Ventos de Santo Augusto Wind Farm

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The Brazilian investment fund Salus Fundo de Investimentos em Participacoes was granted authorizations to build five wind power plants located in the municipality of Simoes, state of Piaui (108 MW in total capacity). The company established eight special purpose companies to manage the projects: * Ventos de Santo Augusto I Energias Renovaveis S.A. - EOL Ventos de Santo Augusto I (16 MW) * Ventos de Santo Augusto II Energias Renovaveis S.A. - EOL Ventos de Santo Augusto II (30 MW) * Ventos de Santo Augusto III Energias Renovaveis S.A. - EOL Ventos de Santo Augusto III (30 MW) * Ventos de Santo Augusto IV Energias Renovaveis S.A. - EOL Ventos de Santo Augusto IV (30 MW) * Ventos de Santo Augusto V Energias Renovaveis S.A. - EOL Ventos de Santo Augusto V (30 MW) * Ventos de Santo Augusto VI Energias Renovaveis S.A. - EOL Ventos de Santo Augusto VI (30 MW) * Ventos de Santo Augusto VII Energias Renovaveis S.A. - EOL Ventos de Santo Augusto VII (16 MW) * Ventos de Santo Augusto VIII Energias Renovaveis S.A. - EOL Ventos de Santo Augusto VIII (16 MW) The 35-year contracts were signed with the regulatory agency ANEEL starting in May 2012. The total investment in the power plants was estimated at US$ 228.2 million (BRL 679.2 million). The government periodically runs public bidding for the sale of energy to the country´s distribution companies. The power plants EOL Ventos de Santo August III, IV and V won the public bidding that took place in November 2013, by offering an average tariff of US$ /MWh (BRL 125.36/MWh). The power plants EOL Ventos de Santo August I, II, VI, VII and VIII won the public bidding that took place in December 2013, by offering an average tariff of US$ /MWh (BRL 120.47/MWh). The project companies signed 20-year power purchase agreements with the several electricity distribution companies. The companies committed to start supplying electricity to the market in 2016 (EOL Ventos de Santo Augusto III, IV and V ) and 2018 (EOL Ventos de Santo Augusto I, II, VI, VII and VIII). Construction works on EOL Ventos de Santo Augusto III, IV and V started in December 2014, and were in advanced stage as of June 2015. The investment on these power plants was estimated at US$ 103.7 million (BRL 308.7 million). As of June 2015, construction works on the other power plants had not commenced. The projects 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 accelated depreciation methods of accounting for construction expenditures. Finally, the electricity sold by the company is not subject to sectoral taxes.