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French developer, Brazil utility to develop two projects

France-based developer Velcan Energy has signed a partnership agreement with Brazil utility CELG Geracao e Transmissao S/A to develop two hydroelectric projects in Brazil.

Velcan said September 10 the partners plan to develop the 64-MW Pau d'Arco project on the Palma River in Tocantins State. Electricity regulator Agencia Nacional de Energia Eletrica (ANEEL) already has approved a project inventory, establishing the river profile for the project.

Additionally, the partners plan to develop 25 MW to 30 MW on the Claro River in the Araguaia River Basin of Goais State for which the project inventory must be completed.

Velcan said it holds 75 percent of the joint venture, with CELG holding the remaining 25 percent.

The next step in the development process is preparation of "simplified technical projects," Velcan said, upon which concession contracts, for projects of less than 30 MW, or concession tenders, for projects exceeding 30 MW, are based.

The companies have formed an executive committee to lead technical studies of both projects in conformity with ANEEL rules. The studies, required procedures, and administrative authorizations are expected to require 18 to 24 months.

Velcan estimated concession contracts could be negotiated in 2010, followed by construction starts in 2010 or 2011. The projects would go on line in 2013.

Pau d'Arco is the biggest project to date for Velcan, whose strategy is to develop hydro projects in stable emerging countries having a high potential of undeveloped hydropower. It has two sources of revenue, power sales and sale of carbon credits.

In March, Velcan acquired rights to construct the 16-MW Quebra Dedo hydroelectric project on the Suaci Grande River in Brazil's Minas Gerais State. (HNN 3/18/08) It also is building the 14.7-MW Rodeio Bonito project in Santa Catarina State.

In other action, Velcan announced that hydropower will be its development priority since it has won a significant number of hydropower projects. As a result, Velcan canceled its investment in four biomass power projects in India.

Velcan said its board concluded it was in shareholders' interest to focus on the bigger, hydropower investment opportunities. In additional to its Brazilian holdings, it is developing several hydro projects in India. (HNN 7/18/07)

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