RIO DE JANEIRO, BRAZIL – A total of 10 companies are interested in the Santo Antonio do Jari, Cachoeira Caldeirão and Mascarenhas hydroelectric plants owned by EDP Brasil (ENBR3), which has placed its entire hydroelectric generation portfolio up for sale to prioritize solar generation.
According to analysts, EDP Brasil’s sale of hydroelectric plants makes sense as the country’s priority will be distributed generation and transmission of energy. “It is very difficult to build hydroelectric plants in the state of São Paulo,” says Mirae Asset analyst Fernando Bresciani. “AES is investing in alternative energy in the Northeast, mainly wind power. Buying a ready-made hydroelectric plant makes perfect sense for it and for CESP.”
Bresciani says that the sale of EDP’s hydroelectric plants should have a premium, because the dispute will be great, as the projects are installed in strategic regions. The plants, located in Pará and Espírito Santo, have a combined installed capacity of 800 megawatts (MW).
Electricity analyst at Genial Investimentos, Vitor Sousa says that CESP is a good candidate to become the buyer, for having low debt and being a net cash generator. According to him, AES Brasil doesn’t have as much room on its financial balance to make this kind of purchase.
According to Sousa, when looking at this type of investment, foreign capital leads in detriment of national capital. “The Chinese, for example, buy infrastructure – and expensive infrastructure – in Brazil.”
Eneva, AES Brasil and Votorantim Energia are said to have bid for the assets. AES Brasil said it has not make an offer for EDP. Eneva and Votorantim Energia neither confirm nor deny their interest. In a statement, Eneva said it is “always attentive to market opportunities that make sense to its strategy.” Votorantim Energia said it “will not comment on negotiations.”