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04.28.08
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BNDES discloses support to Jirau Power Plant, on Madeira River
BNDES has set up its support and a potential shareholding
interest for Jirau Power Plant construction. Located on
Madeira River, in Rondônia, the plant will deliver an
installed capacity of 3.3 thousand MW. It is one of the
largest energy projects of the Growth Acceleration Project (PAC).
A bidding process will start on May 12.
The winning bidder, that is, the new Jirau Power Plant
concessionaire will be the consortium offering the lowest
energy rate, which will be used to set the energy price for
a 30-year term for utilities companies. The concessionaire
must build the plant and start producing electric power on
2013.
The conditions defined by BNDES to support Jirau Power Plant
are quite similar to the ones required for the support to
Santo Antônio Power Plant, also on Madeira River. The Santo
Antônio Power Plant bid was held on December 10, 2007. The
winning bidder was the consortium consisting of Odebrecht,
Furnas, Cemig, Andrade Gutierrez and the Private Equity
Investment Fund of Santander and Banif. The below-par price
given in the bid reached 35% against the maximum price of
the bid – R$ 122,00/MWh. The winning consortium offered R$
78,87 per MWh.
The fierce competition in Santo Antônio Power Plant bid, as
we seen in the below-par value, shows that energy output in
the Amazon region is quite attractive. The bidding outcome
also puts forward good results in terms of low rates. The
project, currently analyzed at the Bank, generates positive
social impacts due to the regional development and it is
also environmentally sustainable.
BNDES management made three changes on the financial support
to the Jirau Power Plant winning bidder, so as to foster a
fiercer competition:
- The bidder can choose the PRICE system (flat
installment system) instead of SAC (variable installments)
in the loan amortization.
- Adoption of loan service coverage index of 1.2.
- Shareholders are liable to keep a reserve account
with 6 months of loan service when the loan service coverage
index is below 1,3 and a decrease for 3 months of reserve
account when the coverage index is higher than 1,3.
Financial support – According to the rules approved
by the Bank’s management, half of the financing will be made
directly by BNDES, and the other half will made through
accredited financial institutions.
The Bank’s support, given through direct and indirect
financing, will be limited to 75% of total investment.
Shareholders’ capital will be no lower than 20% of the
project's amount, excluding, for calculation purposes, any
interest of the BNDES’ private equity arm, BNDESPAR. The
interest limit of BNDES system may be 10% to 20% of the
company’s capital stock to be constituted for the plant
construction.
BNDESPAR may only join the winning group if the consortium
control is mostly private. Additionally, the winning bidder
must hold an Initial Public Offering within a period to be
set out during the analysis of the project of common share
and must also present corporate governance practices
matching the new market practices.
The Bank’s financial contribution may be made through
corporate financing (financing to companies) and/or through
project finance (financing to the project). The beneficiary
must be a Specific Purpose Company (SPC), setup to separate
project cash flows, equity and risks.
Cost – In the direct category, the loan total amount
will be at the Long-Term Interest Rate (currently at 6.25%)
plus the BNDES basic spread, of 0.5% per annum and credit
risk rate, ranging between 0.46% to 2.54% per annum,
depending on the project risk rating. Interest rates will be
capitalized during the grace period.
Maturities – Maximum loan maturity is 25 years from
the project startup, with maximum grace period of six months
after the expected date for the turbine set commercial
operation date. Amortization will be 20 years.
Collaterals - Collaterals will be set according to
the technical and economic analysis of the project and
shareholders. Possible collaterals: pledge of shares, pledge
of credit rights, reserves of medium of exchange, bank and/or
corporate surety bond and insurance.
BNDES also requires that shareholders prove their capacity
to contribute with their own funds, indicating the source,
availability and contribution schedule. It also requires
proof of technical, economic and financial capacity of
project owners. The assessment will be made based on the
consolidated balance sheet of each company or economic group,
audited by a company listed in the Comissão de Valores
Mobiliários (Brazilian Securities and Exchange Commission -
CVM).
For the shareholders of each consortium participating in
Jirau’s bid, the sum of the shareholders' equity and the
total assets of economic groups and/or companies must be
higher or equal to R$ 9 billion and R$ 20 billion,
respectively.
BNDESPAR Interest - BNDESPAR may only join the
winning group if the consortium control is mostly private.
Additionally, the winning bidder must hold an Initial Public
Offering within a period to be set out during the analysis
of the project, consisting of common shares only.
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