ISA CTEEP is constantly evaluating growth opportunities in the market, having recently made advances in this direction. The Company’s strategy consists in expanding its presence in Brazil through auctions and/or acquisitions with synergies with existent operations.

In line with its growth strategy and in accordance with the Material Fact published on April 6, 2018, ISA CTEEP signed a Share Purchase Agreement with Cymi Construções e Participações S.A. (“CYMI”) to acquire 50% of the capital stock in Interligação Elétrica Sul A.A. (“IE SUL”) for the amount of R$ 20 million. The conclusion of the acquisition is still subject to the approval and agreement of certain third parties. Once completed, the Company will assume full control of this subsidiary.

In the last two years, the Company has bid successfully for ten lots in ANEEL transmission auctions which will add 1.3 thousand kilometers of extension to its transmission lines with an addition of 7.5 thousand MVA to its portfolio. The new projects amount to an estimated CapEx of R$ 2.9 billion, representing an increase in RAP of approximately R$ 448 million, once all assets are operational.

The implementation of the projects is in line with the challenging estimated budget and timeframe, which builds in a reduction in CapEx and the start up ahead of schedule.

The IE Itapura and IE Itaquerê subsidiaries, both wholly-owned by ISA CTEEP, began their construction in May and July 2018, respectively, according to the established schedule.

 

Auctions Subsidiaries % ISA CTEEP Location ANEEL CAPEX
ISA CTEEP Participation
(BRL MM)
Discount RAP ISA
CTEEP
(BRL MM)
Profit
Regime
Contract
signature
Implementation
Deadline ANEEL
Necessity
Date¹
Environmental
License (LI)
Initation of
Construction

Auction 03/2015¹
10/28/2016
IE Paraguaçú
(Lot 3) 
50% Bahia
Minas Gerais
255 0,0% 53 Real Profit Feb/17 Feb/22 Jan/192 3Q19 -
IE Aimorés
(Lot 4)
50% Minas Gerais 171 0,0% 36 Real Profit Feb/17 Feb/22 Jan/192 3Q19 -
IE Itaúnas
(Lot 21)
100% Espírito Santo 298 25,1% 47 Presumed Profit Feb/17 Feb/22 Jul/18 Sep/186
Auction 05/2016
04/24/2017
ERB1
(Lot 1)
50% Paraná 968 33,2% 134 Real Profit Aug/17 Aug/22 Feb/213 1Q20 -
IE Tibagi
(Lot 5)
100% São Paulo 
Paraná
135 32,2% 18 Presumed Profit Aug/17 Aug/21 Jan/17 Sep/18
IE Itaquerê
(Lot 6)
100% São Paulo 398 44,5% 46 Presumed Profit Aug/17 Aug/21 Jun/18 Jul/18
IE Aguapeí
(Lot 29)
100% São Paulo 602 52,7% 54 Presumed Profit Aug/17 Aug/21 Dec/21 1Q19 -
IE Itapura
(Lot 25)
100% São Paulo
(Bauru)
126 57,6% 11 Presumed Profit Aug/17 Feb/21 Jan/20 May/18
Auction
02/2018
06/29/2018
IE Itapura
(Lot 10)
100% São Paulo
(Lorena)
238 73,9% 10 Presumed Profit Sep/18 Sep/22 Sep/214 N/A5 -
IE Biguaçu
(Lot 1)
100% Santa Catarina 641 66,7% 38 Presumed Profit Sep/18 Sep/23 Sep/214 N/A5 -
Total 3.831   447  
1 According to concession contract
2 Conditioned to Lot 2 (Alupar)
3 To receive the totality of RAP
4 According to draft of concession contract 5 Does not require Environmental License
6 IE Itaúnas is formed of the implantation of tarnsmission line 345 kV Viana 2 (ES) - João Neiva 2 (ES), the construction of new substation 345/138 kV João Neiva 2, and the expansion of substation 345 kV Viana. The Company begain its construction work of substation Viana. The installment license for the Transmission Line and the João Neiva 2 Substation still has not been issued


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ISA CTEEP and its wholly and jointly-owned subsidiaries invested BRL 93.7 million in 3Q18, 64.3% above the amount reported for 3Q17. The variation is explained principally by:

(i) increased investment in pre-operational subsidiaries for payment of environmental licensing fees and landrelated negotiations. Investments are in line with the challenging budget and schedule that has been set. It is worth noting that the main investment flows at the subsidiaries will occur in the 3rd and 4th year of their respective construction work;

(ii) higher investments in operational subsidiaries reflects mainly additional CapEx at IE Madeira for the solution of pending issues, partially compensated by:

(iii) reduction in reinforcements and improvements activity. Investments in reinforcements and improvements are in line with the planned budget. Investments between the quarters under review are not comparable since both periods have distinct projects and depend on Authorizing Resolutions from ANEEL.

In the first nine months of this year, investments totaled BRL 327.7 million (+76.5% vs. 9M17).

Investments
(BRL million) 3Q18 3Q17 Chg (%) 9M18 9M17 Chg (%)
ISA CTEEP (Reinforcements/Improvements) 47,8 54,1 -11,6% 112,3 148,8 -24,5%
Total Subsidiaries 45,9 2,9 1457,4% 215,3 36,9 484,2%
Operational 16,8 2,7 526,5% 44,4 36,4 22,0%
Pre-operational 29,1 0,3 10843,4% 171,0 0,5 35999,3%
Total 93,7 57,0 64,3% 327,6 185,6 76,5%
Note: Realized investments are demonstrated in the competence vision

Updated on January 7, 2019.