Environ authority clears EIS for CTSul 650MW coal-fired project

Thursday, February 9, 2006

The Fepam environmental authority in Brazil's southernmost state of Rio Grande do Sul has approved environmental impact studies (EIS) for the 650MW coal-fired CTSul thermoelectric power plant, the Rio Grande do Sul state government said in a statement.

The approval of the EIS is an essential step needed for CTSul to sell power at government auctions. The sale of future power generation at auctions is also important because it guarantees future revenues and eases financing.

Investment in CTSul is currently estimated at US$892mn, up from the US$779mn estimate by the state government in August 2005.

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The project was taken off the shelf in 2004 after the state government signed a construction agreement with Chinese state company China National Machinery and Equipment Import Export Corporation (CMEC).

The coal will be supplied by mining company Companhia Riograndense de Mineração (CRM), which is controlled by the Rio Grande do Sul state government and construction entirely financed by European banks.

According to the state government, construction will be carried out by Brazilian engineering firm Camargo Corrêa and commercial operations will start three years after construction gets underway.

The sale of future power in the government's power tender last December made feasible two other coal-fired projects in Brazil's south, where most of the country's coal reserves are found. The projects are the 350MW Candiota III project to be built by federal power company CGTEE and the 350MW Jacuí project to be constructed by Brazilian power group Eleja, which is controlled by mining company Carbonífera Criciúma.