BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano, Luisa Tortolano Barreto and Julia Braga, Tauil & Chequer Advogados in association with Mayer Brown
4.2 Obtaining Approvals to Construct and Operate Transmission Lines and Associated Facilities The winning bidders must submit evidence of their legal, technical, economic-financial and tax qualification after the auction session. The winning bidders are also required to replace their bid bonds with performance bonds, for an amount equivalent to at least 5% of the project’s CAPEX, to guarantee the timely implementation of the project in accordance with the construc- tion schedule set forth in their concession agree- ments. The process from the publication of the auction documents up to the signing of the concession contract usually takes four months. 4.3 Terms and Conditions Imposed on Approvals to Construct and Operate a Transmission Line and Associated Facilities Concession agreements provide for several obli- gations on the part of concessionaires regarding the regularity, continuity, safety, efficiency and quality of public services provided, and they establish a construction schedule with dates for achieving intermediary milestones, and dates for commencing the commissioning and commer- cial operation of power transmission facilities. Power transmission concessionaires are subject to regulations established by ANEEL and the ONS’s grid procedures, as well as conditions defined in the concession contract and in the transmission service agreement ( Contrato de Prestação de Serviços de Transmissão or CPST), entered into by and between the concessionaire and the ONS, which provides for the payment of the RAP based on the availability of the power transmission facilities.
tion regime, except hydropower facilities, may be freely disposed of by the authorised agent.
4. Transmission Lines and Associated Facilities 4.1 Constructing and Operating Transmission Lines and Associated Facilities Pursuant to Law No 9,074/1995 and the Con- cession Renewal Law, the construction and operation rights of power transmission facilities may be granted through concessions following public auctions. The MME defines the transmis- sion facilities to be auctioned, the cap for the annual revenue of each concession ( Receita Annual Permitida or RAP) and the deadline for commencement of the commercial operation of such facilities. ANEEL then promotes the reverse auction, where the winning bid criterion is the lowest RAP. The concessions have a 30-year term. Environmental licences at federal or state level are also required for the construction and opera- tion of power transmission facilities, as well as certain construction and operation permits at local level. Power transmission facilities are composed of transmission lines, substations, and other equip- ment with voltages equal to or higher than 230 kV. There are over 200 power transmission con- cessionaires, operating approximately 200,000 km of transmission lines in Brazil, and around 40% of these facilities are operated by Eletro- bras.
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