MGE Transmissao

active

In June 2010, the Brazilian company Consorcio MGE Transmissao was awarded in a competitive bidding process the contract to build and operate 258-km of transmission lines and one substation (500/345 kV) located in the states of Minas Gerais and Espirito Santo. Consorcio MGE was established as a partnership of state-owned Furnas Centrais Eletricas (49%), the Brazilian company J. Malucelli Energia S.A. (20%) and Desenvix Energias Renovaveis S.A. (31%). Besides Consorcio MGE , other five companies took part in the contest: CYMI HOLDING S.A; ISOLUX ENERGIA E PARTICIPAÇÕES S/A; ALUPAR INVESTIMENTO S.A.; ELECNOR TRANSMISSÃO DE ENERGIA S.A.; ABENGOA CONCESSÕES BRASIL HOLDING S/A; and TRANSMISSORA ALIANÇA DE ENERGIA ELETRICA S.A. The bidding criteria set by the regulatory agency ANEEL was the lowest required annual revenue. Consorcio MGE presented the lowest offer, a total value of US$ 11.6 million (BRL23 million), 28 % below the ceiling set by the regulatory agency. The contract was signed in June 2010, and the sponsors created the company MGE Transmissao S.A. to manage the 30-year project. The sponsor committed to invest US$ 143.8 million (BRL 284.08 million) in the transmission line. In January 2012, the state-owned bank BNDES approved a US$ 60.3 million (BRL 119.1 million) loan to MGE. The remaining investment was set to be financed with the sponsors' internal resources. Environmental clearance was awarded in July 2011. As of October 2012, the construction works were underway, and commercial operations were expected to commence in December 2012. The company was granted the right to take part in the government program called Regime Especial de Incentivos para o Desenvolvimento da Infra-Estrutura (Reidi). Companies selected to take part in this program were given tax cuts in the acquisition of capital equipment and construction material acquired both in the domestic and international markets (this incentive represented a cost reduction of about 9.25%). In addition, the company was allowed to use accelerated depreciation methods of accounting for construction expenditures. Commercial operations commenced in August 2014.