ETH Bioenergia

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ETH Bioenergia, a subsidiary of the Brazilian group Odebrecht (66%) and the Japanese Sojitz Corporation (33%), was created in 2007 to operate in the business of sugar-cane processing, the production of ethanol, and electricity generation. The company was granted authorizations by the regulatory agency ANEEL to operate thermal power plants located in the states of Goias (municipality of Cacu), Mato Grosso do Sul (municipality of Rio Brilhante and Nova Alvorada do Sul) and Sao Paulo (Mirante do Paranapanema). The cogeneration power plants were set to use sugar cane residues as fuel. The unit in Cacu, also referred to as UTE Cacu I, was set to have a capacity of 130 MW; the unit in Rio Brilhante, also referred to as UTE Eldorado, was set to have a capacity of 28 MW; the unit in Nova Alvorada do Sul, also referred to as UTE Santa Luzia I, was set to have a capacity of 130 MW; and the unit in Paranapanema, also referred to UTE Conquista do Pontal, was set to have a capacity of 100 MW. The 30-year contract for the UTE Eldorado was signed by Energetica Eldorado Ltda with ANEEL in October 2004, allowing the power plant to operate in the electricity market as an independent producer. UTE Eldorado began operations in 2006 and demanded investment of US$ million (BRL 33.6 million). In March 2008, ETH paid US$ 382.5 million (BRL 700 million) for Eldorado pressing unit and cogeneration plant, and additional investment should be directed to its expansion (as of 2009, its capacity was of 12 MW). In June 2011, ETH concluded the expansion of the UTE Eldorado to 24 MW in capacity, which demanded an investment of US$ 25 million (BRL 49.9 million). In January 2009, UTE Conquista do Pontal, UTE Santa Luzia I and UTE Cacu I were also authorized to operate in the electricity market as an independent producer (the contracts had 35-year duration). The contract for UTE Conquista do Pontal was signed by Usina Conquista do Pontal S.A., which is 80% owned by ETH Bioenergia (the other shareholders are small local investors). The contract for Santa Luzia I was signed by Agro Energia Santa Luzia Ltda, a wholly-owned subsidiary of ETH Bioenergia. The contract for UTE Cacu I was signed by Rio Claro Agroindustrial S.A., also a wholly-owned subsidiary of ETH Bioenergia. In 2008, UTE Conquista do Pontal, UTE Santa Luzia I and UTE Cacu were able to sign 15-year power purchase agreements guaranteeing the sale of electricity to the national grid. In June 2009, the state-owned bank BNDES approved a US$ 177.8 million (BRL 355.5 million) loan to finance the cogeneration and sugar/ethanol production in Conquista do Pontal. The power plant began operating in November 2009. ETH’s total investment in cogeneration and sugar/ethanol production in Conquista do Pontal was estimated at US$ 250 million (BRL 500 million), but no information was available only on the investment in the cogeneration unit. In the second half of 2009, merger talks were underway between Brenco Companhia Brasileira de Energia Renovavel and ETH. In early 2010, Brenco was incorporated by ETH. The following thermal power plants owned by Brenco were under construction by the time of the merger: UTE Alto Taquari, UTE Costa Rica and UTE Morro Vermelho. Construction works on the UTE Cacu started in 2009 and were concluded in July 2010. ETH’s total investment in cogeneration and sugar/ethanol production in Cacu was also estimated at US$ 250 million (BRL 500 million), but no information was available only on the investment in the cogeneration unit. In August 2010, UTE Eldorado took part in a competitive bidding process to sell electricity to the regulated wholesale market (a 15-year power purchase agreement was signed guaranteeing the sale of electricity to the national grid). In November 2010, ETH was granted another 30-year authorization to build and operate another power plant, UTE Alcidia. With 38.1 MW in capacity, this power plant was established in the State of Sao Paulo. The UTE Alcidia won the public bidding for the sale of electricity at the regulated market that took place in 2010, by offering an average tariff of US$ 87.6/MWh (BRL 154.25/MWh). The project company signed a 3-year power purchase agreements with ANEEL to supply several electricity distribution companies. UTE Alcidia committed to start supplying to the market in 2011, but its commercial operations commenced in December 2010. The investment figure was not available. The company 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 accelated depreciation methods of accounting for construction expenditures. The 79.8-MW UTE Costa Rica, which was incorporated to ETH Bioenergia's portfolio with the merger to Brenco, became operational in November 2011 (investment of US$ 49.4 million or BRL 96.4 million). The 72.7-MW UTE Morro Vermelho, which was algo incorporated to the portfolio with the merger, became operational in January 2013 (investment of US$ 49.4 million or BRL 96.4 million). In 2008, both units had signed power purchase agreements to sell electricity to distribution companies starting in 2010. In December 2011, UTE Conquista do Pontal took part in the competitive bidding process to arrange power purchase agreements with electricity distribution companies. UTE Conquista do Pontal's winning bid was of US$ 58.2/MWh (BRL 95/MWh). In January 2013, another 79.8-MW sugar cane residue power plant became operational: UTE Agua Emendada. In 2008, this power plant had also signed power purchase agreements to sell electricity to distribution companies starting in 2010. A total of US$ 49.4 million (BRL 96.4 million) was directed to constructing UTE Agua Emendada. As of March 2013, construction works on another unit was concluded: the 72.7-MW power plant named UTE Alto Taquari. In 2008, this power plant had also signed power purchase agreements to sell electricity to distribution companies starting in 2010. A total of US$ 49.4 million (BRL 96.4 million) was directed to constructing UTE Alto Taquari. Missing sponsor name