Rio Sirinhaem Energia Small Hydro Power Plants

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The Brazilian company Rio Sirinhaem Energia Ltda, a partnership of the Brazilian companies Atiaia Energia S.A./Grupo Cornelio Brennand (70%) and Koblitz Energia Ltda (30%), was granted authorizations to build eight small hydro power plant located in the state of Pernambuco (24.62 MW in total capacity). The power plants were named: PCH Pedra Furada (6,5 MW) PCH Cortes I (1,4 MW) PCH Cortes II (4,7 MW) PCH Cortes III (1,9 MW) PCH Cachoeira da Prata (1,05 MW) PCH Cachoeira da Onca (3,47 MW) PCH Cachoeira Alegre (1,6 MW) PCH Ilha das Flores (4 MW) As of October 2012, all projects but PCH Pedra Furada had not been granted environmental licenses. For PCH Pedra Furada, a special purpose company was created to manage the project: Pedra Furada Energia S.A. This company signed a 35-year contract with the regulatory agency ANEEL in January 2008 to build and operate the power plant. For each of the other power plants, special purpose companies were created and the 30-year concession contracts were signed in March 2009. In July 2007, PCH Pedra Furada had taken part in a competitive bidding process to sell electricity to the regulated wholesale market. The company presented the winning offer of US$ 69.2/MWh (BRL 134,97/MWh) and signed a 30-year power purchase agreement guaranteeing the sale of electricity to the national grid, starting in 2010. The company was not able to meet this deadline and commercial operations commenced only in March 2012. Pedra Furada Energia committed to invest US$ 25.3 million (BRL 50 million) in the construction of the power plant. 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.