BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano and Luisa Tortolano Barreto, Tauil & Chequer Advogados in association with Mayer Brown
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 Concession Renewal Law, the construction and operation rights of power transmission facilities may be granted through concessions following public auctions. The MME defines the transmission 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 operation of power transmission facilities, as well as certain con- struction and operation permits at local level. Power transmission facilities are composed of trans- mission lines, substations, and other equipment with voltages equal to or higher than 230 kV. There are over 200 power transmission concessionaires, operat- ing approximately 200,000 km of transmission lines in Brazil, and around 40% of these facilities are operated by Eletrobras. 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 qualifica- tion after the auction session. The winning bidders are also required to replace their bid bonds with per- formance 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 construction schedule set forth in their concession agreements. The process from the publication of the auction docu- ments 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 obliga- tions on the part of concessionaires regarding the regularity, continuity, safety, efficiency and quality of public services provided, and they establish a con- struction schedule with dates for achieving inter- mediary milestones, and dates for commencing the commissioning and commercial 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. 4.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Transmission Lines and Associated Facilities Similarly, in relation to power generation facilities, if the proponent fails to reach an amicable agreement with landowners over compensation for the construc- tion and operation of power transmission facilities on their land, the proponent may request the issuance of a DUP by ANEEL, in accordance with ANEEL Norma- tive Resolution No 919/2021, which entitles the pro- ponent to easement or expropriation rights over the land. Based on the DUP, the proponent may judicially obtain injunctions against landowners to access the land, and the court will define the fair compensation due to landowners, usually based on market value. 4.5 Monopoly Rights to Provide Transmission Services Power transmission concessionaires have an exclu- sive right to construct and operate the transmis- sion facilities under the scope of their concession agreements. The construction of new facilities or the expansion of the capacity of existing facilities may be required by the ONS and authorised by ANEEL, subject to an additional parcel of the RAP.
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