Araucaria Power Plant

concluded

In 1999 ANEEL granted the consortium of El Paso (60%) Gaspetro (20%) and COPEL (20%) regulatory approval to develop the 468 MW combined cycle gas fired Araucaria plant. All of these companies were also co-developers of the Brazilian portion of the Bolivia-to-Brazil natural gas pipeline which would supply fuel to the plant. The plant was located near Curitiba in Parana state. The estimated cost of the project was US$360 million. The Araucaria consortium signed a 20-year power purchase agreement (PPA) with Copel, a Parana state-controlled regional utility to sell all the output of the power plant. In October of 2001 the Export Import bank of the US provided a $178 million long-term direct loan. The deal was significant as it was the first gas-fired plant to receive international financing. The Overseas Private Investment Corp (OPIC) also pledged $360 million to the project. The plant entered operations in September 2002. COPEL is slated to purchase all of the plant's output. In February 2003, Parana state government order to suspend COPEL's payments on the PPA. The state government wanted to change the indexation of the PPA to the US dollar due to local currency devaluation. Araucaria ceased its operations in 2003 due to non-payment by the utility that purchases power from the plant. El Paso and Petrobras asked a Paris-based international tribunal to order COPEL to make payments as stipulated in the contract. Brazilian courts blocked the involvement of an international tribunal on the dispute. A Curitiba court ruled that the arbitration clause in the PPA was invalid, and enjoined the project company from prosecuting its arbitration under penalty of approximately $173,000 in daily fines. As of December 2004, the project company was appealing this ruling, and obtained a stay order in any imposition of daily fines pending the outcome of the appeal. The power sales contract of the Araucaria power plant was in international arbitration. In 2006, state-owned company Copel bought El Paso's shares, and became the sole owner of the company. http://www.seen.org/db/Dispatch?action-ProjectWidget:596-detail=1 2006: "El Paso Energy has agreed to sell its 60% interest in the 484-MW Araucaria gas-fired plant in Parana, Brazil, to one of its partners in the facility, Parana state utility Copel, for US$190 million, El Paso announced Feb. 17."