Mitsui & Co., Ltd. agreed with GDF SUEZ Energy Latin America Participações Ltda., subsidiary of the global energy group GDF SUEZ S.A., to participate in 3,750 MW Jirau run-of-the river hydropower project. Mitsui will establish a Brazilian subsidiary, acquiring 20% equity of ESBR Participações S.A., which owns the project with a capital expenditure estimated at about $8 billion.
The Jirau Hydropower Plant, located in northern Brazil, will sell electricity mainly to electric power distributors based on long-term PPAs for 30 years. Its total generation capacity of 3,750 MW will make the project the fourth largest hydropower plant in the South American country. A loan agreement on a project finance basis has already been executed with Brazilian Development Bank (BNDES) and a group of commercial banks, and both the operational license and environmental license have been already granted. Full commercial operation with all 50 turbines expected to start in 2015.
Mitsui will hold, after its participation in Jirau Project, approximately 6,694 MW on an installed net generating capacity basis, including projects under construction. With this project, hydropower will account for 1,287 MW, or approximately 19% of the above mentioned generating capacity. The Japanese firm will pursue further investment in power projects in Latin America and other regions with growth potential, aiming to develop a diversified power generation portfolio with a balanced fuel-mix in various geographical locations.
Closing of the transaction is expected to occur during the second half of 2013, upon satisfaction of certain conditions, including obtaining approvals from Brazilian regulatory authorities and lenders of the project.
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