Serra do Facao Power Plant

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Energetica Ltda and Votorantim Cimentos Ltda, was awarded in a competitive bidding process the contract to build and operate a 212.58 MW hydro power plant located in the Sao Marcos River, state of Goias. Information on the other bidders was not available. The bidding criteria set by the regulatory agency ANEEL was the highest price paid for the concession rights. GEFAC presented the highest offer, $38.1-million ($16.56-million) in annual concession fees, 3190% above the minimum value set by the regulatory agency. This value was set to be paid in monthly installments between the 7th and 35th years of the concession contract. The net present value of such concession fees in 2001 (when the contract was signed were estimated at US$176 million). The contract was signed in November 2001, and sponsors created the company Serra do Facao Hidreletrica S.A. to lead the project during the 35-year contract period. As of 2009, ownership of the project company was structured as follows: Furnas Centrais Eletricas (49.47%), Alcoa (34.97%), Camargo Correa (10.09%) and state-owned DME Energética (5.47%). In October 2007, Serra do Facao Hidreletrica committed to sell 121 MW to the regulated market and 66 MW to Alcoa under the same pricing conditions. In February 2007, the service order for construction and equipment supply was signed with Consorcio de Empresas Fornecedoras de Serra do Facao (COFAC) so that construction works could commence. COFAC was comprised by Construcoes e Comercio Camargo Correa S.A. (responsible for the civil works); Voith Siemens (responsible for equipment supply); and CNEC (responsible for executive project execution). The sponsor committed to invest US$ 531.5 million (BRL 1.063 billion) in the power plant. Although initial construction works commenced in 2007, financial closure was only achieved in April 2009, when the sponsor signed a US$ 260 million (BRL 520 million) loan contract with BNDES (the loan was initially approved in 2007, but the contract was only signed in April 2009 and the bank started releasing the funds in May 2009). In February 2010, BNDES approved another loan to the project company amounting to US$ 31.2 million (BRL 56.1 million). The remaining cost was set to be financed with the sponsors’ internal resources. Commercial operations of the first generating unit (106.2 MW) started in July 2010.

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