Brazil government could decree high revenue for Roraima electric line: sources

[SAO PAULO] The government of Brazil's President Jair Bolsonaro is considering issuing a decree that would guarantee high revenues for the operator of a proposed electricity transmission line to the state of Roraima, two sources familiar with the matter told Reuters.

Roraima is not connected to the rest of Brazil's electricity grid and has relied on Venezuela for electricity, with the state experiencing cuts to the power supply as its neighbor's economy collapses. Electricity firm Alupar Investimento SA and a subsidiary of state-owned Centrais Eletricas Brasileiras, known as Eletrobras, banded together to win a bid for the project in 2011, but it has yet to receive an environmental license.

The decree would be designed to ensure the companies remain interested in the project despite regulatory delays, the sources said.

Alupar and Eletrobras have argued that the project is only feasible with an annual revenue of 396 million reais (S$136.04 million), one of the sources said, compared to the revenue of 121 million reais per year that the firms accepted in the bidding.

Using methodology that electricity regulator Aneel has used in similar cases would indicate the annual revenue should rise to 200 million reais annually, the second source said.

As the crisis in Venezuela deepened, Bolsonaro in February declared the project to be "of national interest", which allows for some approvals to be fast tracked.

Brazil's Mines and Energy Ministry, Aneel, Eletrobras and Alupar declined to immediately comment on a possible decree.

REUTERS