|SAO PAULO, Sept 8 (Reuters) - Brazilian electricity utility Cemig is considering acquisitions of power generation and transmission assets as a way to maintain current levels of revenues if it loses its concessions for three key hydro power plants, a company official said on Tuesday.
Luiz Fernando Rolla, head of institutional relations at Companhia Energetica de Minas Gerais, as the company is officially known, said that partnerships with U.S.-based SunEdison Inc in renewable energy sources and with mining giant Vale in hydro generation will be critical for it to grow in the coming years.
Cemig is in the middle of a legal battle with the Brazilian government regarding three hydroelectric installations - Jaguara, Sao Simao and Miranda - that account for 34 percent of its power generation capacity.
The company is contesting the end date for the concession contracts. While it battles in courts, Cemig looks to grow quickly in the sector to offset the possible loss, and avoid a downsizing.
Rolla said expansion will happen through its subsidiaries if Cemig partners with private companies.
In renewables, the chosen vehicle for growth is Renova Energia SA, which sold a 15 percent equity stake to SunEdison for $250 million in July.
In hydro electricity, Cemig is betting on Alianca Geracao de Energia Ltda, where it owns a 45 percent stake. Vale has the remaining 55 percent.
"Power generation is a priority. We have on one side SunEdison and in the other Vale. Both companies have strong financial capacity to develop projects," said Rolla.
"We have great confidence that we will grow very quickly through those two investment vehicles," he added.
The executive said new projects are not out of the question but are less likely since construction time and investments would be large and cash generation would take time.
In May, Cemig presented shareholders with a target to reach cash generation measured by EBITDA - earnings before interest, taxes, depreciation and amortization - of between 4.6 billion and 5.9 billion reais from 2016 to 2019, compared to a projected range of 5.4 billion to 6.8 billion for 2015.
(Reporting by Luciano Costa; Writing by Marcelo Teixeira; Editing by Chris Reese)
- Utility Industry
- power generation