Teles Pires Project Gets BOO Concession at Brazil's Second Hydro Auction of the Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--After some last-minute judicial battles that nearly prevented the 1,820-megawatt (MW) Teles Pires project from being included in Brazil's second hydro auction of 2010, the project finally completed the process and received a build-own-operate (BOO) concession.

A few hours before the beginning of the event, an appelate administrative court in Brazil reversed a ruling from the day before that had revoked the preliminary permit of the project. This permit attests a project's compliance with environmental regulations and is an unavoidable condition to move on into the tendering process.

Just on time, the Teles Pires project was put up for tender by the Federal Government and received an uncontested offer made by Teles Pires Energia Eficiente, a joint venture formed by Neoenergia (Rio de Janiero, Brazil), Furnas (Rio de Janeiro, Brazil), Eletrosul (Florianópolis, Brazil), and Odebrecht (Salvador, Brazil). Their shares in the joint venture's equity is 50.1%, 24.5%, 24.5%, and 0.9%, respectively.

These companies were the only participants to bid for the project, by offering 58.36 reais ($34.80) per megawatt-hour (MWh). This value represented a 33% reduction from the starting bid of 87 reais ($51.88) per MWh that had been previously determined by the government.

A formal award will not be granted until next year, upon confirmation of the companies' eligibility to be in the joint venture and the fulfillment of participation requirements. Any changes either in the companies making up the joint venture or in their respective shares will not be accepted until then.

Teles Pires is the largest of several planned hydro projects to be constructed in the Teles Pires river basin. It will consist of six generation groups of nearly 300 MW each. Works on site should begin by late 2011, and the first unit is expected to be brought online in January 2015.

The other two projects that were supposed to get BOO concessions at the auction, namely the 56-MW Estreito Parnaíba and the 63-MW Cachoeira hydro projects, received no offerings and will remain on hold until they are included in a new auction for the source.

For additional information on the second 2010 A-5 hydro energy auction in Brazil, view December 17, 2010, article - Brazil's Second Hydro Auction of the Year Faced Doubts Hours Before Opening, and November 3, 2010, article - Major Brazilian Hydropower Projects to Go Out for Tender at December Auction. For additional information about active projects on the Teles Pires basin, view June 18, 2010, article - Construction of Six Major Hydropower Plants in Brazil Likely to Be Awarded Before the End of Year.

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