English version - Sterlite Power wants to up $ 4 billion in energy projects by 2022 in Brazil

May 19 2018

The Indian group Sterlite Power, which last year won concessions to build power transmission lines in Brazil that are expected to demand US $ 1 billion, estimates it will multiply by four the volume of investments in projects in the country in about four years, the company's global president told Reuters.

Looking for better returns and a wide range of investment opportunities in Brazil, Sterlite's idea is to grow rapidly in the country and also use its headquarters in São Paulo as a base for future expansion in other parts of Latin America.

Brazil's energy transmission market has attracted investments from global giants such as China's State Grid, the world's largest power company, France's Engie and Portugal's EDP, which has China Three Gorges as a major shareholder and strategic partner.

These companies have increased their appetite for business in the sector mainly since last year, after the Brazilian government raised the authorized return for the transmission projects due to the need to attract new entrepreneurs in the middle of a retraction of investments of state-owned Eletrobras, Latin America.

"We have already committed ourselves to $ 1 billion (in projects). And we are open to expanding this in three to four times over the next three to four years, "Sterlite global CEO Pratik Agarwal told Reuters in an interview with Reuters. He is in the country to better understand the local culture and consolidate the company's presence.

The investment projection is in line with the contributions of $ 1 billion a year previously reported to Reuters by a source familiar with Sterlite's strategy.

He said that Sterlite has structured a local team and is currently looking for an experienced executive to take command of Brazilian operations and lead an expansion that may pass in the short or medium term due to incursions in other countries.

The investment in Brazil is, for the time being, the first of Sterlite outside India, although the company originates in the Vedanta Group, with deals in oil and gas, mining and other segments around the world.

"São Paulo will be our headquarters in Latin America to look beyond Brazil," he said.

He cited Argentina, Chile, Mexico and possibly Peru as potential countries of interest, and pointed out that the advance to these markets could take place over a period of one to three years.

The executive also pointed out that in addition to participating in government auctions for new projects, Sterlite will also evaluate possible acquisitions as part of its strategy in the country.

The preference in all investments, according to him, is for "complex" projects, in which he evaluates that the company believes it is better able to generate value and obtain advantages over competitors.

Technology and agility

Sterlite caught the attention of the Brazilian energy industry in its first bid in April last year to take out a broadcast concession with a discount of 58.9 percent over the government's maximum allowable revenue for the project.

The company also took one more project at that same event and a third at another auction in December, when it got the largest venture offered to investors.

The construction of these already sold lines will require about 1 billion dollars.

According to Pratik, the strategy of the company to have a good return even after the high discounts are through intensive use of technology, good planning of works and anticipation of delivery of the lines, which generates an additional revenue.

"There is a certain myth that our discount was very high. If you look, in the same auction there were bids with similar discount ... we have a very robust planning process. I believe we put more men-hours ahead of a project than most companies in the country and the world, "he said.

He also said that the company has already secured funding and all environmental licenses for one of its three projects and that there is great confidence in being able to deliver them in advance.

"We have an excellent track record of delivering projects ahead of schedule and using some innovative strategies," Pratik said.

He said that in a project in India the company even used helicopters to carry transmission towers at a site in a mountainous region, which saved months before the most traditional way used before by Indian industry: loading equipment with donkeys of load.

Read the portuguese version on - https://br.reuters.com/article/businessNews/idBRKCN1IJ2L4-OBRBS