BNDES announces new financing conditions for energy auctions

Nov 27, 2017

Generation projects will be able to choose between TJLP, TLP and IPCA

They will also have the option of choosing the amortization system: SAC or Price

The new financing conditions for projects of electric power generation (A-4 and A-6) and transmission that win the public auctions to be held by the federal government in December 2017 can already be found on the website of the Brazilian Development Bank (BNDES). The new rules bring changes that offer more flexibility in the financing structuring to entrepreneurs.

In the case of generation auctions, one novelty is the possibility of the winners to choose between three rates: TJLP (Long-Term Interest Rate, which is still in force for auction public notices published in 2017); the new TLP (Long-Term Rate) and IPCA (Extended National Consumer Price Index). Entrepreneurs will be able to evaluate which rate is the most convenient for their business structuring.

Another change in the conditions is the maximum participation of BNDES on the value of eligible items – previously divided into three categories (80% for solar energy; 70% for wind energy; and 50% for power and thermal plants) – has now been standardized: up to 80% for all projects, regardless of the form of power generation.

In addition, entrepreneurs can now choose between two amortization systems: SAC (Constant amortization system) and Price. In the option for the Price system, the minimum Debt Service Coverage Ratio (DSCR) of 1.3 in the SAC amortization system will be used to calculate the value of the debt with BNDES. This debt must maintain minimum DSCR of 1.6 in the Price system. If the project chooses additional resources, such as debentures, it will have to maintain minimum DSCR of 1.4. In the option for the SAC system, BNDES will be the only creditor of the project, with DSCR of 1.2.

Wind generators and photovoltaic systems purchased by the project must meet the determinations of the Computerized Manufacturers Accreditation system (CFI). Recent changes in the rules for accreditation of the modules and photovoltaic systems result from a dialogue with the photovoltaic segment and provide flexible alternatives for the accreditation and maintenance in the Computerized Accreditation Manufacturers system (CFI) of BNDES.

Transmission – In the energy transmission segment, BNDES maintained the financing conditions of the 001/2017 auction, however with a novelty: the possibility of using TLP as a financing indexer, in addition to IPCA, at the client’s criterion. In addition, regarding the financing of machines and equipment, the client will be able to choose between the TJLP, TLP and IPCA financing.

The conditions for transmission repeat the formula that has ensured the success of recent auctions and aim to encourage the issuance of infrastructure debentures by providing longer financing, with 20 years, and the amortization Price system with DSCR of 2.0, allowing greater participation of the infrastructure debentures in the projects.

Apart from this, for both generation and transmission, BNDES has established automatic and objective criteria for the distribution of dividends and equity interest, according to criteria published on the Bank’s website.

This way, BNDES continues the policy in support of the expansion of the power generation and transmission capacity of the Brazilian Electric System and now offers more flexible conditions to accommodate the various business strategies of different economical groups.

The financial conditions expected in the operational policy can be found on the website of BNDES, in Infrastructure>Electric Power, or directly through the links: