China's State Grid to build mammoth power line for Belo Monte dam in Brazil

Executive Vice President and Deputy General Manager of State Grid Corporation of China, Yang Qing (C), hammers a gavel to close the trading session with members of his company at Brazil's BM&FBovespa Stock Market in Sao Paulo July 17, 2015. China's State Grid won a concession to build and operate the second power transmission line to connect the giant Belo Monte hydro power plant to the national Brazilian grid in an auction on Friday. [Photo/Agencies]

RIO DE JANEIRO - China's State Grid Brazil Holding won a contract Thursday to build a gigantic transmission line for the Belo Monde hydroelectric dam, located deep in the Amazon rainforest.

In an auction realized at the Sao Paulo Stock Exchange, the State Grid subsidiary made the lowest bid by offering to operate the dam's second power line in exchange for 988 million reals a year ($309 million).

The winning offer was 19 percent lower than the maximum amount permitted in the auction. Spanish firm Abengoa came in second place in the bid.

As the winner, State Grid Brazil Holding has committed to finish building in 2019 and to begin operating the power line in 2020 and will maintain the concession for 30 years.

The second transmission line will run for 2,250 km and will connect the Belo Monte dam to the town of Nova Iguacu near Rio de Janeiro.

The project is expected to create 16,800 direct jobs in the states of Para, Tocantins, Goias, Minas Gerais and Rio de Janeiro.

The construction is estimated to require an investment of 7 billion reals ($2.19 billion) and will be spread across five Brazilian states.

According to Ramon Haddad, Vice-President for Operations at State Grid Brazil Holding, the scale of the project means that the Chinese firm will be seeking a partner in Brazil to help.

Construction on the Belo Monte dam began in March 2011 but has faced regular opposition by indigenous communities, farmers, fishermen and ecologists, who maintain the project will have a devastating environmental impact on the Amazon.

Work on the dam should be completed by January 2019 but has seen regular interruptions due to judicial reversals, strikes by workers and protests. Belo Monte will dam the Xingu river, a tributary to the Amazon, and is set to flood 506 square kilometers of the jungle.

Once fully operational, Belo Monte will have a maximum capacity of 11,233 Mw, and is estimated to produce at an average capacity of 4,419 Mw a year. It will be the world's third largest hydroelectric dam and is located in the northern state of Para.