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SÃO PAULO, SP (FOLHAPRESS) – The last auction of energy transmission lines at the end of June is over with a group of about 30 Indians shouting "hexa" to celebrate the six lots sold, 20 auctioned in the event.
These lots, which will require investments of at least R $ 3.64 billion, add to the other three projects won in 2017 by the Indian company Sterlite Power.
In all, there will be at least 7 billion reais of investment in the country to build and operate the transmission lines.
This is only the beginning, according to Pratik Agarwal, world president of the company.
For him, Brazil will require investments in transmission lines for at least the next ten years.
This long-term perspective was one of the factors that attracted the interest of the Indians, who offered aggressive bids at the last auction, with discounts of up to 60 %.
The higher the discount, the lower the price for the consumer.
The company's plan is to invest 4 billion US dollars (the equivalent of about 15 billion US dollars) in Latin America for the next three or four years.
QUESTION – Brazil is the first country in which you invest outside of India. When did this interest start?
PRATIK AGARWAL – We have been studying the Brazilian market for at least five years and we have seen its ups and downs with the Europeans coming and going.
We decided at the end of 2016 that the market was ready and that we were ready to leave India.
Brazil has an interesting model for the construction of transmission lines through concessions.
I do not think any other country in the world has used private capital in this way. The country is ahead in this model.
P. – And why Brazil?
PA – In all the countries we badyze, we look at three main factors.
First, if it has strong regulation.
Secondly, if there is volume available on the market. Brazil is a large country and will most likely need new investment in transmission lines for at least the next 10 years.
Third, the availability of a local ecosystem of partners and engineering firms.
This system is very rich in Brazil, has developed over a long period, and especially now, with a low demand in the infrastructure sector, many of these companies are looking for the sector of the economy. ;energy.
P. – Historically, Brazil has problems of judiciarization and political influence in the electricity sector. Is this a concern?
PA – I think that in general, India and Asian countries have a greater appetite for uncertainty than many Western countries.
Brazil has many conflicts and political uncertainties. But we do not believe that a government has renegotiated contracts already signed.
Regarding environmental uncertainties, it is part of the global market for broadcasting. These are risks that we manage.
P. – How do you see the uncertainty on the electoral scenario?
PA – The election may affect the expansion of the sector, but not the existing contracts.
The truth is that we do not believe that [o resultado] will affect [o crescimento do setor] because the impact of hydrological changes in Brazil has led to a new composition of the energy matrix [com a entrada de mais usinas de energia renovável] and this change will require new investments in the transmission.
P. – In recent years, many Chinese have entered the Brazilian energy sector and we have seen other Indians propose energy auctions. Will India be the next China in the country?
PA – India and China are very different countries.
India has had a more open economy since 1991, with many private companies in the infrastructure sector like us. China has many public companies in the energy sector. It's hard to say.
I do not believe that Indian companies will invest as much in Brazil as China, because in India, those who make these choices are not governments, but companies that evaluate investments not for geopolitical reasons.
However, there is a lot of interest. I believe that several Indian companies have attractive proposals in Brazil, in new industries such as fintechs [startups financeiras] pharmaceutical companies, and even more difficult sectors such as real estate and infrastructure.
These are countries with similar growth rates, similar geologies, and Indians have a greater openness to Brazilian uncertainty.
P. – What are the next Sterlite projects in Brazil? Are there plans to work in other sectors?
PA – Sterlite Power focuses on power transmission. For the moment, let's focus on this sector.
As long as Brazil has transmission problems, we will participate in the auction.
We do not have to enter a high percentage in an auction. We are not motivated by the volume of projects.
There are several reasons for these high rates compared to high discount rates [do último leilão].
Projects with a negative 70% acquisition gap may be more profitable than others, with a 30% discount.
But if, in future auctions, we feel that there is a lot of euphoria on the market and that people are giving unsustainable prices, we will be less aggressive we sit down, wait and finish the projects we already have.
P. – What is the structure of Sterlite in the country today?
PA – Our philosophy is decentralized. We believe that Brazilians are best placed to manage projects in a country like Brazil.
We already have 44 employees and we will reach 80 by the end of this year. We have an office in São Paulo and we will soon announce a president at the local branch.
Are there any plans for acquisitions in Brazil? "We are not looking, but we are open.
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