Sul Transmissora de Energia

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MIGA has provided $10.7 million in investment insurance to Control y Montajes Industriales CYMI, SA of Spain for its investment in the construction of an energy transmission line in Brazil. MIGA's coverage is against the risks of currency transfer restriction and breach of contract, for up to 15 years. This project is part of a larger undertaking involving the construction of five energy transmission lines in different parts of Brazil to reduce existing infrastructure bottlenecks in the country's energy sector. Each of the lines involves a concession agreement with Brazil's federal electricity regulatory agency for the construction, operation, and maintenance of the transmission line. The concessions were subject to international competitive bidding. The Uruguiana-Santa Rosa transmission line project by Sul Transmissora de Energia comprises the construction and operation of a 363-kilometer transmission line in the state of Rio Grande do Sul. The project is expected to significantly improve the reliability of the power grid in the Western part of the state. The project responds to a need to compensate for low investment levels in the country's energy sector, a result of austerity programs in the 1980s. Given that most of Brazil's energy is produced by hydroelectric dams subject to fluctuations in water levels due to drought, the interconnected electrical system will allow for a more efficient and reliable delivery of energy. The project will operate under a Brazilian program that calls for public-private partnerships in its electric energy concessions. Investments undertaken through the program, instituted in 1999, have resulted in an estimated 20 percent increase in electrical capacity and the generation of about 25,000 jobs. The five new transmission lines underwritten by MIGA will together account for about 25 percent of overall electricity transmission. Other development impacts include the generation of taxes and royalties, purchase of local materials, creation of competition, expanded public access to electricity, and job training. The Sul Transmissora de Energia transmission line project is in line with the World Bank Group's Country Assistance Strategy, which aims, among other things, to help Brazil become more competitive by improving its infrastructure.

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