Alupar has the following competitive advantages:
Strong cash flow and revenue predictability. Alupar’s concession agreements in the transmission segment have a 30-year term and provide for exceptionally stable revenue flows, ensuring a predictable source of funds to sustain future investments. Alupar’s transmission revenue does not depend on the volume of electricity transmitted through its network and is adjusted annually for inflation, measured by the IGP-M general market price index or the IPCA consumer price index. The transmission segment regulations establish protection mechanisms against default and tax changes, further strengthening the predictability of Alupar’s future revenues. Most of the above points also apply to generation, except for certain sector-specific features, and the Company started benefitting from this flow of funds thanks to the start-up of generation projects from 2010 on. As a result, Alupar has high credit ratings in the national scale (AAA (bra) and BB in the international scale, assigned by Fitch Ratings, one of the three main international credit rating companies, being very close to Brazil’s sovereign rating.
Experience in the identification, development and execution of energy-related infrastructure projects. The members of Alupar’s top management have, on average, more than 25 years of experience in the Brazilian infrastructure sector, particularly in the development of energy-related greenfield projects. Alupar believes that this experience puts it in a privileged position in regard to identifying and executing new projects, as well as contributing to ensuring profitability and the creation of value to the shareholders. Its capacity to plan and execute projects, the result of the experience and commitment of its professionals, is translated into efficient operations, the high availability of its transmission grids and investments that comply within ANEEL’s budgets and deadlines.
Modern installations allowing greater operating efficiency. All the Company’s transmission lines and substations began operations as of 2002 and all its generation facilities as of 2010. Alupar believes its installations will continue to present one of the sector’s highest levels of availability for several years, requiring low investments in operating maintenance to preserve current revenue levels and permitting investments in new projects that will contribute to its growth, in addition to minimizing the risk of reduction in revenue.
Competitiveness and profitability through strategic partnerships. Alupar has experience in identifying strategic partners that complement its expertise in order to develop new projects. The Company believes these partnerships allow it to (i) improve its operational knowledge through the sharing of experience; (ii) mitigate the risks associated with large projects by dividing investments and ensuring improved access to financing sources; and (iii) gain competitiveness for the development of new businesses through partnerships in concession auctions in which Alupar and its partner use their complementary know-how to maximize project returns.