The Brazilian government’s Investment Partnership Program (PPI) was the big winner in a pair of major concession auctions Wednesday, bringing in a combined total of nearly R$16 billion. An auction of 30-year concession rights to four hydroelectric generating stations brought R$12.1 billion into government coffers. Separately, an auction of both on-shore and off-shore oil and gas development concessions brought R$3.84 billion more. Wednesday morning, in São Paulo, the government sold all four of the hydroelectric concessions put up for auction. The four, which previously belonged to state-controlled utility Cemig, were sold at modest premiums against reserve prices, which totaled R$11 billion. The four hydroelectric stations have combined capacity of 2,922 megawatts. Wednesday afternoon, the government completed an auction at which it offered 287 oil and gas develop ment blocks. Only 37 of the blocks were sold. However, they were the biggest and, potentially, the most lucrative. The total paid in signing rights, R$3.84 billion, was more than double the total reserve prices for all 287 blocks, which was R$1.7 billion. Brazil’s state-owned Petrobras and global energy giant Exxon-Mobil were the big winners in the auction, paying a combined R$3.59 billion for just six blocks in the oil-rich Campos Basin. The sales from the twin auctions were considered crucial in government efforts to comply with a 2017 budget deficit ceiling of R$159 billion. The auctions were also considered a test of investor interest in the government’s sweeping concession and privatization program. Winners in Wednesday’s auctions included companies from China, the U.S., Italy and France, as well as Brazil and other countries. In the case of the oil and gas blocks, many companies formed consortiums to compete.
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