BNDES Spurs Financings in the Energy Sector Under New Conditions
Going further in reviewing its operational credit policies, the Brazilian development bank BNDES just released new conditions destined to financings in the energy sector for 2018. The main changes aim at broadening the access to resources BNDES will make available and refer to (i) modification of the financing costs, (ii) term extension, (iii) spread cuts; and (iv) change to the calculation methodology of the overall financed amount.
In general, the financial costs related to financing transactions destined to support the initiatives in areas such as energy generation, transmission, distribution and energy efficiency will be based on the Long Term Rate TLP, which will fill in for the eliminated TJLP as the basis for the remuneration of financings extended by BNDES.
The financial costs may also be pegged to the National Price Consumer Index – IPCA, in connection with financings of projects selected in 2018 aiming at the expansion and or modernization of infrastructure for generation and transmission of energy in the country.
As to the average term of new financing operations, BNDES resolved to enlarge the options of term length for financial transactions with players from different segments of the energy sector. Transactions concerning the generation and distribution, for instance, may be extended up to 24 years. Financings to distribution and energy efficiency, in turn, may be offered under a maximum term of up to 20 years.
Furthermore, the bank resolved to cut the spreads in different types of transactions going forward. The spreads in deals involving generation, transmission and distribution have been brought down to 1.3% per annum. Particularly in the case of financings related to energy efficiency and solar photovoltaic generation projects, the reduction is even deeper, to 0.9% per annum.
The methodology for the calculation of bankable items within the projects has also been subject to changes. Differently from the previous method, which adopted a certain percentage of the eligible items as a limit for the bankable costs, the new methodology uses the total amount of the project as the cost subject to financing.
From now on, projects in the energy sector will most likely be regarded as promising upon counting on the support of the reduced spreads offered by BNDES. Such expectation is grounded on the significant development potential of the energy market in the country, which encompasses not only players directly involved with the industry business, but also both the production and commercial areas interested in achieving higher energy cuts. Therefore, it becomes possible to see financings applied to projects related to (i) premises optimization, (ii) public street light systems, (iii) energy optimization applied to production processes, (iv) power plant refurbishment and (v) intelligent electric energy nets.
Our Banking & Restructuring and Energy areas follow closely the introduction of such changes in the financing market and remain at the service of our clients, companies and investors in an array of queries regarding the different types of financings to the energy sector.