Embraer enters cargo market with jet conversion

Jets are designed to meet transportation demand of e-commerce and modern trade

08/03/2022

Embraer’s converted E-Jet — Foto: Reprodução

Embraer’s converted E-Jet

Embraer unveiled on Monday its entry into the air freight market with the launch of passenger-to-freight conversions of models E190F and E195F.

The jets are designed to meet the transportation demand of e-commerce and modern trade, which “require fast deliveries and decentralized operations,” the company said.

The conversion is available for E190 and E195 aircraft, scheduled to start operating in early 2024. Embraer projects a market for aircraft of this size of nearly 700 units over 20 years.

The new freighters fill a gap in the market, positioning themselves between turboprops and larger narrowbody jets, said Arjan Meijer, CEO of Embraer Commercial Aviation. “Our P2F E-Jet conversion hits the market as the demand for airfreight continues to take off, and as e-commerce and trade, in general, undergoes a global structural transformation,” he said.

The conversion will be done at Embraer’s units in Brazil and the jets can handle payloads of 10.7 tonnes (E190F) and 12.3 tonnes (E195F).

By Stella Fontes — São Paulo

Source: Valor International

https://valorinternational.globo.com
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Solar financing in Brazil totaled R$16bn in 2021

Amount is more than double volume negotiated in 2020, survey shows

03/07/2022

The financing for solar power generation in Brazil totaled R$16.2 billion in 2021, according to a survey conducted by Clean Energy Latin America (Cela) with the main financial firms that foster the source.

This is the third consecutive year that the country sets a record for financing in the sector. Of the total resources, R$9.5 billion were destined to distributed generation. The other R$6.6 billion were directed to centralized generation (large power plants).

Cela founder and CEO Camila Ramos has been monitoring the sector since 2019 and says that the amount financed in 2021 increased by more than 100% compared to the previous year, which shows a growing interest of organizations in leveraging renewable power projects.

“The year 2021 more than doubled the amount of financing compared to 2020, which shows that the development of the sector came followed by new operators, fintechs and commercial banks entering the market to finance these projects.”

The executive highlights important institutions in the supply of credit, highlighting development banks, such as BNDES, BNB and Banrisul; multilateral banks, such as the Inter-American Development Bank and the European Investment Bank; cooperative credit systems, such as Sicredi; commercial banks, such as Santander, Bradesco, Banco do Brasil, among others, as well as bonds and fintechs.

In centralized generation, Ms. Ramos highlights a 70% increase in the volume financed due to the maturity of solar projects for the free energy market with many contracts signed “and now we see the construction of these projects.”

In distributed generation, the jump in financing was 2.4 times over 2020. “This is due to the increase in tariffs for the final consumer, new investors entering the sector, and more credit lines from financial firms,” she said.

What may hinder the number of deals in 2022 are the interest rates. Brazil has gone from a historic low to a double-digit rate, which is likely to make loans less attractive. However, the executive argues that, in spite of that, financing will continue attractive.

“When looking for financing, the consumer compares the cost of capital, rate of return, and interest rates. For centralized generation, we are going to see a dominance of development banks, such as BNB and BNDES, and bonds, besides the opportunity of financing in foreign currency. For distributed generation, the interest rate variation is going to be less important if consumers are able to exchange their electricity bill for the portion of the financing,” Ms. Ramos said.

What she has also noticed is that the financing companies are improving other financing conditions, such as extending the terms to fit the consumer’s budget. In addition, 2022 will be the first year of Law 14.300/22, which establishes the legal framework for self-generation of energy, microgeneration, and distributed minigeneration, “which can bring greater comfort for financial firms and can impact the risk spread.”

Source: Valor International

https://valorinternational.globo.com
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Impasses with Paraguay challenge new head of Itaipu

Anatalicio Risden has to come to an agreement with the neighboring country to define the power plant’s budget for 2022

03/07/2022

Anatalicio Risden Junior — Foto: Sara Cheida/Itaipu Binacional

Anatalicio Risden Junior — Foto: Sara Cheida/Itaipu Binacional

Without consensus on the power tariff for the Brazilian and Paraguayan markets, Itaipu Binacional power plant still has no defined budget for the year 2022. Facing the impasse between the Brazilian and Paraguayan boards, Admiral Anatalicio Risden Junior takes over the command of the company with the mission of sitting at the table with the Paraguayans — who own 50% of the company — to negotiate the new hydroelectric power plant tariffs.

The challenge will not be easy. The part of the electricity that Paraguay does not use, according to the Itaipu Treaty, must be sold to Brazil, and in this assignment the neighboring country has always been hardline when it comes to changing tariffs. This should have been approved since October of last year, but there is still no agreement on reaching a base.

This is not new. Past administrations have also had difficulties. Until this happens, the plant uses a provisional tariff from the previous year, which is $22.60 per kilowatt, a value frozen since 2009. As any buyer, Brazil, obviously, is interested that the value falls. The executive’s strategy will be to maintain the policy of good neighborliness in the negotiation with the Paraguayans to define the budget of the state-owned company, as well as to carry out a series of structural works in progress. In his first interview since taking office, Mr. Risden says that the negotiations are underway, but without any further definition.

“What we have to do, and this is a point that Minister (of Mines and Energy) Bento Albuquerque and President Jair Bolsonaro put to me, is to maintain the dialogue without losing the bases that Brazil needs. This is the exercise that I have been doing together with the Paraguayan director-general of trying to find a solution in which I can bring the least possible impact to the Brazilian consumer and at the same time have a viewpoint of the Paraguayan problem”, he said.

Mr. Risden is familiar with the business — as he has been working at the company since 2019, when he held the position of chief financial officer. Now as Brazilian CEO, he hopes his time there will be marked by a practice of market management, prioritization of business cost reduction, and planning for the medium and long term.

“To calculate the tariff, which is how much the Brazilian and Paraguayan consumer pays us, there are four elements. One is the budget base. We were able to define all the other elements, but we couldn’t reach an agreement with the budget base. We are running the company without a pre-placed budget.”

Another goal will be to continue a management marked by austerity and major works. The review of contracts and agreements resulted in resources for structuring works, such as a new bridge between Brazil and Paraguay, and the revitalization of the Furnas transmission system to make it more robust, among others. In all, there are about R$2.6 billion invested.

In 2021, the company completed the payment of $600 million for part of the debt, and operating expenses fell. With this, there is the possibility of reducing the tariff value of the plant in the same proportion. All that remains to be done is to agree with the Paraguayans. “What I defend is the lowest cost for the Brazilian consumer. The point is that we are partners in a company and we have to negotiate, and this is what is happening,” he says.

Another of Mr. Risden’s missions will be to assist Brazilian diplomacy in the negotiations on Annex C of the Treaty, which establishes the financial and electricity service provision bases of the binational company. With just over a year to go until the Itaipu Treaty turns 50 years old, the negotiations for the revision of Annex C are with the Foreign Office, known as Itamaraty.

Time is pressing and the date that marks this turning point between the neighboring countries on the company’s financial bases will be April 26, 2023, when the countries will be able to adjust it to current reality, and the plant’s construction debt will be practically zeroed, which will bring the contracting cost to a lower level.

“We have to move towards a market model,” he defends. “The difficulty is that our partner’s integrated power system is far behind ours. They have only one company, Ande [Paraguay’s state-owned company], which does everything,” he adds.

Half a century after it was created, Itaipu is still a key piece in the power security chessboard of both countries. The hydroelectric plant has 14 gigawatts (GW) of installed power, accounts for 8.4% of all the electricity consumed in Brazil and 85.6% of Paraguay’s power. Even though it is the second largest in the world in installed capacity, the binational power plant holds the title of largest power generator on the planet, having produced more than 2.8 billion MWh.

It will be difficult to balance these interests. The Brazilian diplomacy is trying to convince the Paraguayans to give in the negotiations, especially in relation to the price of Paraguayan electricity sold to Brazil. The expectation is that both countries will benefit from Itaipu’s power generation without paying construction costs that represented more than half the price of the company’s power.

Source: Valor International

https://valorinternational.globo.com
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War to boost renewables, expert predicts

To former president of Energy Research Company (EPE) Luiz Barroso, rising oil prices may drive demand for biofuels

03/07/2022

Luiz Barroso — Foto: Leo Pinheiro/Valor

Luiz Barroso — Foto: Leo Pinheiro/Valor

Luiz Barroso, former president of Energy Research Company (EPE) and the current president of consultancy PSR, sees opportunities, especially in Brazil, for renewable energy with the rise in oil and gas prices caused by the Russian invasion of Ukraine. Last week, after the outbreak of the conflict, the international prices of the oil barrel went over the barrier of $100 and saw the highest prices of the last eight years.

For Mr. Barroso, the global geopolitics are already aligned towards the replacement of fossil sources, with higher carbon emissions, by renewable ones. With the scenario of rising fossil fuel prices, the search for clean energy and greater consumption efficiency is likely to accelerate, as well as the development of new technologies, he believes. “Access to energy transition technologies is a geopolitical tool,” he emphasizes.

In this context, the expert says that Brazil may pay more attention to biofuels, in addition to pre-salt gas, as a way to become less dependent on liquefied natural gas (LNG), which is imported.

On the energy planning side, he also believes that the crisis will lead to questions about energy integration in Europe and, consequently, to the search for reducing European dependence on Russian gas, which can increase exports from regions such as North Africa and the United States. Below are the main excerpts from the interview.

Valor: What are the impacts of the Russia-Ukraine crisis for the energy transition in Brazil?

Luiz Barroso: Brazil automatically aligns the main objectives of the energy transition: the cleanest energy, the renewable ones, are the most competitive. This foundation remains and already places us among the global leaders in terms of low carbon intensity in the energy sector. With the crisis, LNG [liquefied natural gas] becomes more expensive, which increases the attractiveness of renewables. This scenario also brings pre-salt gas into the energy equation, with the attribute of greater independence from international prices.

Valor: And biofuels?

Mr. Barroso: The increase in oil prices may stimulate the demand for biofuels, a sector in which Brazil is self-sufficient, in addition to accelerating the discussion of other forms of sustainable mobility. Brazil can also seek to reduce its international dependence on other important components, such as fertilizers, and increase its role in other energies that will redesign the future of energy, such as green hydrogen and, who knows, carbon capture and sequestration.

Valor: Is there any other source that can benefit, in the Brazilian market, from the geopolitical crisis?

Mr. Barroso: The current scenario reminds us of the importance of actions on the demand side and is an opportunity to organize the national energy efficiency agenda. There is room for much gain in commerce and industry. Reducing consumption, through efficiency, is the cheapest and most self-sufficient energy the system can achieve, in addition to being a permanent energy gain. This adds to dynamic demand response actions at prices and tariffs [mechanisms to charge more for energy at times of peak consumption]. On the other hand, there is the reflection that it is essential to transform the way we consume energy with new emerging technologies. There is no point in having an abundant supply of hydrogen and electricity if most of the demand does not run on hydrogen and electricity.

Valor: Could there also be a trend towards greater search for the use of oil, gas and coal in Brazil?

Mr. Barroso: For purely economic reasons, I don’t believe so; all these energy sources will be much more expensive in this decade.

Valor: What are the immediate impacts that you see on global energy policy, especially in Europe, as a result of the current crisis?

Mr. Barroso: More immediately, there will be a quest to reduce dependence on Russian gas, which supplies 40% of European gas consumption, and to ensure sufficient storage levels to ensure consumption in the coming winter. Russia is responsible for more than 60% of the total energy imported by the European Union.

Valor: How can Europe replace Russian gas?

Mr. Barroso: On the supply side, abandoning Russian gas means importing non-Russian gas, basically from North Africa, Norway and the United States, increasing coal production and relying on nuclear power plants. It will also be important to reduce energy consumption. This can be done through energy efficiency actions, such as reducing the temperature of heaters, which are mostly gas-powered in Europe.

Valor: How will conflict impact the energy transition? 

Mr. Barroso: The European energy transition was already one of the most ambitious before the war and it could be accelerated. The geopolitical imperative is aligned and the current environment puts further pressure on reducing dependence on fossil fuels. This can accelerate the development of the technologies we will need in a carbon-neutral future. Massive investments have made it possible to create economies of scale that, together with increases in oil and gas prices, reduce the additional cost of choosing a clean technology over one that emits a greater amount of greenhouse gases, making renewables more accessible to others parts of the world, such as Brazil. But it is not possible to say that it will be a global trend, as each country has its reality and its energy transition.

Valor: May it be necessary to review the emission reduction targets?

Mr. Barroso: I don’t believe in expanding emission reduction targets right away, but the possible increase in emissions in the short term could, in fact, impact the planet’s carbon budget. Further on, this can challenge the sufficiency of the targets, which can trigger a global discussion about who should raise the target and when.

Valor: Could an eventual increase in military spending in the world as a result of this crisis lead to a reduction in resources and collaborative efforts between countries for the energy transition?

Mr. Barroso: It’s still too early to talk about that. In absolute terms, the North Atlantic Treaty Organization [NATO] has planned military expenditures that have not always been met, in amounts currently lower than the annual budgets of government stimulus programs and private direct investment to new technologies for energy transition. So, in theory, I don’t believe in resource reduction. However, and speculating a bit, we may have Western sanctions that ban some countries, like Russia, from accessing some key technologies. Access to energy transition technologies is a geopolitical tool.

Source: Valor Econômico

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War may worsen supply of semiconductors in Brazilian industry

More than 60% of industrial companies that buy chips pointed out difficulties in finding these items in January

03/07/2022

Divulgação TSMC — Foto: Asian semiconductors factory; in Brazil, inventories are likely to be further pressured by conflict

Divulgação TSMC — Foto: Asian semiconductors factory; in Brazil, inventories are likely to be further pressured by conflict

The inventories of semiconductors in Brazil, already in a critical situation, are likely to be further pressured by the Russia-Ukraine war. More than 60% of the industry pointed out difficulties in buying those items in January.

Russia and Ukraine are major global producers of palladium and neon gas, respectively, which are key inputs to make chips. Palladium is a metal especially used in sensors and memory components. Semiconductor-grade neon, on the other hand, is purified by Ukrainian industry and is critical for lasers used in chip manufacturing.

“The war is a new component that has us very concerned, because we have been having problems with semiconductors since suppliers in Asia were no longer able to meet the demand for these items,” said Humberto Barbato, head of Abinee, the Brazilian trade group of the electrical and electronics industry.

Now the war creates a bottleneck in the previous stage, in the suppliers of these semiconductor manufacturers. “Available stocks of raw materials in the semiconductor factories exist, but they are not infinite. From the talks we’ve had with semiconductor makers, the impact is expected to be limited in the short term. But the longer the war lasts, the greater the risk of shortages,” Mr. Barbato said.

Computer and mobile device makers say it is still early to assess any impact of the war in the supply of components to Brazil. “More than the shortage of raw materials, there is inflationary pressure on components,” said Norberto Maraschin, head of consumer business and mobility at Positivo Tecnologia. He refers to the prices of electric and electronic components and freight costs, which surged as Asian plants closed at the beginning of the pandemic.

Although supply is restricted, the scenario is no longer one of shortage and shows signs of improvement. “The value of the container rental for importing components, which went to over $15,000 from $2,000 during the pandemic, has been gradually dropping,” Mr. Maraschin said.

Santa Catarina-based Avell, a high-capacity notebook maker, has adapted to the pace of the semiconductor market, moving up orders by six months instead of two months, said Emerson Salomão, the company’s founder and CEO. Now, according to him, the suppliers’ delivery times are getting shorter. “The situation is better than last year,” the executive said.

The duration of the conflict between Russia and Ukraine will define the impacts on the sector and the deadline for the regularization of the supply chain. “If there was no war, we were anticipating a normalization in the second half of the year”, says Mr. Salomão.

Abinee’s last survey, conducted in January with 80 members, showed that 67% of the respondents that use these components in their production reported difficulties in acquiring them. This means an improvement over the previous survey, from December, in which 73% reported difficulties. Among the respondents, 53% said they believed that the supply of semiconductor components would be normalized by the end of 2022: 22% believed that it would still be in this first half of the year, while 34% predicted that this would only happen in 2023. Still, 13% of the interviewees said that their suppliers had not given any forecast. There has not yet been a survey after the invasion of Ukraine.

As Reuters reported on February 24, many semiconductor manufacturers said they were monitoring the situation. Korean memory chipmaker SK Hynix said it had a large volume of raw material, and GlobalFoundries, which is based in the United States, said it has the flexibility to seek suppliers from other countries.

Source: Valor Econômico

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Embraer halts services, sales to Russia

Russian airline S7 operates 17 aircraft made by the Brazilian company

05/03/2022

Embraer plane — Foto: Divulgação

Embraer plane

Like Boeing and Airbus, Brazilian company Embraer halted the execution of maintenance services and the supply of spare parts for aircraft to customers in Russia and in certain regions of Ukraine.

The decision was taken after new sanctions were imposed by the international community on Russia, in response to the invasion of Ukraine. One of Russia’s largest airlines, S7 Airlines operates 17 Embraer aircraft, all E170s, according to information on its website.

Without providing details of the practical ramifications of the decision, Embraer stated “it is closely monitoring the evolution of the situation and has been complying, and will continue to comply, with the international sanctions imposed on Russia and certain regions of Ukraine”. As a result, “parts, maintenance and technical support services for customers affected by the sanctions” were suspended.

The suspension of commercial activities by aircraft manufacturers, combined with initiatives by leasing companies to ask for the return of jets operating in Russia, could leave most of the local fleet on the ground in the coming weeks.

But the risks aren’t just on the eastern side of that scale. For the world’s three largest aircraft manufacturers, suspending commercial ties with Russian entities is something expected to compromise access to titanium, the light metal used in the manufacture of aircraft and engines.

Russia’s VSMPO-Avisma, part of state-owned conglomerate Rostec, is the world’s largest producer of titanium and parts made from the metal. It is also the main supplier of material to aircraft manufacturers. In this group, the most exposed to the Russian state-owned company is the Brazilian company.

Virtually all of Embraer’s titanium needs are met by VSMPO-Avisma. Questioned, the company said on Sunday that the titanium supply was not a concern at the moment, as its stocks are high.

However, prolonged sanctions will force all companies to seek alternative supply. There are other suppliers in the world — China is the biggest — but costs are likely to rise with competition for the metal.

In the political field, Embraer’s decision is also not simple. The Brazilian government holds a golden share in the aircraft manufacturer, which gives it power over some of the company’s strategic decisions. And, in the Ukraine war, while Brazilian diplomacy approved the United Nations resolution condemning Russian attacks on Ukraine, the position of the head of state has been much less scathing.

Source: Valor International

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Startup digitalizes agricultural commodities trading

Based in Minas Gerais, Grão Direto has German giant Bayer among investors

05/03/2022

Frederico Marques, Alexandre Borges and Pedro Paiva — Foto: Divulgação

Frederico Marques, Alexandre Borges and Pedro Paiva — Foto: Divulgação

When a farmer has a crop to sell, he has to deal with a series of phone calls to get the best offer for his products or even exchange grains for fertilizers and pesticides, in an analogical — and sometimes stressful — process that can last over a week until the contract is signed.

Grão Direto — a startup created by three friends who have known each other since childhood in Uberaba, a country town in Minas Gerais state — wants to change this logic, digitalizing the negotiation of agricultural commodities by connecting rural producers from all over the country to the most diverse buyer profiles, from large trading companies to feed mills and grain warehouses.

Little by little, the agtech founded by the trio Frederico Marques, Alexandre Borges and Pedro Paiva has been gaining traction, and attracting more and more investors. This time, Grão Direto brought to its shareholders the trading companies Amaggi, ADM, Cargill and Dreyfus, which are among the main grain buyers in the country — on the list of big companies, only Bunge and Cofco are not included, for the time being.

To scale up the operation, Grão Direto has raised R$40 million in the third round of investments. In addition to the minority contribution of trading companies, investors who had already supported the startup in the first funding rounds followed.

The list of shareholders also includes names such as the German giant Bayer (the largest seed company in the world), the managers Lanx Capital and Barn, the investment arm of the Rendimento Group, as well as individual investors. Since it was founded in 2017, Grão Direto has raised R$58 million.

“Agribusiness is probably one of the last multi-trillion markets without a marketplace in the physical market,” Alexandre Borges, founder and CEO of Grão Direto, told Pipeline, Valor´s business website.

In the world, agtechs such as Argentina’s Agrofy, the U.S.-based FBN, and Orbia have already advanced in building a marketplace for agricultural inputs, but the journey to creating an ecosystem for trading commodities (in Brazil, mostly grains) is still in its infancy.

Not by chance, Grão Direto managed to attract trading companies, which are also clients of the platform. But the pioneering does not mean that the startup is alone in the market. In Brazil, agtechs such as Tarken (founded by Luiz Tângari and Carlos Neto, the entrepreneurs behind Strider), sold to Syngenta, are also building a grain marketplace.

“Startups are less of a competitor and more of a facilitator for the digitalization of the agribusiness to happen faster. Our main competitors are the inefficient and analogical negotiations,” argues Mr. Borges.

In the Grão Direto model, rural producers have no cost to negotiate grain. So far, the agtech application has had 200,000 downloads. Last year, the startup hit 1 million tonnes traded — a small volume for the size of national production, but a milestone for the business.

To monetize the business, Grão Direto offers services such as digital contracts, which can also be hired by farmers and trading companies. On the buyers’ side, the startup charges a fee per deal closed. In the future, Grão Direto will also get into credit, offering the anticipation of receivables for producers.

With the available data and real-time connections to commodity exchanges, Grão Direto can also offer insights and help producers price their product, pondering variables such as freight. “Our system updated prices more than 1 billion times in 2021. It’s as if we replaced 1 billion phone calls,” jokes the CEO of Grão Direto.

To make the commodities trading platform be accepted by all, the principle is that the strategic partners are minority. Inspired by the New York stock exchange, built by brokerage houses, Grão Direto wants to involve most of the agribusiness players.

“We will bring in other strategic operators in new rounds. The idea is to have diversity, with the entry of rural producers as well. More important than control is to maintain neutrality and independence,” says Mr. Borges.

Due to the involvement of the trading companies, the conclusion of the round depends on the approval of antitrust regulator Cade.

Source: Valor International

https://valorinternational.globo.com
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Petrobras to keep prices in line with international market

Oil giant states it will avoid passing on “external volatilities”

05/03/2022

Petrobras confirmed that it will maintain its commitment to keep fuel prices in Brazil in line with the international market — Foto: Divulgação

Petrobras confirmed that it will maintain its commitment to keep fuel prices in Brazil in line with the international market — Foto: Divulgação

Petrobras confirmed that it will maintain its commitment to keep fuel prices in Brazil in line with the international market. In a statement after being asked about possible readjustments with the rise in the barrel prices due to the crisis in Eastern Europe in recent days, the oil company, however, noted that it will avoid passing on external volatility and the exchange rate caused by broader events.

“The international market was already experiencing high volatility, and the latest events have caused even more volatility. Petrobras continues to monitor and evaluate the impacts on fuel prices and cannot anticipate any decision on adjusting or maintaining current prices,” stated the company.

The company pointed out that the national fuel market is also supplied by other companies, such as importers, distributors that are authorized to import, in addition to other producers and importers of biofuels and other refiners. As a comparison, Petrobras points out that in 2021 the company met about 44% of the demand for type A gasoline from distributors, with the rest being produced or imported by other players.

The state-owned company has not updated fuel prices at refineries for 49 days, despite the recent rise in barrel prices on the international market after the Russian invasion of Ukraine.

Source: Valor International

https://valorinternational.globo.com
https://valorinternational.globo.com
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Vibra creates largest power trader in Brazil

Vibra Energia made official on Wednesday the creation of the largest trader in the free electricity market in the country. In the wake of the multibillion transaction announced in October — which began with an investment of R$2 billion in a convertible debenture — Vibra, formely known as BR Distribuidora, confirmed its option to take over 50% of Comerc.

In addition, Vibra and Comerc’s partners — manager Perfin, founder Kiko Vlavianos and executives — also reached an agreement to invest in Targus, an energy trader controlled by Vibra since last year. With Targus, Comerc jumps from the fourth to the first position in the ranking of traders, going to 2.4 gigawatts from 1.9 gigawatts.

By adding Targus to Comerc, Vibra is already beginning to show the return of CEO Wilson Ferreira Jr.’s bet on the energy transition. A year ago, when the company bought 70% of Targus’ capital, the trader was valued at R$90 million. In the transaction with Comerc, the valuation of the company more than tripled, reaching R$303 million.

Under the terms of the transaction, Vibra injected R$2 billion into Comerc’s cash reserves in October through a debenture that will be converted into 30% of the capital. Originally, the company would invest another R$1.25 billion – in a secondary tranche – to reach 50% of Comerc’s capital, but the agreement around Targus reduced the secondary stake to R$1.1 billion.

In the negotiations with Comerc’s partners, Vibra also tied a purchase option to take control of the company between 2026 and 2028. The other Comerc partners are left with a put. When they announced the transaction in October, there was still no definition of the call and put structure.

“Another market leader is born,” Mr. Ferreira Jr. told Pipeline, Valor´s business website. The country’s largest fuel trader, Vibra does not want to lose its hegemony in the energy of the future.

Vibra has been building a multi-power platform that also aims to be a leader. In the commercialization of electric energy, it is already born as a leader in the free market with Comerc. The same logic applies to the sale of ethanol, a business that will be done in partnership with Copersucar.

With Vibra’s investment, Comerc will have the drive for an expansion that foresees R$6 billion in investments until 2025, with a capacity that should jump to 3,900 gigawatts/hour from 121 gigawatts/hour per year in five years. In distributed generation, Comerc is expected go to 550 gigawatts/hour from 157.4 gigawatts/hour.

In addition to the R$6 billion in investments already foreseen, Comerc also has a pipeline of projects that can add another 1,100 megawatts-peak. “This is an asset that was not valued in Comerc’s IPO,” says Mr. Ferreira Jr. When Vibra reached the agreement to acquire the 50% stake, the company went through the distributor’s IPO, paying a premium over what investors would pay to take Comerc to the stock exchange.

In the view of Vibra executives, the renewable power market will only grow. With the easing of barriers to entry into the free electricity market, reducing the size for the use of this format, the expectation is that 50% can be purchased on the free market in a few years, a jump over the current 33%. “This is the market that we are accessing with the transaction,” says Mr. Ferreira Jr.

Vibra will appoint three members to Comerc’s board of directors. The other partners will nominate another three. The board will also have two independent members.

Source: Valor International

https://valorinternational.globo.com

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