OREANDA-NEWS. ENEVA informs that, on an extraordinary meeting held today (September 5), the board of Aneel (Brazil's National Electric Energy Agency) approved an agreement to adjust power supply obligations of the Parnaíba II power plant. The agreement enables the economic feasibility of the project.

"After more than three months of discussions with Aneel, we have achieved a balanced solution for Parnaíba II, which will allow the maintenance of the PPAs with a low cost energy for the consumers. Parnaíba II is a unique project with the cheapest CVU (Variable Unit Cost) among the Brazilian power plants, is highly efficient and will contribute to the energy security of the country. This decision is also a key element for ENEVA to continue its financial stabilization plan”, said Fabio Bicudo, ENEVA CEO.

The terms and conditions of such agreement include:• The obligation for the completion of the construction of Parnaíba II until December, 2014. In the event of non-complying this condition, a penalty of BRL 60 million will apply;• The postponement of the start date of the Power Purchase Agreements (PPAs) to July 1st, 2016. As a result, the PPAs will be extended for another two years, until July 2036;• A penalty amounting to a total of BRL 333 million, paid for in installments, through the reduction in annual fixed revenues and indexed to inflation index (IPCA), from 2022 and until 2032;• Immediate suspension of transmission charges (TUST) until July, 2016.Aneel has also accepted the company's proposal to close the cycle of the four gas turbines of the Parnaíba I power plant in up to five years. This item is still subject to the execution of appropriate energy auctions that may enable the sale of energy in the regulated market. If necessary, the deadline may be extended.

Additionally, the Parnaíba Complex should maintain its current nominal generation capacity of 908 MW with the temporary replacement of Parnaíba III and two turbines of Parnaíba I by Parnaíba II, optimizing the generation of electricity from the reduced availability of gas. Following Aneel's determination, the generation by replacement should take place from November 2014.The decision of generation by replacement considers the recommendation from Brazil's National Oil, Gas and Biofuels Regulatory Agency (ANP) so that gas production intended for the Parnaíba Complex, from the Gavião Real field, is restricted to up to 4.8 million m3 a day. The recommendation aims to maximize the useful life of reservoirs in the current high thermoelectric dispatch scenario while additional drilling are performed, thus accelerating production at other discovered fields that have already been approved by ANP.

If ENEVA does not comply with the terms and conditions of the TAC, the company should pay 20% of the penalty of BRL 333 million that has been determined by the regulator.