Pioneiros II Thermal Power Plant

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The company Brazilian company Pioneiros Bioenergia S.A. was granted the authorization to build and operate a sugar-cane-residue fueled power plant located in the state of Sao Paulo (50 MW in total capacity). The 35-year contract was signed with the regulatory agency ANEEL in December 2007. The sponsor created a special purpose company named Pioneiros Termoeletrica Ilha Solteira S.A. to manage the project. The value of the investment committed to the project was estimated in US$ 6.2 million (BRL 12.2 million). In March 2007, the company had taken part in a competitive bidding process and had won the right to supply electricity for 30 years in the regulated market starting in 2010 (the company won the bidding by offering a tariff of US$ 71.3/MWh or BRL 139.12/MWh). The project suffered with delays and the construction works were only concluded early in 2012. As of October 2012, the power plant could not commence commercial operations because the construction works on the transmission line connecting the power plant to the national grid was not concluded. 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. Commercial operations commenced in September 2013.