May 17, 2017 / 9:31 PM / 7 months ago

Brazil watchdog sees further delay in Abengoa's power line project

SAO PAULO, May 17 (Reuters) - Brazil’s electricity watchdog Aneel expects a further delay in the construction of 6,000 kilometers of power lines licensed to Abengoa SA, raising concern over the reliability of the country’s grid as a massive new dam comes online, according to an internal document seen by Reuters.

Abengoa halted construction of the transmission lines in 2015 amid a financial crisis at its headquarters in Spain which was followed by a bankruptcy filing at its units operating in Brazil.

Aneel has been trying ever since to revoke the licenses granted to Abengoa and offer the project, which it estimates will require some 8 billion reais ($2.55 billion) in additional spending, to another investor. But Abengoa has won court rulings allowing it to keep the assets and sell them as its Brazilian unit tries to emerge from bankruptcy protection.

“Aneel does not expect the installations in question to be operational by 2022. There is also uncertainty in relation to the progress of the works beyond that date,” the document said.

Abengoa, whose original timeline had called for part of the transmission lines to already be up and running and the rest to be completed by 2018, did not immediately return requests for comment.

The document signals the regulator’s concern over the security and reliability of the national power grid as Brazil’s massive Belo Monte hydroelectric dam, with capacity to generate 11,233 megawatt of electricity, becomes fully operational by 2019.

Even if licenses are sold to a third party during the bankruptcy proceedings, Aneel does not think construction of the lines can be completed by 2022, the document dated April 26 said.

Abengoa’s unfinished lines would serve to distribute Belo Monte electricity as well as power generated at windpower plants based in Brazil’s Northeast.

Bidders including State Grid Corp of China, Transmissora Aliança de Energia Elétrica SA and Equatorial Energia SA have publicly expressed interest in acquiring Abengoa’s assets.

In the Aneel document, the regulator recommends that the government study operating the nationwide power grid without Abengoa’s lines, which could involve issuance of licenses for new projects.

$1 = 3.1331 reais Reporting by Luciano Costa; Writing by Ana Mano; Editing by Christian Plumb and David Gregorio

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