Pampa Sul Thermal Power Plant

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The Brazilian company Tractebel Energia, a subsidiary of French group Engie, was granted authorization to build and operate a coal fueled power plant located in the state of Rio Grande do Sul, municipality of Candiota (340 MW in total capacity). A 35-year authorization contract was granted by the regulatory agency ANEEL to UTE Pampa Sul in March 2015. The sponsors created special purpose company Usina Termelatrica Pampa Sul S.A. to manage the power plant. The estimated investment in the project was US$ 539.6 million (BRL 1.8 billion). Construction works commenced in December 2015 and were in its final stages as of June 2017. The government periodically runs public bidding for the sale of energy to the country´s distribution companies. UTE Pampa Sul won the public bidding that took place in November 2014 by offering an average tariff of US$ 85.9/MWh (BRL 201.98/MWh). The project company signed 25-year power purchase agreements with the several electricity distribution companies. The project companies 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 accelerated depreciation methods of accounting for construction expenditures.