Brazil's Petrobras plans to sell its stakes in three thermal power plants are moving forward despite halting divestments in the oil and natural gas sector, but the state-controlled company could struggle to find interested buyers, according to market participants.
Petrobras will sell its 20pc stake in the Termocabo and Suape II fuel oil-fired plants and its 18.8pc stake in the Araucaria gas-fired power plant. The fuel oil plants have power generating capacities of 48MW and 381.2MW, respectively, while the Araucaria plant has a 469MW capacity.
It is still unclear who the possible buyers could be, as market sources said the plants would rely on power capacity tenders for future contracts. Thermal power generation is used as a backup for hydrogeneration in Brazil. With water reservoirs that feed power generation at record levels for this time of year, there is little space for thermal power contracts in the near future, aside from power capacity tenders — which were introduced in Brazil in late 2021 to allow bidders to purchase access to a power plant's capacity to provide firm, non-interruptible generation.
Adding the capacity component to auctions introduced a key update to Brazil's power framework as it defined the cost of power stability by stimulating the purchase of this attribute by power consumers, both regulated and those under bilateral contracts.
A market participant said selling the fuel oil assets would be difficult without a retrofit adapting the plants to use natural gas, as tenders might not allow other fuels. Since Petrobras only owns other companies to hold a 20pc stake on each plant, this would either need to be approved by the other owners or other groups would have to agree on selling their participation. Still, French utility Engie was recently able to sell its coal-fired plants in Brazil, so it is not out of question that the plants would find buyers.
Fuel oil plants are among some of the highest fuel costs (CVU) for power generation plants, usually only falling behind diesel — with the CVU for the Termocabo plant at R957.74/MWh ($192.40/MWh) and Suape II's at R986.34/MWh.
Both plants have won past power tenders and are under contract until the end of 2024 and 2026, respectively. The remaining 80pc participation in the Termocabo plant is owned by thermal power group EBrasil. The remaining shares of Suape II's are held by investment fund Savana SPE Incorporated.
The Araucaria plant does not have an inflexibility contract, so it is not authorized to dispatch and does not have a set CVU value. Parana state power company Copel, which owns the remaining portion of the power plant, is also putting its participation for sale, allowing buyers to purchase the entire asset.
