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Brazilian company opts for small dams

Southeast Brazilian energy company Companhia Forca e Luz Cataguazes (CFLCL), has opted to concentrate on building small dams rather than diversify into gas-fired power plants, owing to a government decision to fix gas prices in the US dollar when costs are in local currency.

CFLCL plans to invest R$220M (US$115M) in completing ten small dams with a total power output of 170MW by 2004. Each plant will be less than 30MW and will take 18 to 24 months to build.

According to CFLCL, the advantages of choosing small water power plants is a guarantee of 80% finance from federal bank BNDES (Banco de Desenvolvimento Economico e Social), and no requirement to tender or obtain environmental licences. Furthermore the government allows the plant operators a higher generating tariff.

CFLCL’s first small dam will be Nova Sinceridade (9MW) in Manhuacu in Minas Gerais state. The plant will cost R$11M and provide an annual output of 40GWh when it starts operating in March 2001.

In order to attract further capital for its dam schemes, CFLCL is offering US$30M-worth of commercial papers through Brazilian investment bank, Banco Bozano Simonsen.