Sao Sebastiao Small Power Plant

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The Brazilian company Sao Sebastiao Empreeendimentos S.A. was granted the authorization to build a small hydro power plant (PCH Sao Sebastiao) located in the state of Santa Catarina (9.9 MW in total capacity). The 30-year contract was signed with the regulatory agency ANEEL in March 2011. Sao Sebastiao Empreeendimentos committed to invest US$ 24.1 million (BRL 47.63 million) in the construction of the Sao Sebastiao power plant. In August 2010, the power plant took part in the competitive bidding process to sell electricity to the regulated wholesale market starting in 2013 (20-year power purchase agreement was signed guaranteeing the sale of electricity to the national grid). The tariff offered in the bidding process by the power plant was US$ 67.5/MWh (BRL 133.25/MWh). As of October 2012, the construction works were underway, and operations were expected to commence in 2013. 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. In September 2010, the company applied for carbon credits.