A-4 and A-6 New Energy Auctions of 2017

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Objective

To support projects that aim to expand and/or modernize the country’s infrastructure of energy generation, winners of A-4 and A-6 New Energy Auctions of 2017.

Who is entitled to request financial support

Companies with seat and administration in Brazil and legal entities governed by public law.

What is eligible to receive financial support

Projects of solar, wind, hydroelectric, biomass and natural gas-fired combined cycle energy, winners of A-4 and A-6 Auctions of 2017.

Note:

Only solar energy projects whose modules and photovoltaic systems are registered in the methodology for accreditation of photovoltaic equipment, launched in August 2014 and reviewed in June 2017 shall be eligible for funding.
Only wind energy projects whose modules and photovoltaic systems are registered in the methodology for accreditation and financing of wind turbines, launched in December 2012.
BNDES’ support for projects of natural gas-fired combined cycle energy is dependent upon determined socioenvironmental criteria.

Minimum loan amount

R$ 20 million. For lower values, refer to BNDES Automatic financing lines.

Note: Projects to be financed through BNDES Automatic lines should follow the financial conditions at the time of submission of the financing request.

Interest Rate

Direct support (financing directly with BNDES)

Interest rate = Cost of funds + BNDES’ margin + Risk spread where:

Composition of interest rates for direct support

Cost of funds = TJLP (Brazilian long-term interest rate) or TLP (long-term rate) or IPCA (consumer price index), at the Customer’s discretion

BNDES’ margin = According to conditions existing at the time of project framework

Credit risk spread = According to conditions existing at the time of project framework

Indirect support (finance done by intermediation of commercial banks)

Interest rate = Cost of funds + BNDES’ margin + Financial intermediation rate + Commercial bank spread, as follows:

Composition of interest rates for indirect support

Cost of funds = TJLP or TLP or IPCA, at the Customer’s discretion

BNDES’ margin = According to conditions existing at the time of project framework

Financial intermediation rate = According to conditions existing at the time of project framework

Commercial bank spread = Negotiated between the Commercial Bank and the customer/project.

Also, refer to other rates charged in BNDES’ financing contracts.

BNDES’ maximum participation

For solar energy:

Up to 80% value of the module or photovoltaic system, multiplied by “C Factor”; and
Up to 80% value of other eligible items.

“C Factor” value shall be determined by the quantity of components manufactured and/or productive processes performed in Brazil, according to a new methodology for accreditation of photovoltaic equipment and systems. The greater the quantity of components manufactured or productive processes performed in Brazil, the greater BNDES’ financing participation.

For other energy sources:

Up to 80% value of eligible items.

The project shall have at least 20% investment of equity investment.

BNDES might acquire infrastructure bonds issued by the project.

Amortization

Terms: (maturity)

Hydroelectric plants of any size: 20 years
Solar energy: 18 years
Biomass of A-6 Auction: 20 years
Biomass of A-4 Auction: 16 years
Wind energy: 16 years
Natural gas-fired combined cycle energy: 16 years

The interest shall be capitalized during the grace period, which may be of up to six months after the entry of the project into commercial operation, set forth at the time of the deliberation regarding the credit granting.

Amortization System: PRICE or Constant Amortization System (SAC), at the customer’s discretion, respecting that set forth in the item Credit Value.

Loan Amount

The loan amount shall be determined according to the project capacity of payment, expressed by Debt-Service Coverage Ratio (ICSD).

For the cases in which the customer opts for PRICE system, BNDES’ loan amount shall be calculated based on SAC system and minimum ICSD of 1.3, associated exclusively with BNDES’ debt service. In BNDES’ loan contract, amortization by PRICE system shall be established, and the customer must maintain minimum ICSD of 1.6, measured annually. If the client chooses fund-raising or bonds issuance in addition to BNDES credit, the minimum ICSD of 1.4, measured annually must be maintained, considering the sum of all project debt services, contracted or issued, during the whole period of BNDES’ contract.

For the cases in which the customer chooses the SAC system, there must be BNDES financing only for the project and the value of BNDES loan amount shall be defined based on minimum ICDS of 1.2. The minimum ICDS of 1.2, verified annually, shall be maintained during the whole period of BNDES’ financing contract.

Contractual guarantees and obligations

Indirect support: negotiated between the accredited financial institution and the customer.

Direct support: Defined in the operation analysis, with the following highlights:

Personal guarantees: In the case of bank guarantees required until BNDES declaration of physical and financial completion of projects, they can have minimum term of validity of:

For solar energy: two years, renewable for at least, one year and a half.
For other sources: three years, renewable for at least one year and a half.

Dividends distribution: Dividends and interest on own equity (JCSP) may be distributed as follows:

Up to the completion: maximum amount equivalent to the mandatory minimum, limited to 25% of the Adjusted Net Income.
After the completion: amount may exceed 25% of the Adjusted Net Value, provided that:
- there is no non-compliance with financial and non-financial obligations with BNDES, and
- in the terms set forth in BNDES’ loan contract (i) there are annually audited financial statements, (ii) minimum ICSD has been performed in the previous year, (iii) minimum ICSD performance is not impaired in the current year, and (iv) there was minimum generation of energy in the previous year. Item (iv) does not apply to hydroelectric plants that are part of MRE (Energy Reallocation Mechanism).

Debt Service Reserve Account: It shall be equivalent to six months of the projects debt service (s).

Find out more about guarantees of operations with BNDES’ resources.

Financing availability

This document presents the conditions available at BNDES for those that win the bidding process for A-4 and A-6 New Energy Auctions of 2017, and it does not necessarily imply the future winners of the bid have the right to obtain funding. Once the results have been approved and the energy procurement and sale contracts signed, the winners must apply for BNDES loans, which shall analyze the application and registration status of each applicant and potential guarantors, as well as all legal, economic and environmental aspects of the projects presented.

How to request

Support requests are submitted to BNDES by the interested company or by means of the accredited financial institution, through previous consultation, filled in according to orientations of the information route and sent to:

Banco Nacional de Desenvolvimento Econômico e Social - BNDES
Área de Planejamento e Pesquisa - APP
Departamento de Prioridades - DEPRI
Av. República do Chile, 100 - Protocolo - Térreo
20031-917 - Rio de Janeiro – RJ