Itumbiara Transmissora de Energia Ltda. (ITE)

MIGA has issued guarantees of $35.4 million to Cobra Instalaciones y Servicios S.A. (Cobra) of Spain to cover its $39.2 million equity investment in a transmission line project in Brazil. The coverage is for fifteen years against the risk of breach of contract, and up to 10 years against the risk of transfer restriction.

The ITE project consists of the construction and operation of a 500-kV transmission line from the existing Itumbiara substation in the Municipality of Araporã (State of Minas Gerais) to the existing Cuiabá substation in the Municipality of Cuiabá (State of Mato Grosso). The project will be an interconnector between the North-Northeast, North Central West, and the Southeast regions’ grids.

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.