China's State Grid Asks Brazil to Speed up Power Line License

State Grid Corp of China has asked the Brazilian government and regulators to speed up environmental licensing of a planned power line connecting to the Belo Monte dam in the Amazon forest, according to official documents and a source with direct knowledge of the matter.

 

State Grid, the world's biggest utility, fears it could have to delay construction of the line, possibly forcing the third-largest hydroelectric power dam to begin operating in 2019 below full capacity.

 

Belo Monte, a dam 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.

 

The Chinese firm, together with two units of the Centrais Elétricas do Brasil SA state-controlled utility, has begun work in the first of two transmission lines linking Belo Monte to cities throughout Brazil.

 

The source said State Grid had expected to receive a preliminary license from Brazil's Ibama environmental agency for a second 2,500 kilometers-long transmission line by October 2016 and authorization to begin construction by February 2017.

 

Ibama has not issued either of the licenses for the second transmission line, which will carry power to the southeast, Brazil's biggest energy consumer, and other states.

 

The source said that while the delay did not affect the construction schedule, the preliminary authorization needs to be issued in January, followed by the building authorization in March.

 

Ibama said its analysis was still underway and it had no estimate of when it would be completed.

 

Last week, Brazil's power regulator Aneel contacted the Energy and Mining Ministry to ask for support in speeding up the licensing process, an Aneel document seen by Reuters showed.

 

Construction of the power line, which State Grid estimates will cost 7 billion reais ($2.15 billion), needs to be complete by December 2019 if Belo Monte is to operate in full capacity.

 

A State Grid document seen by Reuters said that delays in the licensing process would also force it to disburse additional money as it could miss deadlines for receiving funds from state development bank BNDES.

 

In an emailed statement, a State Grid representative said the company is confident that the licensing will occur normally and that it will take all efforts to compensate potential delays.