Cemig Invests US$1.95bn in Brazil’s Grid

Brazilians can look forward to a more reliable power supply as power company Cemig ploughs billions of dollars in to the country’s grid.
Published: Wed 14 Nov 2012

What happened                                                                         

Cemig, one of Brazil’s largest electric companies, will be investing US$1.95bn (4bn reais) into its power distribution system. The funds will go towards the expansion and upgrade of the grid which is due to be completed by March 2013.

Background          

The investment falls under Cemig’s (Companhia Energética de Minas Gerais) four-year development plan which has seen a total investment of US$1.7bn (3.6bn Reals) since 2008. The investments will benefit 18 million consumers in the firm’s concession area. Cemig explains that the development plan will allow the market to grow in accordance with the availability of energy. Through the plan, Cemig aims to improve the continuity and quality of its electric energy supply.

The investments form part of an agreement with national power regulator Aneel during its 2008 periodic tariff revision.

The Belo-Horizonte-based firm says that seven million customers can look forward to a modernized metering system. Cemig has just recently awarded S&C Electric Company, a global smart grid leader, a US$38.5m (78m Reals) contract to replace underground distribution switchgear line-ups in cities across the state of Minas Gerais, including the metropolitan area of Belo Horizonte. The switchgear replacement will result in modern, smart-grid functionality for Cemig’s customers. Modernizing the area’s grid will enhance electric service reliability and grid efficiency. It is also essential for broader economic growth, as well as for the 2014 FIFA World Cup tournament preparations and 2016 Olympics.

Cemig is looking to diversify its sources of revenue by investing in gas whilst bidding for US$4.93bn (10bn Reals) worth of contracts in order to build power transmission lines. If Cemig wins some of those contracts, it plans to raise funding in the local market in 2013 by selling tax-free bonds linked to infrastructure projects.

Cemig is alsocarrying out a wide-ranging program of revitalization of its plants. There are maintenance and upgrading projects in progress at the São Simão, Volta Grande and Salto Grande hydroelectric plants. The program is planned to continue until 2025, and also includes the Três Marias, Itutinga, Camargos, Jaguara, Emborcação, Nova Ponte andMiranda plants, with total planned investment of US$7m (1.6bn Reals).

Cemig continues to invest in automation of its facilities. Remote assistance has now been put in place at 13 plants, 12 small hydro plants (“PCH’s”) and 24 transmission substations. With its Automation Master Plan, Cemig will install remote assistance in 17 plants, 14 PCHs and 37 transmission substations. Completion of the whole program is planned for December 2016.

Last Word

A reliable electric service is an ongoing issue in Brazil which is facing positive economic growth and receiving much global attention. Investments such as these are essential to keep the lights on.

Sources

Bloomberg-Cemig Defies Prediction for Biggest BRIC Dividend Cut

Business News Americas-Cemig to outlay US$1.95bn in expansion, upgrades

S&C Electric Company-Cemig and S&C Electric Company Improve Grid Reliability