EDP, a company operating across all segments of the Brazilian energy market, has signed a secondary market contract with Chinese company CEE Power and Brazilian company Brafer to acquire Litoral Sul Transmissora de Energia Ltda, which holds the concession rights to Lot Q, acquired by LTSE during the first stage of Tender 13/2015 in April 2016. The Company expects to invest R$ 407 million, factoring in the enterprise’s total updated CAPEX and the price to acuire 100% of Litoral Sul.

Lot Q includes two substations and 142 kilometers of transmission lines connecting two Brazilian states, connecting 12 cities in Santa Catarina and 10 cities in Rio Grande do Sul, running between Tubarão (SC) and Torres (RS). The project could generate over 500 direct jobs during construction.

“EDP is finishing its first transmission project acquisition on the secondary market. The transaction is expected to provide a good return, in line with the Company’s goal of generating value for shareholders”, said Miguel Setas, President of EDP in Brazil.  “Furthermore, Lot Q has synergy with Lot 21, another transmission project currently under construction in Santa Catarina, where we are also one of the largest shareholders in Celesc.

Lot Q is divided into two segments with each expected to begin operating on different dates and receive partial remuneration. The first section, in Santa Catarina, has already been awarded a construction license and earthmoving has already begun. It represents 42% of PAR (permitted annual revenue). The second section, which runs between Santa Catarina and Rio Grande do Sul, accounts for the other 58% and is in the environmental licensing stage, which involves the Brazilian Environmental Institute (Ibama) and the Henrique Luis Roessler State Environmental Protection Foundation (FEPAM)

Transmission Investments

This year, EDP expects to invest R$ 2.9 billion, double its 2018 figure. R$ 2 billion will be used for Transmission project construction.

EDP plans to invest R$ 3.5 billion in Transmission by 2022 to build 1.4 thousand kilometers of transmission lines and six substations in the states of Santa Catarina, Rio Grande do Sul, São Paulo, Minas Gerais and Maranhão. EDP began operating its first transmission venture in the state of Espírito Santo in December 2018, 20 months ahead of schedule.

Expansion in Santa Catarina

At the Litoral Sul acquisition will help consolidate EDP’s operations in Santa Catarina, where it already has overall responsibility for building out Lot 21, which includes 433 kilometers of transmission lines between the cities of Biguaçi and Campos Novos. Last October, EDP concluded a public offering of R$ 1.2 billion in ordinary debentures to help finance the project, achieving almost 100% asset leverage.

EDP is also Celesc’s largest non-controlling shareholder, with a 23.56% stake in the company.

At the management model EDP is using to build the transmission lines is the same model it adopted for its power plant construction projects, which resulted in the Company delivering the Cachoeira Caldeirão, Santo Antônio do Jari and São Manoel hydroelectric power plants several months ahead of schedule. The main factors behind EDP’s ability to deliver projects ahead of schedule are its rigorous operating region selection process and realistic timetables.

About EDP Brazil

EDP has over 20 years’ experience and is one of the biggest private-sector companies operating across the entire value chain. The Company has over 10,000 direct and indirect staff and is involved in energy Generation, Distribution, Transmission, Sales and Services. The company has six hydro power plants and one thermal power station that serve around 3.5 million people in the states of São Paulo and Espírito Santo. The Company recently acquired a majority stake in CELESC, from Santa Catarina. In Brazil, the company is noted for its Innovation, Governance and Sustainability and has been included in the B3 Business Sustainability Index (BSI) for 13 consecutive years.