BNDES approves loan to Chinese-owned electricity company in Brazil

The loan will pump US$1.38 billion into power transmission schemes, and the projects’ Chinese owners also access local capital markets to fund energy operations in Brazil

The board of directors of the National Bank for Economic and Social Development (BNDES) in Brazil have approved a US$1.38 billion loan to Chinese owned Xingu Rio Transmissora de Energia.

Xingu Rio Transmissora de Energia is a special purpose company engaged in the installation, construction, operation and maintenance of power transmission projects. Established in 2015, it is a subsidiary of State Grid Brazil Holding, in turn owned by State Grid Corporation of China (SGCC).

Xingu Rio holds the concession to build the 800kV Xingu-Terminal Rio power transmission system, which will run across 78 municipalities in five Brazilian states.

One of two bipoles has already commenced operations. The 2,092 kilometres ultra-high voltage line, from Xingu in northern Pará state to Estreito in the state of Minas Gerais, is the longest of its type in Latin America. It is operated by Belo Monte Transmissora de Energia (BMTE), a special purpose company formed by State Grid Corporation of China and Brazilian state-run companies Furnas and Eletronorte.

A second bipole, with a length of 2,520 kilometres, is currently under construction, and tests are expected to be carried out in the first half of 2019. This line will serve the city of Rio de Janeiro.

Xingu Rio has been accessing local capital markets for funding, as well as bank debt. Earlier this year the company made an offering of US$358.6 million of notes guaranteed by State Grid Brazil Holding. Banco Santander acted as lead manager on the offering.

In 2010, State Grid Brazil Holding purchased a number of Brazilian energy transmission companies, and has since become one of the biggest electricity companies in Brazil, including ownership of utilities in major cities.

Earlier this year State Grid said that it would invest US$38 billion in Brazil over the next five years, including investments in transmission and generation. Investment in the transmission segment alone will total more than R$90 billion, connecting hydro, wind and solar generation capacity in the north with highly populated areas in the southeast.