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Iberdrola And GIC To Develop Transmission Networks In Brazil

May 2, 2023
Partnership with GIC to drive Iberdola subsidiary Neoenergia’s growth in the Brazilian transmission sector.

Iberdrola's 2023-2025 Strategic Plan has taken a significant step forward with the signing of a strategic agreement with Singaporean investment firm GIC to develop transmission networks in Brazil, worth $472 million.

The agreement involves co-investing in operational assets, such as Jalapão, Santa Luzia, Dourados, Atibaia, Biguaçu, Sobral, Narandiba, and Río Formoso, which encompass a total of 1,865 km of transmission lines and an annual profitability of $85 million, with a concession term of 25 years.

Iberdrola’s Brazilian subsidiary Neoenergia will have a 50% stake in the project, which is valued at $236 million.

The partners have also signed a framework agreement to participate jointly in future tenders for electricity transmission assets in Brazil, including the upcoming auction scheduled for June 30, 2023.

GIC will become a preferred partner for assets under construction and upcoming auctions, including the right to acquire a 50% stake in other assets under construction and operation, such as Itabapoana, Guanabara, Vale do Itajaí, Lagoa dos Patos, Morro do Chapéu, Estreito, Alto do Parnaíba, Paraíso, and Potiguar Sul. 

These assets comprise a total of 6,279 km and generate an annual return of approximately $256 million.

After the transaction, Neoenergia will no longer consolidate the debt of the operational assets considered within the scope of the agreement. Furthermore, its partnership with GIC will enable the company to consolidate its firm commitment to growth in the local transmission sector.

Iberdrola’s record investment plan of $52 billion is being supported by this agreement, which is part of the company’s non-core asset rotation program that is now 100% fulfilled. The plan will allocate approximately $30 billion to electricity grids worldwide, increasing the value of the company's network assets to $62 billion in the next three years.

Iberdrola also intends to invest around $19 billion in the renewables business and expand its renewable energy portfolio by over 12 GW.

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