11575 - CPFL Energia

Who We Are
Who We Are

IFC is the largest global development institution focused on the private sector in developing countries. By encouraging growth, IFC advances economic development, creates jobs and improves the lives of people.
More About Us
About IFC

Our Leadership

Development Partners
Accountability

Learn more about accountability
Annual Report

Download the Report
What We Do
What We Do

IFC advances economic development and improves the lives of people by encouraging the growth of the private sector in developing countries. We achieve this by investing in impactful projects, mobilizing other investors, and sharing expertise.
What We Do Overview
SOLUTIONS

Our products and services
OUR PRIORITIES

Climate Business

Fragile & Conflict Afflicted Situations

Gender

Mobilizing Private Capital

Sustainability
SECTORS & EXPERTISE

Agribusiness & Forestry

Creative Industries

Education

Financial Institutions

Funds

Health

Infrastructure

Manufacturing

Public-Private Partnerships

Tourism, Retail & Property

Trade & Supply Chain Finance

Venture Capital

Working Upstream
Where We Work
Where We Work

As the largest global development institution focused on the private sector, IFC operates in more than 100 countries around the globe. We apply lessons learned in one region to solve problems in another.
Overview
By Region

Africa

East Asia and Pacific

Europe

Latin America and the Caribbean

Middle East and Central Asia

South Asia
Our Impact
Our Impact

Our impact improves lives. IFC brings a clear set of advantages to the world’s most challenging markets. Including a history of innovation, a global mandate, and a determination to achieve measurable development impact.
Our Impact Overview
PRINCIPLES & MEASUREMENT

Impact Investing at IFC

Measuring and Monitoring (AIMM)

Evaluation

Sustainable Development Goals (SDGs)

Owned by 186 member countries and consistently rated AAA/Aaa. IFC aims to achieve our mission of promoting development by providing debt and equity to the private sector, through a range of benchmark and bespoke products.

For Partners

For Investors

Get in Touch

Environmental Review Summary

Project Number

11575

Company Name

CPFL Energia S/A.

Date ERS Disclosed

Sep 30, 2002

Country

Brazil

Region

Latin America and the Caribbean

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : May 15, 2003
Signed : Jun 25, 2003
Invested : Feb 27, 2004

Sector

Electric Power Other (Including Holding Companies)

Industry

other

Department

Regional Industry INF LAC & EUR

Project Description

The project involves a convertible loan to CPFL Energia, one of the largest power groups in Brazil and the largest power company controlled by Brazilian investors. The IFC investment will assist CPFL-Energia in the completion of its corporate restructuring process, implementation of new corporate governance policies and preparation for an IPO on the Brazilian Novo Mercado and NYSE.

Company Description
CPFL Energia, a holding company, controls three distribution companies serving almost 5 million customers and has ownership in several generation companies with total nameplate capacity (operating and under construction) in excess of 4,200 MW (CPFL''s portion is 2,379 MW).

CPFL’s distribution operations serve consumers in 515 municipalities in Brazil providing approximately 30,500 GWh of energy each year. These operations are organized through three separate distribution concessions: CPFL Paulista serving the State of Sao Paulo, CPFL Piratininga serving the southern regions of the State of Sao Paulo, and RGE serving the northern regions of the State of Rio Grande Do Sul. CPFL Paulista and CPFL Piratininga rank among the ten largest electricity distribution companies in Brazil.

CPFL Energia’s existing generation assets consist of Serra da Mesa, a 1,275 MW hydro power plant in which the company holds a 51.54% stake, and 19 small hydro power plants and one thermal unit with total installed capacity of approximately 143 MW.

The company is also participating in four new hydro projects in the South of Brazil (Barra Grande, Campos Novos, Foz do Chapeco, Ceran Complex) which are at different stages of construction and development. The total nameplate capacity of the new projects is 2,785 MW (CPFL''s portion is 1,579 MW) with assured capacity of 1,364 MW (CPFL''s portion is 758 MW).

Environmental and Social

The company has presented plans to address potential environmental and social impacts to ensure that the proposed project will, upon implementation of the specific measures agreed, comply with applicable host country laws and regulations and World Bank/IFC requirements. The information about how these potential impacts will be addressed by the company is summarized in the paragraphs that follow.

Environmental Management Framework. Organizationally, CPFL Energia includes several, previously distinct entities that are in process of being restructured to coordinate operations under a single corporate identity. Current groupings include CPFL-G and CPFL-D in Sao Paulo State, Piratininga in Sao Paulo State, Rio Grande Energia in Rio Grande do Sul State, Serra da Mesa hydro project in Goias State, and four large hydro projects under development in Rio Grande do Sul and Santa Catarina States. Environmental capacity at the holding company level is limited, and exists only as part of investment planning for new projects. Day-to-day environmental capacity is centered in CPFL-G, which provides support to CPFL-D and Piratininga, and limited support to RGE. This capacity in CPFL-G will be strengthened as CPFL-G, CPFL-D, Piratininga and RGE are more integrated.

Environmental and social management of the large hydro projects is conducted on a project specific basis by project teams largely independent from CPFL. One operating project, Serra da Mesa, is managed and operated by Furnas, a state-owned utility. CPFL-G staff provide oversight to the four new projects under development, with support from independent consultants. IFC staff met with the company''s oversight consultant for the Barra Grande project, and on a previous visit met with the project team for Campos Novos. The large hydro projects are professionally managed, have necessary permits, and are being constructed in accordance with Brazilian environmental requirements.

CPFL Energia has an environmental policy in place, which is posted on its website. The company achieved ISO 14000 certification for portions of CPFL-D, and certification for other units within CPFL-D is in progress. CPFL has implemented a "5S" program at its facilities to improve productivity, quality and safety.

Sustainability. The company undertakes a variety of environmental programs, both as mitigation for the environmental and social impacts of its activities and as a public service, at a cost of over US$1 million annually. Mitigation in the areas of its hydroelectric plants includes reforestation with species of native flora and a program of fish restocking of rivers (360 thousand juvenile fish/year). In cooperation with municipalities, CPFL has initiated a process for recycling street light bulbs that contain mercury and has donated 300 thousand tree seedlings as part of an urban arborization program.

CPFL supports a variety of social programs for the needy in its service area. Since 1999, the company has worked with hospitals for indigent people in 36 cities to provide equipment and other support to promote the hospitals'' long term financial viability. Its programs in 2002 focus on efficiency improvements, diagnostic treatments for infants with visual deficiencies and donations of equipment for neonatal and pediatric care. CPFL has an ongoing internship program to introduce adolescents to the workplace, and additional programs providing support to schools and sports activities.

Environmental Compliance of Operating Subsidiaries. IFC staff visited CPFL''s distribution facilities in Sao Paulo and Rio Grande do Sul states, including a warehouse and substations. Because CPFL subcontracts all new construction, about 80% of routine electrical maintenance, and nearly all vehicle maintenance and fueling, there are only a few shops or similar facilities. Apart from Polychlorinated Biphenyls (PCBs - synthetic chemicals, subsequently banned, used to improve electrical and heat transfer properties), CPFL-D does not have significant environmental liabilities. Facilities acquired as part of Piratininga did not involve liabilities. Distribution company expansion and upgrade programs do not require major land acquisition. Based on the visits and information provided, these operations are conducted in compliance with local environmental requirements and good industry practice. Staff also visited the Campinas shop and warehouse of Alstom, a key CPFL subcontractor for transformer and electrical component repair. Alstom also manages the storage and disposal of capacitors and transformer oil containing PCBs. Alstom''s operations and procedures are satisfactory to IFC.

CPFL has made staff cuts as its operating units consolidate and streamline. About 800 people were retrenched in 1997/98 and another 300 to 450 staff may be made redundant as part of the integration of Piratininga and modernizations. Social conditions, such as retention priority for underprivileged persons, are considered. Severance packages are developed with input from labor unions. Many of the retrenched staff have formed or joined companies that now are key subcontractors to CPFL, such as Alstom, Metrowatt (for meter repairs), TNA (communications equipment), construction contractors, and other commercial and technical services.

CPFL-G has 19 small hydroelectric plants constructed in the late 19th and early 20th centuries. IFC environmental staff visited the 12 MW Jaguari plant near Campinas, which is also the location of CPFL''s fish hatchery and tree nursery. The small hydro plants have installed capacity of between 0.6 MW and 30 MW and are all run-of-river. Nine plants that are at the end of their useful life are in various stages of being repowered and modernized. CPFL has prepared environmental documentation and received all necessary permits for repowering work to date. CPFL-G also operates Carioba I, a small (36 MW) oil-fired thermal plant near Americana. There are no significant environmental or social issues associated with the above plants.

Going Forward. As currently structured, CPFL has appropriate environmental staff and procedures, but they are located at mid-level within the organization, in CPFL-G. As part of restructuring, and as a condition for IFC''s investment, CPFL Energia will assign an individual at the holding company organizational level with overall authority and responsibility for environmental and social matters, including oversight of a process for periodic management level review of environmental and social performance.

Heretofore, CPFL has not included World Bank/IFC environmental and social policies and guidelines as part of the legal and other requirements that apply to its investment activities (legal and other requirements include those performance indicators that are required by law or regulation, as well as others that are adopted by the company from industry best practice, ISO 14000, etc.). For those projects in which CPFL Energia has or will have a controlling interest, it will include WBG policies and guidelines as per of the legal and other requirements for those projects. For those companies in which CPFL Energia owns or purchases a minority interest, it will exercise its corporate power to the extent possible, through shareholder votes, directorships or otherwise, to ensure that the environmental management systems are consistent with the World Bank’s environmental and social policies and guidelines.

As part of the above, CPFL will incorporate a formal procedure, benchmarked on WB Group policies and guidelines for environmental and social screening of new projects and investment opportunities into its corporate business strategy, commercial planning, and bid policy and process.

Conclusion & Monitoring

IFC will evaluate the company''s compliance with the applicable environmental and social requirements during the lifetime of IFC''s loan to the company by reviewing the annual monitoring reports (AMRs) prepared for the project covering ongoing performance of project-specific environmental, health and safety, and social activities. Site supervision visits will also be conducted.

This Environmental Review Summary (ERS) is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Any documentation that is attached to this ERS has been prepared by the project sponsor or in conjunction with the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content. The following ERS is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Projects

Environmental Review Summary

Project Description

Environmental and Social

Conclusion & Monitoring

Similar Projects

Projects

Environmental Review Summary

Project Description

Environmental and Social

Environmental Category B Disclosure Requirementsy

Environmental and Social Issues

Proposed Mitigation for Environmental and Social Issues

Conclusion & Monitoring

Conclusion

Monitoring and Compliance

Press-Release

Related SPI

Similar Projects

Disclaimer