Sinop Hydro Power Plant

Active

In August 2013, the Brazilian consortium CES, comprised of the state-owned companies Companhia Hidreletrica do Sao Francisco (Chesf; 24.5%) and Centrais Eletricas do Norte do Brasil (Eletronorte; 24.5%) and the private company Alupar (51%), was awarded in a competitive bidding process the contract to build and operate a 400-MW hydro power plant located in the Teles Pires River, state of Mato Grosso. The names of the other bidders were not disclosed. The bidding criteria set by the regulatory agency ANEEL was the lowest tariff. CES presented the lowest offer, a value of US$ 46.4/MWh (BRL 109,40/MWh), 7,29% below the ceiling set by the regulatory agency. The contract was signed in February 2014, and the sponsors created the special purpose company Companhia Energetica SINOP S.A. to lead the project during the 35-year contract period. State Secretary for the Environment (Semat) awarded the environmental license for the project in August 2016. The company Construtora Triunfo was hired to conduct the EPC works for the project and supply the equipment. In December 2014, Alupar sold its 51% stake in the project company to the French company EDF. The sponsor committed to invest US$ 516.1 million (BRL 1.8 billion) in the power plant. Financial closure was achieved in August 2016, when the project was granted a US$ 300 million (BRL 1.046 billion) loan from BNDES. The remaining cost was set to be financed with the sponsors’ internal resources. Construction works commenced January 2014, and operations were expected to begin by 2018. 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.