Boa Vista Thermal Power Plant

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The Brazilian company Nova Fronteira S.A., a partnership of the Brazilian companies Sao Martinho S.A. (51%) and state-owned Petrobras (49%), was granted the authorization to build and operate a 80-MW sugar-cane-residue fueled power plant located in the state of Goias. The 35-year contract was signed with the regulatory agency ANEEL in June 2007, and the sponsors created the company Usina Boa Vista S.A. to manage the project. The power plant was named UTE Boa Vista. UTE Boa Vista commenced operations in June 2008 as a captive unit with a capacity of 40 MW. In October 2006, the company won the public bidding for the sale of electricity to the regulated market that took place in October 2006, by offering a tariff of US$ 61.9/MWh (BRL 134.99/MWh). The project company signed 15-year power purchase agreements with the several electricity distribution companies. UTE Boa Vista committed to start supplying electricity to the market in 2011. In order to fulfill this commitment, UTE Boa Vista invested US$ 70.5 million (BRL 153.6 million) to expand its capacity to 80 MW. This new unit commenced operations in April 2011. In 2012, UTE Boa Vista started investing in an additional 40 MW unit. This expansion was envisaged because the sponsors decided to invest in expanding the capacity of the sugar-cane pressing facilities associated with the thermal power plant. The total investment on both the power plant and the industrial facility was estimated at US$ 220.5 million (BRL 430.5 million), and it was financed with a US$ 182.7 million (BRL 356.6 million) loan from the state-owned bank BNDES granted in October 2012. The loan was also set to finance not only the expansion of the thermal power plant, but also the expansion of the associated sugar-cane processing facilities. UTE Boa Vista was granted the right to take part in the government program called Regime Especial de Incentivos para o Desenvolvimento da Infra-Estrutura (Reidi). Companies selected to take part in this program were given tax cuts in the acquisition of capital equipment and construction material acquired both in the domestic and international markets (this incentive represented a cost reduction of about 9.25%). In addition, the company was allowed to use accelerated depreciation methods of accounting for construction expenditures.