On   August   11th,   2015,   the   Brazilian   Government announced the Power Investment Program (“Programa de Investimento em Energia Elétrica”, or “PIEE”),  which foresees investments in the amount of BRL 186 billion in new power generation and  transmission projects through public auctions to be held between August 2015 and December 2018.

In relation to the generation segment, the Brazilian Government estimates that BRL 116 billion will  be destined to the construction of hydroelectric power plants, small hydroelectric power plants  (“PCHs”), wind farms, solar photovoltaic power plants, fossil and biomass (sugarcane bagasse, wood  chips and others) and thermoelectric plants, which will result in a supply increase of up to 31,500  MW, of which 26,500 MW will be generated from renewable sources, as detailed in the chart below:

Click here to view the table.

To achieve the goals, the Brazilian Government will carry out at least three energy auctions per year in the modalities A-3, A-5, Alternative Sources and  Reserve Energy.

In relation to the financing conditions for power generation projects, the PIEE confirms that the  Brazilian Bank for Economic and Social Development (“BNDES”) will  finance projects with  at  least  1.2 of Debt  Service Coverage Ratio at the Brazilian Long Term Interest Rate (“Taxa de Juros de Longo Prazo”, or  “TJLP”), currently at 6.5%, plus 1.2% and risk spread, subject to the applicable requirements of  local content, as well as the following conditions according to the power source:

Click here to view the table.

Regarding    the    power    transmission    segment,    the Brazilian Government announced that there will be bids for the grant of new concessions that will  demand investments in the amount of BRL 70 billion with an expansion of 37,600 km in transmission  lines in all regions of the country.

In addition to the three transmission bids scheduled for August, October and December 2015, the  Brazilian Government affirmed that there are projects under analysis aiming the: (i) supply to the  State of Amazonas and increase of the reliability in Manaus in the Northern region; (ii) outflow of  the power generated by São Luiz do Tapajós and Jatobá Hydroelectric Plants in the Middle-West  region; (iii) receipt of the power generated by the São Luiz do Tapajós and Jatobá Hydroelectric  Plants in the Southern and Southeastern regions; (iv) expansion of the South-Southeast  interconnection; and (v) outflow of the power generated by wind and solar plants in the Northeastern and Southeastern regions.

Despite the market criticism regarding the lack of great innovations of the PIEE, considering that the mentioned projects had already been presented by the  Energy Research Company (“Empresa de Pesquisa Energética”, or “EPE”), the PIEE is  an  important  indicator  of the Brazilian Government’s intention to prioritize the expansion of the power  generation capacity and the power transmission system with the support of domestic and  international private capital.

To access the presentation on the PIEE published by the Brazilian Ministry of Mines and Energy  (“Ministério de Minas e Energia”, or “MME”), click here.