Sao Manoel Hydro Power Plant

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In December 2013, Consorcio Terra Nova, a partnership of EDP (66,67%) and Furnas (33.33%), was awarded in a competitive bidding process the contract to build and operate a 700 MW hydro power plant located in the Teles Pires River, state of Para. The names of other bidders were not disclosed. The bidding criteria set by the regulatory agency ANEEL was the lowest tariff. Consorcio Terra Nova presented the lowest offer, a value of US$ 35.52/MWh (BRL 83.49/MWh), 22% below the ceiling set by the regulatory agency. The contract was signed in April 2014, and sponsors created the company Empresa de Energia Sao Manoel S/A to lead the project during the 35-year contract period. Empresa de Energia Sao Manoel S/A committed to sell 100% of the output to the regulated market . Environmental regulator, Ibama, awarded an environmental license for the project in August 2014. The Consorcio Constran-UTC UHE was hired to conduct the EPC works for the project. The sponsor committed to invest US$ 695.2 million (BRL 2.069 billion) in the power plant. In July 2014, the sponsors issued US$ 245.5 million (BRL 532 million) in bonds and US$ 15.1 million (BRL 45 million) in bridge loans. The issued bonds were fully acquired by the state-owned bank Banco do Brasil. In May 2015, the state-owned bank BNDES approved a US$ 151.2 million (BRL 450 million) loan to the project. In September 2015, the sponsor issued an additional US$ 14.4 million (BRL 48.1 million) in long-term bonds. In November 2014, EDP Brasil sold part of its shares in the project company to the subsidiary of the Chinese state utility Three Gorges Corporation (TGC). The ownership structure was established as follows: EDP Brasil S/A (33,33%), Furnas (33,33%) and TGC (33.33%). Construction works commenced in the second semester of 2014, and operations were expected to begin by 2018. In January 2015, the construction license was suspended by the federal court, as the project company was not complying with several issues related to environmental protection. In July 2015, the construction works resumed. 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.