Abengoa crisis leaves LatAm power sector uneasy

Brazil's power regulator Aneel could seize control of transmission assets belonging to troubled energy group Abengoa to avoid major project delays, a consultant has told BNamericas.

The Spanish firm filed for preliminary creditor protection on Wednesday in a bid to avoid a full insolvency process.

The collapse could have significant ripple effects in Latin America, which makes up more than a quarter of the company's US$166bn project pipeline.

In Brazil, Abengoa is building 6,100km of transmission lines to add to the 6,800km already in operation.

According to Diogo Mac Cord de Faria, a partner at Curitiba-based business consultancy LMDM, Aneel will be wary of the possible impact of the Abengoa crisis in Brazil.

He said the watchdog remained "traumatized" by the protracted bankruptcy protection process of utility Rede Energia, which jeopardized electricity services in six states in 2012 and 2013.

"If Abengoa's Brazil operations are affected, Aneel will act decisively," Cord de Faria said in a telephone interview.

"Even if the company applies for bankruptcy protection in Brazil, Aneel can take over the administration of the projects to avoid delays. The memory of the Rede Energia ordeal is still fresh in their mind."

Cord de Faria added that the strong liquidity of Brazil's transmission projects meant Abengoa could easily find buyers for its local assets.

Brazil's power industry is already struggling with chronic transmission delays that have threatened to leave new power plants sitting idle.

At an auction earlier this month, the government awarded just four of 12 projects as a sharp economic downturn, fears of permit delays and tight credit conditions sapped investor interest.

Based in Seville, Abengoa acts in the electric power, biofuel and water infrastructure sectors, among others.

ABENGOA IN LATIN AMERICA

MEXICO

The company's Latin America portfolio comprises a US$2bn backlog in Mexico, including 1.6GW in conventional energy and 230MW in renewable power generation projects.

CHILE

The group is building a US$1bn CSP-solar hybrid project in Chile, where it also won contracts for transmission projects earlier this month.

BRAZIL

Works in Brazil include the Manaus (586km), ATE VIII (108km), Linha Verde (987km) and Norte Brasil (2,375km) transmission lines in the country's north.

ARGENTINA

Abengoa was last week awarded contracts to design and install two power transmission projects in Argentina that will require US$49mn of investment.

JAMAICA

Jamaican power utility JPS this week awarded Abengoa a US$200mn-plus contract to engineer and build the new 190MW Old Harbour Bay combined cycle plant.

OTHERS

Regional energy sector projects also include Peru's 900km ATS transmission line; Chilean lines Quadra I (79km) and II (50km), and a 50MW wind project in Uruguay.