Faxinal II Small Hydro Power Plant

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Centrais Eletricas Salto dos Dardanelos S.A., a partnership of the Brazilian companies Madeireira Barra Grande Ltda (50.3%) and Magabra Agropastoril Ltda (49.4%), was awarded the contract to build and operate a 10 MW hydro power plant located in the Aripuana River, state of Mato Grosso. The company signed a 30-year concession contract with ANEEL in Novembro 2002, and the power plant was named PCH Faxinal II. In 2003, PCH Faxinal II established a power purchase agreement to sell all its output to the electricity distribution network of CEMAT. The sponsor committed to invest US$ 5.1 million (BRL 15 million) in the project, which was financed with a US$ 3.1 million (BRL 9.1 million) loan granted by the state-owned bank Banco do Brasil in 2004. The power plant commenced operations in November 2005. In April 2012, the power plant was authorized by the regulatory agency Aneel to expand its capacity to 30 MW. The investment committed to this expansion was not available. As of March 2013, construction works were underway, and operations on this new unit commenced in November 2014. 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 accelerated depreciation methods of accounting for construction expenditures. In March 2008, the company applied for carbon credits.