IEMG Neves 1 - Mesquita Transmission line

active

On November 24, 2006, Brazil’s federal regulator ANEEL awarded Interconexion Electrica SA (ISA) a 30-year contract for the construction and operation of a transmission line connecting the substations the Neves 1 and Mesquita The 500kV line was to stretch 172km and pass through 14 municipalities in Minas Gerais state. ISA formed Interligacao Eletrica de Minas Gerais SA (IEMG) as the project company on December 13, 2006. Later, under a shareholders’ agreement entered with CYMI Holding S.A, ISA transferred to this company 40% of its participation, and the remaining 60%, to CTEEP, ISA’s subsidiary. The objective of the project was to increase the energy efficiency in Minas Gerais state. The contract was awarded to ISA in an international competitive tender organized by ANEEL that was officially titled Auction 005/2006, lot D in November 2006 . ISA won the tender by offering the lowest annual revenue of 10.8 million reais which was 40% below the asking price. The number of final bids for the auction was not publically available although over 28 companies participated in the auction for lots A-D. The project had a total cost estimated at US $66.1 million (121 million real). The project reached financial closure in late September 2008 when BNDES granted IEMG a 70.5mn-real (US $38.5 million) credit line. The debt to equity ratio was 58 to 42. The project started commercial operation in December 2008. Figures converted to USD using the period average, market rate for 2008 published by the IMF.