Brazil

Brazil

Brazil's government is unsure whether to hold the A-3 auction

BRAZIL: Brazil's federal government is still unsure whether it will hold the A-3 auction scheduled for 18 October for start of delivery of the power in 2015.

A spokesperson to the Energy Planing Company (EPE) said the decision will depend on whether the power regulator Aneel will cancel concessions for five thermoelectric power plants whose construction hasn't started.

The spokesperson also confirmed that the October 25 A-5 auction – with start of delivery scheduled for for 2017 – will take place.

The five thermoelectric power plants add up to over 1GW of installed capacity that were due to come on-line by January 2013.

Local industrial conglomerate Bertin, which sold power from the five plant projects at an auction in 2008, is seeking permission from Aneel to renegotiate contracts with distribution companies.

In case permission is not granted for Bertin to renegotiate contracts, the distribution companies will have the chance to buy the needed power at the A-3 auction.

The spokesperson said that demand projections for 2015 alone do not justify the holding of the A-3 auction.

The auction would only be held to fill an energy supply gap that would result from the cancellation of the Bertin's contracts.

In this case, Bertin will lose R$114 million in guarantees deposited in 2008 to participate in the auction.

Aneel is expected to decide on the case in coming weeks, the spokesperson said.

EPE recently confirmed that more than 15GW of wind projects have been registered for the A-5 and A-3 auctions.

The A-3 auction has been postponed because of lack of future demand as a result of a economic slowdown in Brazil.

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