Chesf-Brennand Sento Se Wind Farms Phase II

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The Brazilian companies Brennand Energia S.A. (51%) and state-owned CHESF (49%) were granted authorizations to build three wind parks located in the state of Bahia (150 MW in total capacity), municipality of Sento Se. This constituted an extension of the wind park the partners established in the same municipality, which became operational in 2013. The 35-year contracts were signed with the regulatory agency ANEEL starting in February 2014. The following special purpose companies were created to manage each plant: Mussambe Energetica S.A. – EOL Mussambe (30 MW) Morro Branco I Energeica S.A. – EOL Morro Branco I (30 MW) Baraunas I Energetica S.A. – EOL Baraunas I (30 MW) The total investment in the power plants of the wind complex was estimated at US$ 132.7 million (BRL 311.85 million) and was financed with loans granted by the state-owned bank BNDES to the three special purpose companies above mentioned. The loans were approved in December 2014 and had a total value US$ 91.9 million (BRL 216.14 million). The government periodically runs public bidding for the sale of energy to the country´s distribution companies. All three power plants won the public bidding that took place in August 2013, by offering an average tariff of US$ 44.2/MWh (BRL 103.95/MWh). The project companies signed 20-year power purchase agreements with the several electricity distribution companies. The sponsors committed to start supplying to the market in 2015. The sponsors were 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 accelated depreciation methods of accounting for construction expenditures. In July 2013, the company applied for carbon credits.