Brazil to Sell Operating Licenses for Five Hydropower Plants

The Brazilian government will auction off rights to operate five existing hydroelectric dams by Sept. 30, a notice published on Wednesday in the official gazette said.

The five hydropower plants have a combined capacity to generate 2.93 gigawatts. Four of those plants are operated by Companhia Energética de Minas Gerais, or Cemig, which is still fighting in courts to retain the operating licenses for the plants.

The auction is part of Brazil's drive to sell licenses for infrastructure and energy projects, such as power plants, roads, airports and port terminals. Proceeds from the sales were to be used by the government to cut its budget deficit.

Among the hydroelectric dams to be passed on to new operators is the São Simão unit, in the Paranaíba river, one of the largest plants under operation by Cemig with 1,710 megawatts of generation capacity.

The old operation licenses for the existing dams have already expired. Cemig tried to retain operation rights, but the federal government won the last court battle in March allowing it to proceed with the auctions.

The Energy Ministry expects the sale of new operating rights will raise around 12 billion reais ($3.88 billion). A final date for the auction is yet to be announced.

This is the second auction of operating rights for hydroelectric plants organized by the government. In the first auction in November 2015, it sold 29 licenses for dams worth 17 billion reais ($5.5 billion).

Reporting by Marcelo Teixeira