Mato Grosso Delays Partnership Plans for NatGas Distribution

Brazil's Mato Grosso state government has delayed plans to bring in partners to establish a natural gas distribution company, MTGas, and will instead proceed on its own, state development secretary Jose Epaminondas told BNamericas.

By establishing the distributor itself and getting preliminary operations up and running, the state government expects to raise a better price for shares in the company in the future, he explained, adding that the government could call for private partners in two or three years time. The government had planned to sell up to 74.5% of total share capital to private sector partners, although it would have kept 51% control of ordinary shares.

The state legislature approved the state law authorizing the new company on June 30, and it has now be returned to state governor Blairo Maggi, of the Popular Party (PP), for approval, Epaminondas said.

The state government will then establish the company, appoint the directors and begin the necessary studies, he said, adding that this will probably require the help of a consulting firm to prepare models. Cuiaba is already connected to the Bolivian side of the Bolivia-Brazil pipeline (B2B) through a 7.5 million cubic meters a day (mcm/d) capacity pipeline that delivers 1mcm/d of natural gas to the Cuiaba thermoelectric power plant. Because this 660km pipeline is connected to the Bolivian side of the B2B, Mato Grosso buys gas directly from producers in Bolivia, making the gas very low cost.

The first sales target for MTGas would be the industrial district in state capital Cuiaba, which is closest to the existing citygate in the Cuiaba natural gas pipeline, Epaminondas said. The state government estimates that initial demand from the 150 companies located in the district is 200,000 cubic meters a day, he said. The state government would like to get construction work of a distribution network up and running by the end of this year, but that will depend on the speed of work and the licensing process, he said, adding that there is not as yet any investment figure for the project.

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