Gasmar to Start up 2007

Brazil's Maranhao state gas distributor Gasmar aims to start operations by 2007, Gasmar president Carlos Gomes told BNamericas.

Gas would be supplied through a US$720mn, 1,965km pipeline project known as Meio Norte. The main 1,100km stretch will link into Ceara state's transport network and the other 865km will make up local distribution networks in Maranhao and Piaui states.

In December 2003, Gasmar joined forces with Piaui state counterpart Gaspisa and private Brazilian company Termogas to form the Transportadora Meio Norte (TMN), in which Gasmar and Gaspisa have 5% each and Termogas 90%. "We are talking to [federal energy company] Petrobras to see if they can participate," Gomes said.

If the project proceeds according to schedule, the company could start laying the 36 and 22-inch diameter pipelines in early 2005.

TMN would initially deliver 2 million cubic meters a day (mcm/d) of gas to Maranhao at prices around US$2.5 per million British Thermal Units (mBTU), well below the US$3.3/mBTU that imported Bolivian gas costs. "We have already set up a special purpose company and are talking with the government agencies to get the proper licenses," Gomes said.

A key part of the financing is the possibility of 270mn reais collected from power distributors through obligatory contributions, estimated to total 1.8bn reais, to the CDE fund, which aims to diversify power generation sources. Goias and Mato Grosso do Sul states are competing for the same money for a proposed 875km pipeline linking into the Bolivia-Brazil pipeline, which would reportedly cost US$634mn.

"We have a good case and are better prepared than the center-west project," Gomes said. "We have been meeting with the [federal] government to convince it of our case."

Both projects are part of a US$2.48bn, 5,100km plan to take Bolivian gas to the northeastern region. "The whole thing would be ready in 10 years," said Gomes. In Maranhao, preparations are already underway, he added. Gasmar has already called for consulting firms to present proposals by March 3 to economic and geographical feasibility studies in 10 cities that will be linked to the main network after December 2006.

Gasmar says there is demand for gas for residential and transport usage, and there is also interest from large local industries such as beverages maker Ambev, aluminum maker Alumar and conglomerate CVRD. According to Gomes, the federal government needs to finalize rules for financing from the CDE fund, which could be ready in the next month and would determine how much financing TMN secures from loans and how much from equity participation, Gomes said. Possible lenders are national development bank BNDES and private sources, he added.

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