Itarema Wind Complex - Phase I

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Itarema Geracao de energia S.A., a subsidiary of the Brazilian company FIP Rio Energy (controlled by Denham Capital), was granted authorizations to build a wind complex in the state of Ceara. The wind farm named Complexo Eolico Itarema was set to be built in two phases (207 MW in total capacity). The first phase included the construction of four power plants with total capacity of 90 MW. The following special purpose companies were created to manage each plant: * Eolica Itarema I S.A. - EOL Itarema I (27 MW) * Eolica Itarema II S.A. - EOL Itarema II (27 MW) * Eolica Itarema III S.A. - EOL Itarema III (15 MW) * Eolica Itarema V S.A. - EOL Itarema V (21 MW) The second phase included the construction of five power plants with total capacity of 117 MW. The following special purpose companies were created to manage each plant: * Eolica Itarema IV S.A. - EOL Itarema IV (21 MW) * Eolica Itarema VI S.A. - EOL Itarema VI (24 MW) * Eolica Itarema VII S.A. - EOL Itarema VII (21 MW) * Eolica Itarema VIII S.A. - EOL Itarema VIII (21 MW) * Eolica Itarema IX S.A. - EOL Itarema IX (30 MW) The 35-year contracts were signed with the regulatory agency ANEEL starting in May 2014. In November 2013, the first phase power plants had been granted 20-year power purchase agreements with the several electricity distribution companies through public biddings. The sponsors offered an average tariff of US$ 53.3/MWh (BRL 125.5/MWh) and committed to start supplying the market in 2018. In August 2014, the second phase power plants were also granted power purchase agreements with electricity distribution companies. The sponsors offered an average tariff of US$ 55.7/MWh (BRL 131/MWh) and committed to start supplying the market in 2017. The total investment in this first phase was estimated at US$ 209 million (BRL 697.5 million). In September 2015, the state-owned bank BNDES approved a US$ 195.6 million (BRL 652.5 million) loan to finance both phases of the project. The remaining project cost was set to be equity financed. Construction works commenced in July 2015 and were in advanced stages by December 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.