Canada gas developer moves into Brazil small hydro

Canada’s Kenartha Oil &Gas Co. Ltd. is negotiating to participate in small hydropower projects in Brazil as a way to expand business opportunities in South America.

Kenartha said it is negotiating with a private group that currently has site licenses and all required approvals and permits for two small hydro projects. The 8-MW Renic project is to be developed for US$8 million, while the 17.5-MW Tamboril is to be developed for US$18 million.

Kenartha said the run-of-river projects are located downriver from a 28-MW project that was built under turnkey contract for the same private group.

�Management is of the opinion a participation interest will give the company a low risk entry point in which to seek whether there are additional business potentials in the region,� Kenartha said.

The Canadian firm said it has examined Brazil’s small hydro potential for four years, finding the government encourages development of maximum-30-MW small hydro projects — pequenas centrais hidreletricas (PCH). (HNN 1/29/07) Rules allow developers to negotiate directly with regulator Agencia Nacional de Energia Eletrica (ANEEL), eliminating the public tendering format.

Kenartha noted site licenses are granted for 30 to 35 years, after which they are renewed by agreement with ANEEL, with no provision for transfer back to the state. Power can be marketed under power purchase agreements to the state or national utility grids backed by sovereign guarantees, or to private sector customers.

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