Pedro Afonso Thermal Power Plant

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The Dutch group Bunge's subsidiary Bunge Acucar e Bionergia (80%) and the Japanese company Itochu Corporation's subsidiary JB Bioenergy (20%) was granted the authorization to build and operate a 80-MW sugar-cane-residue fueled power plant located in the state Tocantins. The power plant was named UTE Pedro Afonso, and the sponsors created the company Pedro Afonso Acucar e Bioenergia Ltda to manage the project. The 35-year contract was signed with the regulatory agency ANEEL in May 2011. The value of the investment committed to UTE Pedro Afonso was estimated at US$ 83.4 million (BRL 162.7 million). UTE Pedro Afonso won the public bidding that took place in 2010 to sell electricity to several distribution companies, by offering a tariff of US$ 76.3/MWh (BRL 134.25/MWh). The project company signed 15-year power purchase agreements with the several electricity distribution companies. UTE Pedro Afonso committed to start supplying to the market in 2013. Commercial operations commenced in September 2013. As of March 2013, construction works were underway and ahead of schedule. 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. Finally, the electricity sold by the company was free from sectoral taxes.