Hydroelectric, Renewables

Suez wins Brazil hydro contract

20 May 2008 – A consortium led by Suez, the Franco-Belgian water and energy utility, has won a licence to build and operate the second of two controversial hydroelectric power stations on the River Madeira on the eastern edge of the Brazilian Amazon.

The Jirau power station is expected to have a total capacity of 3300 MW, enough to deliver close to 2000 MW under normal conditions. It is expected to enter operation in 2013 and to require investments of about R$8.7bn ($5.3bn), according to government estimates.

Jirau and its sister plant on the River Madeira, known as Santo Antonio, are central pieces in government plans to deliver more generating capacity to Brazil’s electricity network, which is expected to face shortages in the next few years if the economy keeps growing at the current rate of 4-5 per cent a year.

The Suez-led consortium won the auction by offering to deliver electricity from the plant at a cost of R$71.4 per MWh, a discount of 21.5 per cent to the maximum price stipulated by the government.

It won the licence against a rival consortium led by Odebrecht, a Brazilian construction group. Odebrecht led a group that won the licence to build the Santo Antonio plant in December, surprising observers by offering to supply electricity at a discount of 35 per cent to the government’s maximum price.

The consortium that will build the Jirau plant consists of Suez with 50.1 per cent, Chesf and Eletrosul, two electricity utilities, with 20 per cent each, and Camargo Corrêa, a construction group, with 9.9 per cent.