Guanhaes Energia Small Hydro Power Plants

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Guanhaes Energia S.A., a partnership of the Brazilian state-owned company Cemig (49%) and the Brazilian company Light Energia (a partnership of Cemig, 26%; Rio Minas Energia, 13%; Luce Empreendimentos, 13%; state-owned bank BNDES, 10%; and other small investors, 38%), was awarded the contract to build and operate four small hydro power plants located in the Corrente Grande River and Guanhaes River, state of Minas Gerais (total capacity of 44 MW). The company signed 30-year concession contracts with ANEEL starting in December 2001. The projects were named: PCH Fortuna II (9MW) PCH Senhora do Porto (12 MW) PCH Jacare (9 MW) PCH Dores de Guanhaes (14 MW) Guanhaes Energia established a power purchase agreement to sell all its output to the electricity distribution network of Cemig. The sponsor committed to invest US$ 137.9 million (BRL 269.2million) in the power plants. In August 2012, Investminas sold its shareholding in Guanaes Energia to the Brazilian company Light Energia for US$ 13.6 million (BRL 26.6 million). Light Energia was set to invest an additional US$ 30.8 million (BRL 60.2 million) to finance the construction works. Cemig held a 26% interest in Light Energia at the time the deal took place (Rio Minas Energia, 13%; Luce Participações, 13%; BNDES, 10%; other investors, 36%). In January 2014, the sponsor was granted a US$ 81.7 million (BRL 192 million) loan from BNDES. Construction works commenced in September 2012, and commercial operations were set to start in the early 2015. 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 November 2009, Guanhaes Energia applied for carbon credits.