Brazil's Renova faces strike threat at 737MW Alto Sertão 3

Workers at the 737MW Alto Sertão 3 wind complex being built by Brazilian renewables developer Renova Energia in the state of Bahia are preparing to go on strike in what they say is a bid to avoid further mass layoffs and guarantee payment of arrears to the contractors they work for.

“We'll hold an assembly on Monday [25 January] and we'll strike unless we have a proposal from the company for the maintenance of remaining workers,” said Emerson Gomes, the co-ordinator of wind power projects at the Union of Heavy Construction Workers of the state of Bahia (Sintepav).

According to Gomes, the six main construction services companies hired by Renova have not been paid for several months and have reduced the 3,300-strong workforce at the wind projects by over half since October 2015.

“The company said it is waiting for the approval of a loan from the BNDES,” he said.

The remaining 1,200 workers face delays to paychecks and have slowed down their activities. Gomes said that other developers in the region, who employ another 1,300 workers, are not facing any problems.

“The turbines and towers are being delivered and are waiting to be assembled on the site,” he said. “This shows that Renova is paying the turbine supplier and not the workers.”

Alstom – now owned by GE – is the global onshore turbine supplier for Renova.

The result is that the construction schedule of the wind farms has been delayed, and work to install 140 turbines – which was scheduled to end in December 2015 – is not finished, said Gomes.

The next stage, which includes the construction of a further 125 turbines, has not started at the beginning of 2016 as expected and will likely not be concluded by March as originally planned, he added.

Alto Sertão 3 is composed of 44 wind projects in the inland Caetité region in the state of Bahia.

Of the total 737MW, 559MW is contracted to deliver power to the non-regulated market and should have come online in stages in September 2015, January 2016 and January 2017

The company said in its financial report for the third quarter that projects due to come online in September were completed and were awaiting connection to the grid.

The remaining 178MW was contracted in the regulated market auctions and should come on line in January 2017 and January 2018.

Gomes said that that he expects Renova to inform the trade union of a new schedule for the complex, and whether it had found financing from the projects in the next few hours hours, but added that he is prepared to go to court to guarantee proper severance package for workers.

Renova told Recharge that it is not directly responsible for the management of the labour force since this is the responsibility of third party companies, so it is not involved in negotiations with Sintepav.

Renova reaffirmed its commitment to complete Alto Sertão 3 and said it will continue to invest in the state of Bahia. It indicated that layoffs may have been due to planned changes in rhythm of the construction due to different stages.

“Although Brazil is facing one of the most severe political, economic and financial crisis, Renova [will keep up] the investments in the Alto Sertão 3 project, in which it has already invested more than R$1bn,” the company said.

Renova said in December that it was undergoing restructuring to adapt itself to local economic conditions, and to the cancellation of the second phase of an agreement with US yieldco TerraForm Global, which scrapped an asset sale and share-swap deal for 2.2GW of Renova's projects estimated at R$13bn ($3.16bn).

The company said it is renegotiating its debt, trying to raising revenue from operational projects, revising its project pipeline and restructuring its workforce.

Local press reports said that Renova has been firing its own workers, cutting by about half its staff in the state of Bahia.

Renova claimed that the layoffs in Alto Sertao 3 were not related to the restructuring of the company.

Meanwhile, BNDES told Recharge that Renova was waiting for the final disbursements of a R$700m bridge loan for the complex.

The bank approved the loan in December 2014 and disbursed most of it in 2015 without providing many details, though a significant part of the loan was used for buying turbines.

The disbursement for the remaining amount is waiting on final red tape.

BNDES says it has information that Alto Sertão 3's schedule was adequate. Additionally, the bank says Renova is up to date on all payments to the bank.

In December Renova named a new managing board, including Carlos Waack as CEO, replacing Mathias Becker.

“Our aim is to balance operational excellence, reduce costs significantly and raise the company's competitiveness,” said Waack in the statement.

Renova has been facing growing operational costs due to the start of operations of its wind farms and had been posting quarterly losses.

In the first half of 2015, Renova signed the asset and share swap deal with SunEdison and its yieldco TerraForm Global. That involved the sale of 294.4MW of wind and 41.8MW of small hydro, along with share swaps in a first phase that earned Renova R$666.5m in capital gains.

This helped the company post a profit in the third quarter of 2015.

Story was updated with comment from BNDES