Baguari Hydro Power Plant

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In 2002, Consorcio UHE Baguari, which was formed by state-owned Cemig(34%), Neoenergia (51%), and state-owned Furnas (15%), was awarded in a competitive bidding process organized by the federal regulatory agency Aneel the 35-year contract to build and operate a 140 MW hydro power plant located in the Doce River, state of Minas Gerais. Besides Consorcio UHE Baguari, only one company took part in the bidding contest: the Brazilian Fuad Rassi. The bidding criteria set by the federal regulatory agency ANEEL was the lowest tariff. The company also agreed to pay US$ 0.223 million (BRL 0.408 million) in yearly installments during the life of the contract, starting once operations commence (using a discount rate of 10%, the present value of this contribution was estimated at US$ 67.9 million). The contract was signed in August 2006, and sponsors created the company Consorcio UHE Baguari to lead the project during the 35-year contract period. Almost all the electricity produced was set to be sold to distribution companies. The sponsor committed to invest US$ 270.3 million (BRL 527 million) in the power plant. Financial closure was achieved in December 2007, when the sponsor was granted a US$ 185.2 million (BRL 361.2 million) loan from BNDES. The remaining cost was financed with the sponsors’ internal resources. The construction works were undertaken by Consorcio Construtor Baguari (CCB), comprised by the Brazilian companies Odebrecht and Engevix, and the German Voith Siemens. Construction works started in May 2007, and operations commenced in October 2009.