Following approval by the Company's Board of Directors, on September 15, 2022, ENGIE Brasil Energia (EGIE3) signed an agreement for the sale of the Pampa Sul Thermoelectric Plant, located in the municipality of Candiota (RS) to Grafito and Perfin Space X investment funds, controlled by the companies Starboard and Perfin, respectively. The asset has an installed capacity of 345 MW, generation which is bolstering the national grid.
The total value of the transaction will be approximately R$ 2.2 billion, divided between the sale price in the amount of R$ 450 million, and the assignment of the debt to the acquirors, worth approximately R$ 1.8 billion. Morgan Stanley acted as advisors to the negotiations while Stocche Forbes were responsible for advice on legal aspects. The closing of the sales agreement is subject to fulfillment of certain conditions precedent in the agreement.
The Pampa Sul Thermoelectric Plant is the remaining coal-fired asset in ENGIE Brasil Energia's portfolio and the transaction is aligned to the ENGIE Group's goal of leading the energy transition towards the goal of a carbon neutral economy.
"ENGIE Brasil Energia is on a trajectory to become 100% renewable, an objective it has been pursuing for at least six years, when we decided to accelerate our exit from coal-fired operations in line with the ENGIE Group's global guideline to focus its efforts and investments on solar and wind generation projects in addition to transmission infrastructure. Following the closing of the operation for the disposal of Pampa Sul, we shall have taken a further step forward in our strategy, consolidating the Company as the largest clean energy generator in the Brazilian electricity sector with a total of 8,096.0 MW of proprietary installed capacity generated from renewable sources", declared Eduardo Sattamini, the Company's Chief Executive Officer.
Since 2013, ENGIE has decommissioned two plants, Alegrete and Charqueadas, both in the state of Rio Grande do Sul while last year also reporting the sale of the Jorge Lacerda Thermoelectric Complex in the state of Santa Catarina. "These events were accompanied by a massive investment in wind and solar energy as well as transmission infrastructure, our growth vectors for contributing to an increasingly greater renewable energy matrix for the country", Sattamini notes.
Buyers future plans for Pampa Sul TPP
The companies, Starboard and Perfin are asset managers investing in independent participations, specialized in equity income business, infrastructure assets and special situation investments. They will continue to count on the experience of the plant's management and operational teams and are also committed to a long-term ESG strategy.
"The Pampa Sul Thermoelectric Power plant brings with it the possibility of operating in an energy transition in a sustainable and responsible manner, equilibrating all ESG pillars. We are creating important fronts to comply with guidelines of investment in technologies for increasing plant efficiency in parallel, seeking early decommissioning without harming the stakeholders involved", said Marcus Bitencourt, Starboard's director.
"These fronts will receive the support of experienced professionals in the sector as well as a long-term vision in line with our good governance practices. Approximately R$ 150 million will be invested in Pampa Sul with the goal of reducing carbon emissions by up to 5% (75,000 thousand tons of CO2 equivalent/year). The companies will also allocate a significant part of their R&D investment to the development of research into carbon capture and storage technology", explained Ralph Rosenberg, CIO at Perfin.
"In addition, one of the distinguishing features of this transaction is our commitment with the decommissioning of this plant prior to the maturing of the concession grant. This will be the first time that a power plant will see an anticipated end to its operations at the behest of a financial and planning partner of the parent company with a view to reducing emissions", Rosenberg pointed out.
About Pampa Sul Thermoelectric Power Plant
The viability of Pampa Sul was enabled at the A-5 auction held in November 2014, when ENGIE, at the time known as Tractebel, sold 294.5 average megawatts of energy from the future thermoelectric plant in Candiota, state of Rio Grande do Sul. The investment of R$ 1.9 billion in Pampa Sul's implementation was backed by a power purchasing agreement of 25 years.
Since the beginning of commercial operations in June 2019, Pampa Sul TPP has been enhancing its parameters of efficiency and uptime, backed by an advanced technology electro-mechanical park.
With the operational consolidation of the asset, ENGIE decided to resume negotiations for the sale in 2021, driven by the company's plans for becoming 100% renewable in line with its objective of accelerating the transition to a carbon neutral economy, focusing its activities on renewable energy generation, natural gas, and infrastructure.
Pampa Sul is operating normally, fulfilling ONS (National System Operator) dispatch requirements. The plant has a total direct head count of 113 and approximately 500 outsourced employees, the majority of whom resident in the region's municipalities.
Pampa Sul TPP
Location: Candiota (RS)
Total installed capacity: 345 MW
Assured energy: 294.5 aMW, generating enough energy to supply about 1.3 million people.
Transmission line: 20.4 km, 525 kV, 60 Hz
COD: June 28, 2019
PPA: 294.5 MW contracted at the A-5 Auction held on November 28, 2014 (regulated market) for 25 years as from June 2019.
113 direct employees
500 outsourced employees
Our group is a global reference in low-carbon energy and services. Together with our 170,000 employees, our customers, partners and stakeholders, we are committed to accelerate the transition towards a carbon-neutral world, through reduced energy consumption and more environmentally-friendly solutions. Inspired by our purpose ("raison d'être"), we reconcile economic performance with a positive impact on people and the planet, building on our key businesses (gas, renewable energy, services) to offer competitive solutions to our customers.
ENGIE is the largest private-sector power producer in Brazil, operating in generation, commercialization and transmission of electric power, gas transport and energy solutions. With an installed capacity of 10 GW from 69 power plants, which stands for about 6% of the country's capacity, the Company has nearly 97% of its installed capacity in the country from renewable sources and with low GHG emissions, such as hydro, solar and biomass power plants, and windfarms.
With the acquisition of TAG, ENGIE now also owns the largest natural gas transportation network in the country, at 4,500 km and transecting 10 states and 191 cities.
The Group also has a complete portfolio of integrated solutions focused on reducing costs and emissions and improving the infrastructure for companies, such as compressed air, local solar self-production, biogas and biomass, power management and consulting, HVAC and substations. ENGIE also acts as a partner for cities to make the urban spaces more efficient and sustainable, with public lighting, electric mobility and district cooling solutions. With 3,500 employees, ENGIE's turnover in Brazil in 2021 was R$ 13.5 billion.
The Group´s turnover in 2021 was of 57.9 billion Euros. The Group is listed on the Paris and Brussels stock exchanges (ENGI) and is represented in the main financial indices (CAC 40, Euronext 100, FTSE Eurotop 100, MSCI Europe) and non-financial indices (DJSI World, DJSI Europe, Euronext Vigeo Eiris - Eurozone 120/Europe 120/France 20, MSCI EMU ESG screened, MSCI Europe ESG Universal Select, Stoxx Europe 600 ESG, and Stoxx Global 1800 ESG).