State Grid wins Brazil work

China's State Grid Brazil Holding has won the bidding to build two power transmission lines in Brazil, said the Brazilian Electricity Regulatory (Agencia Nacional de Energia Electrica).

The company won the rights on two lots located near the Paranatinga town in Mato Grosso, west of Brazil, for 334.5 million reais ($95.6 million) and 61.4 million reais ($17.5 million), respectively.

On April 13, more than 10 companies got 14 transmission lines stretching across 3,402 kilometers, with bids totaling 6.87 billion reais ($1.96 billion), said the agency, also known as ANEEL.

The companies that won the contracts will earn up to 2.5 billion reais ($715 million) annually over 30 years of the concession.

They also will be able to benefit from the substations, which start operation in 2017, according to tender contracts.

Jose Jurhosa, director of ANEEL, said that the investments are of significant value for a country coping with a recession.

"Given the situation of the Brazilian economy, receiving such an amount of investment in infrastructure is really very positive," said Jurhosa.

The regulatory agency had put out to bid 24 transmission lines over 6,500 km, which it estimated would bring in 12.2 billion reais ($3.49 billions) and create 27,640 direct jobs.

According to a study conducted by ANEEL last October, nearly 63 percent of all work to build new transmission lines in the country has been on hold, which has caused massive delays in connecting new wind farms and small hydroplants to the grid.

That is where State Grid Brazil, an experienced provider of transmission grids, can help, according to Ricardo Correa, an analyst for Ativa Corretora, a Brazilian financial services company.

"The participation of new actors in energy generation is difficult in Brazil, as the sector is crowded. However, in transmission, the Brazilian market is open and only requires volume, which State Grid has handled in China," he said.

"The project will yield a win-win result," said Zhang Jianping, an expert at the Academy of Macroeconomic Research of China's National Development and Reform Commission.

In addition, the project will create a huge demand for electricity equipment and steel and push Brazil to update its power infrastructure.

To China, the transmission lines are a breakthrough in overseas development. Given the weak export growth, the project will serve as a window for the world to see China's advanced technology and production capability. Those can be new growth points in foreign trade for China, Zhang said.

Brazil hopes to attract Chinese investment in highways, railways, ports, airports and other infrastructure projects, while the Chinese government regards infrastructure building as key to bilateral cooperation.

"The Brazilian government can count on infrastructure investment as a way to overcome the current economic recession and promote economic and social development," said Xie Wenze, a visiting scholar from the Chinese Academy of Social Sciences.

A 1 percent increase in infrastructure investment can raise Brazil's GDP by about 0.6 percent, he said.

For China Daily