Brazil revokes Isolux power projects

Wednesday, December 14, 2016

The Brazilian government has rescinded transmission concessions belonging to Spain's Isolux Corsán amid escalating concerns about project delays.

Documents published by power sector regulator Aneel show that Isolux was stripped of two lots secured at Brazil's first transmission auction of 2015.

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Aneel is expected to penalize the company and outline a new bidding process for the projects in the coming weeks.

Isolux, which has the right to appeal, could not immediately be contacted on Wednesday.

The Madrid-based firm received court approval for a US$2.2bn debt-restructuring plan in October, having failed to meet obligations with lenders for engineering projects in several countries.


The two projects involve 686km of high-voltage power lines and seven substations in the northern states of Pará and Rondônia.

Isolux had agreed to combined revenue from the lots of 213mn reais (US$70mn) a year.

Earlier this month the company advised Aneel that it was negotiating the sale of the assets to rival Spanish group Ferrovial after similar talks collapsed with Brookfield Asset Management.

Aneel director general Romeu Ruffino has been quoted in Brazilian media as saying that any deal between the companies will not be accepted.

Isolux has five delayed transmission projects in Brazil, including the Taubaté-Nova Iguaçu line in the country's southeast, which is almost three years behind schedule. The latest expected completion date for the project is April 2017.


The company is not the only Spanish transmission developer to be mired in debt.

Seville-based Abengoa halted work on around 6,100km of power lines in Brazil last year after filing for preliminary creditor protection.

Last month Ruffino said that local group Equatorial Energia was in advanced talks with Abengoa to acquire part of the projects.

In addition to the Isolux and Abengoa crises, Brazil's power transmission segment has been beset by permit bottlenecks, tightening credit terms and miserly revenue caps set by the government.

In May, Aneel said that more than 60% of Brazil's power transmission works were behind schedule.

In recent years several generators have been unable to dispatch electricity from new plants due to the absence of power lines.