Vila do Conde Transmissora de Energia (VCTE)

MIGA has issued a guarantee of $5.4 million to Cobra Instalaciones y Servicios S.A. (Cobra) of Spain to cover its $6.0 million equity investment in a transmission line project in the State of Para, Brazil. The coverage is against the risks of transfer restriction and breach of contract for up to 15 years.

The project is being developed on the basis of three identical concessions awarded in March 2005 through a competitive bidding process. The project consists of the construction and operation of a 500-kV transmission line from the existing Tucuruí substation in the Municipality of Tucuruí to the existing Vila do Conde substation in the Municipality of Barcarena, all in the State of Pará. The project is a third circuit that will deliver power from the Tucuruí hydropower project on the Rio Tocantins to meet the growing demand of, and improve the reliability of the primary power supply to, the city of Belem and the industrial zone of Barcarena.

Transmission lines in Brazil tend to cover large distances, resulting from the fact that most energy is produced in hydroelectric dams located far from major energy consumption centers. The interconnected transmission line system allows for more consistent generation of energy, as it permits regions of the country to continue receiving energy even if there is a dry spell.

For nearly two decades, investment in Brazil’s electricity sector remained low, a result of austerity programs begun in the early 1980s. But in an effort to spur economic growth, the Cardoso administration instituted reforms allowing private participation in the infrastructure sector. Today, most of the resources for expansion of transmission lines result from public-private partnerships, with 13,700 additional kilometers of lines having been constructed since the late 1990s, resulting in the direct employment of some 25,000 people.

The proposed project is part of this overall effort and is expected to further facilitate Brazil’s electricity distribution, providing a consistent energy source needed to fuel the country’s economic growth. The project is in line with the World Bank’s country assistance strategy for Brazil, one of the key objectives of which is to help the country become more competitive by improving its infrastructure.

Environmental Impact Information: Vila do Conde-Tucurui Power Transmission Line in pdf form (Simplified Environmental Report in Portuguese; Environmental and Social Management Plan in Portuguese; and Draft Resettlement Action Plan (Program for Actions to Establish Right of Way [Land Acquisition Plan]). Posted: January 17, 2007