Brazil will complete Angra 3’s financial package in 18 months, according to BNDES director: Energy & Environment

March 22, 2021

Leonardo Mendes Cabral, director of privatizations at the Brazilian National Bank for Economic and Social Development (BNDES), said he expects a financing agreement to complete Unit 3 of the Angra nuclear power plant be ready by the end of next year. BNDES is one of the main funders for infrastructure projects in Brazil and has also played a role in funding nuclear energy in the past.

Leonardo Mendes Cabral, Director of Privatization at BNDES

Speaking at a high level panel at the World Nuclear Association Strategic electronic forum on sustainable finance on March 18, Mendes Cabral said BNDES was learning lessons from its previous involvement in the Angra 3 project. In addition, it is working to expand its green bond issuance to include nuclear power within a broader, environmental framework. , social and governance (ESG).

Two nuclear power plants – Angra 1 and 2 – provide around 3% of Brazil’s electricity. The units are operated by Eletrobras subsidiary, Eletronuclear.

The Angra 3 project has a long history. Construction began in 1984 on a 1405 MWe (crude) pressurized water reactor designed by the German company KWU, but this failed two years later. At this stage, around 70% of the plant’s equipment would have already been purchased and delivered to the site. A resumption of construction was approved in 2007, and an industrial agreement for the completion of the unit was signed with Areva in December 2008. The project was again suspended in mid-2015.

In June last year, the board of Brazil’s Investment Partnership Program (PPI) approved a plan to complete the unit. Created by the government to expand and strengthen the relationship between the state and the private sector, the main objective of the PPI is to generate jobs and growth for the country through new investments in infrastructure projects and the privatization.

“We are changing what we aim to do about funding nuclear projects a bit as we learn from the past,” said Mendes Cabral. The project shutdowns and starts were not due to funding problems, he said, but rather was about “having the right structure.”

BNDES was contracted by the Brazilian government and Electrobras to develop the project to build the unit at an estimated cost of $ 3-4 billion.

“We believe that with the right structure in place, and also with the government aligned with longer term investment in nuclear power plants, Brazil will be able to attract not just financiers, not just global banks. and local, to finance the project, but also engineering and construction companies, ”said Mendes Cabral.

“Right now, we are in the process of hiring an advisor to work with us, BNDES, to redesign the whole project in order to understand what has been done so far and what needs to be done at the future. We hope to have it by the end of this year, and then we will start working with the banks to provide the financing for the project. We expect to have this finalized by the middle to the end of 2022. “

BNDES will still play a role in the project, but not in the same way as before. “Frankly, we have failed as the sole provider of finance,” he said. “We have to work with the private sector and that is what we are doing.”

The conference was moderated by Sama Bilbao y Léon, chief executive of the World Nuclear Association, who asked if Brazil’s green bonds could include nuclear energy projects. BNDES issued its first green bond – worth $ 1 billion – in 2017.

“We were the first financial institution in Brazil to issue a green bond in the global market,” said Mendes Cabral, but it was “tightly focused” on developing solar and wind power plants in the country.

Last year, it issued a second green bond, identical to the first, “to speed up the process” of financing solar and wind projects, he said. Since then, however, BNDES has decided to “adapt”.

“So instead of just calling it a green framework, it’s now an ESG framework,” he said. “Of course, ‘green’ will be a big part of what we aim to fund, but from now on, it will no longer just focus on solar and wind, but renewables in general. We will include other sectors because in Brazil we still have a huge problem in terms of water desalination, and so it is included. In terms of the “social” part of the ESG, we asked to include the gender equality and health education, so we have a broader mandate in terms of ESG framework. “

Nuclear can be part of this new ESG framework, he said.

“What we’re not going to do is fund fossil fuels, cattle ranching, etc., if that has an impact on the environment. The good news is, even though I’m talking about BNDES, we had a panel with pretty much all of the development banks around the world and they all share the same point of view, so this will be the agenda of all development banks globally. “

BNDES will unveil its ESG framework at the end of this year and aims for it to be the model for all Brazilian financial institutions, and possibly for all of South America, he said. .

“We want the model to set the tone in terms of what an ESG framework should be for the Brazilian economy,” he said. “But on top of that, it is not impossible to have ground rules that work in the global economy and development banks are working on it. What is included in an ESG framework will require some adaptation for each country. , but I believe the development banks are aligned with this, so that’s something we can accomplish. “

The ability of development banks to lead the way is “sometimes underestimated”, he said, but they should “be part of this movement and put this agenda in place”.

Research and writing by World Nuclear News

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