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The respective governments of Brazil and China have signed an agreement for the construction to build the US$700mn, 650MW CTSul coal-fired power plant in Rio Grande do Sul state, Brazil's presidential news service reported.
CTSul announced plans last May to invest in the plant and was seeking tax breaks for the project. The project will now be built by the China National Machinery and Equipment Import Export Corporation (CMEC) and the coal will be supplied by Brazil's CTSul Recursos Minerais. The plant's construction it will be entirely financed by European banks, a spokesperson for the state government told reporters Monday.
Construction should take 36 months to be completed after it starts, he said.
The project is at an advanced stage of licensing with the electricity regulator Aneel and from the state environmental agency, the spokesperson said.
Rio Grande do Sul energy secretary Valdir Andres believes this is the green light needed from the federal government for this and other coal-fired projects in the state, the spokesperson said.
The original project was first conceived of in 1997 by partners DMC and Empresa Brasileira de Mineracao (EBM).
This was one of 15 commercial and investment agreements estimated at US$5bn signed between Brazil and China on the five-day trip to China by Brazil's President Luis Inácio Lula da Silva, local press reported.
Other energy accords include a commercial and operational agreement between Brazilian energy company Petrobras (NYSE: PBR) and two Chinese state oil companies, Sinopec and National Offshore Oil Company (CNOOC).
With Sinopec, Petrobras plans to explore deep-water reserves in Asia, Ecuador and Iran and with CNOOC, to explore for oil in the South China Sea.