State Grid likely to get first license for Brazil line in February: sources

Reuters News
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Posted: Jan 31, 2017 9:00 AM

By Silvio Cascione and Leonardo Goy

BRASILIA (Reuters) - Brazil's government expects environmental regulator Ibama to grant preliminary approval to Chinese utility State Grid in the second half of February for another power line in the Amazon forest, two government sources told Reuters on Tuesday.

State Grid, the world's biggest utility, had expected to receive the preliminary license last October. A second license would then be needed for the company to start construction, probably some months later.

The company has been pushing for a speedier process as delays could increase the cost of the 2,500 km (1,553-mile) line between the Belo Monte dam and cities throughout Brazil beyond the 7 billion reais ($2.21 billion) originally planned.

Ibama is expected to finish its technical analysis on the project around Feb. 17 and then grant the preliminary license about a week later, according to the sources, who requested anonymity as they are not allowed to talk publicly. They did not give a forecast for the building license.

Although there was still a small chance that the license could be denied, the sources said the process was going on normally. The Chinese company, together with two units of the Brazil's Centrais Elétricas do Brasil SA state-controlled utility, is already working on another transmission line in the same area.

Belo Monte, built on the Xingu River in the Amazon forest, will have a total installed capacity of 11,233 megawatts, exceeded only by China's Three Gorges and Brazil's Itaipu dams.

Construction of the power line needs to be complete by December 2019 if Belo Monte is to operate at full capacity. Otherwise, it would only be able to supply part of its capacity to the rest of the country.

Brazil's long environmental licensing process is often blamed for the high cost of doing business in the country, which has been in a deep recession since 2015.

Ibama and State Grid did not immediately respond to requests for comment.

($1 = 3.1683 reais)

(Reporting by Silvio Cascione; Editing by Lisa Von Ahn)