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Brazil Offers Appealing Loans to Build 3,000 Kms of Power Lines

The president of Brazil’s National Economic and Social Development Bank (BNDES), Guido Mantega, announced, Wednesday, November 9, the creation of a program of loans for the construction of electric power plants and transmission lines in Brazil.

The new program, aimed at increasing investments in the electricity sector to ensure the country’s energy supply for the coming years, was presented to President Luiz Inácio Lula da Silva.

The new financial guidelines, organized by the BNDES and the Ministry of Mines and Energy, will be offered to the companies that are victorious in the transmission line auction scheduled for November 17 and the bidding for "new energy" scheduled for December 16, when companies will compete for contracts to provide energy, starting in 2009. The announcement was made by the Brazilian Minister of Mines and Energy, Silas Rondeau.

The government’s objective is, in the next few years, in partnership with the private sector, to construct around three thousand kilometers of power lines all over the country.

At the coming auction involving public utility concessions to implant new power lines, it is expected that seven lots will be offered, totaling 17 power lines and eight substations. The projected investments are on the order of US$ 920 million.

Mantega underscored the importance of a large-scale energy supply as crucial to a country’s development, and he asserted that, in consequence of the government’s projects in this area, Brazil does not run the risk of suffering blackouts in the next ten years.

"Lula’s government is concerned about the energy issue to prevent the recurrence, for want of planning, of problems that occurred in the past." The government also intends "to lower the cost of electricity for consumers," Mantega said.

Investors in power generation already had access to a BNDES financial program, but under stricter conditions, the president of the bank pointed out.

The new program, which offers more favorable terms, will increase the investors’ returns and reduce project risks. With the new financial guidelines, the amount of a company’s own assets required for investments was reduced to 30% of the total.

The new program also made a substantial cut in the annual interest rate charge, from 8% to 3.5%.

Agência Brasil

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