants and they are not coming out because many have environmental (licensing) problems and the auctions have a logic that is no longer attractive for the sector,” he said.

Martins da Costa said EDB bid for two hydroelectric projects in past auctions, but stopped bidding after seeing that the price did not guarantee adequate returns. Companies offering the lowest price of future energy supplies win. State-run companies have accounted for most winning bids so far.

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