Losing group challenges Brazil’s auction of 3,300-MW Jirau

Consorcio Jirau Energia, the group that lost the concession auction for construction and development of Brazil’s 3,300-MW Jirau hydroelectric project, has filed an appeal with regulators, seeking to overturn the May auction.

Consorcio Jirau, led by federal utility Furnas Centrais Eletricas S/A, filed an appeal June 27 with electricity regulator Agencia Nacional de Energia Eletrica (ANEEL), citing documentary irregularities in the application of winning bidder, Consorcio Energia Sustentavel do Brasil (CESB), led by a unit of French utility Suez.

Additionally, the losing group lodged a major complaint that CESB announced it plans to move the project nine kilometers from its original location as a way to save 1 billion reais (US$626 million). Press reports said Consorcio Jirau alleged CESB admitted consulting with ANEEL about the site change prior to the auction, information that should have been available to the other bidder.

ANEEL is to examine the appeal prior to July 23, the deadline for ratification of the auction results. CESB said it is examining the appeal and will file a response showing there were no irregularities.

CESB won an eight-minute electronic auction May 19 to develop Jirau on Brazil’s Madeira River. (HNN 5/20/08) It offered an electricity sale price of 71.40 reais (US$43.26) per megawatt-hour, a 22 percent discount from the price cap of 91 reais (US$55.13).

Consorcio Energia Sustentavel do Brasil includes:
o Suez Energy South America Participacoes Ltda., a unit of French utility Suez, (50.1 percent);
o Eletrosul Centrais Eletricas S/A (20 percent);
o Companhia Hidro Eletrica do Sao Francisco (CHESF) (20 percent); and
o Camargo Correa Investimentos em Infra-Estrutura S/A (9.9 percent).

The losing group, Consorcio Jirau Energia, includes:
o Federal utility Furnas Centrais Eletricas S/A (39 percent ownership);
o Fundo de Investimentos e Participacoes Amazonia Energia II (comprising banks Banif and Santander) (20 percent);
o Odebrecht Investimentos em Infra-Estrutura Ltda. (17.6 percent);
o Construtora Norberto Odebrecht S/A (1 percent);
o Andrade Gutierrez Participacoes S/A (12.4 percent); and
o Cemig Geracao e Transmissao S/A (10 percent).

Consorcio Jirau won a concession auction in December for Jirau’s sister project, 3,150-MW Santo Antonio, also on the Madeira River.

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