Suape II Thermal Power Plant

active

The Brazilian state-owned company Petrobras (20%) and Savana SPE Incorporacao Ltda (80%) were granted the authorization to build and operate a 356-MW diesel fueled power plant located at the state Pernambuco. The power plant was named UTE Suape II, and the sponsors created the company Energetica Suape S.A. to manage the project. The 35-year contract was signed with the regulatory agency ANEEL in June 2008. The value of the investment committed to UTE Suape II was estimated at US$ 302.6 million (BRL 590 million). UTE Suape II won the public bidding that took place in January 2007 to sell electricity to several distribution companies, by offering a tariff of US$ 136.1/MWh (BRL 265.4/MWh). The project company signed 15-year power purchase agreements with the several electricity distribution companies. UTE Suape II committed to start supplying to the market in 2012. In January 2013, UTE Suape II commenced commercial operation. 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. Finally, the electricity sold by the company was free from sectoral taxes.