VICTOR PARANHOS

CEO OF ENERGIA SUSTENTÁVEL DO BRASIL

ESBR: General Framework

ESBR

Financing(BNDES)

Other Companies

Interfaces(Concremat)

Civil Project(Themag)

Civil Works(CCCC and JMalucelli)

Jirau HPP

Turbines and Generators

(DongFang and Alstom/Voith/Andritz)

Owner’s Engineering(LEME)

BS Construtora

Works Around the Reservoir

Owner’s Engineering(INTT)

Concession Agreement(ANEEL/MME)

Environmental Licensing(IBAMA)

Assembly and Mounting

(ENESA)

Mitsui(20%)

GDF Suez (40%)

Eletrosul (20%)

Chesf(20%)

Jirau HPP: Basic Characteristics

Part of PAC -Growth

Acceleration Program

Located at Ilha do Padre, 120 km far from Porto Velho, State of Rondônia,

in the North of Brazil

3,750 MW installed capacity - enough

to supply more than 10 millions of

families

Connected to the National

Interconnecd Grid System through

three 500 kV transmission lines

• Energy:

Power houses: 2, one at each riverbank

Installed capacity: 3,750 MW

Quantity of turbines: 50

Turbine type: Bulb

Individual turbine capacity: 75 MW

• Reservoir:

Variable water level: 82.5 m – 90.0 m

Reservoir area: 361.6 km2

Reservoir area increase due to the project: 21.0 to 207.7 km2

Life expectancy: more than 50 years

• Spillway:

Design flow: 82,600 m3/s

18 gates, each 22.7 m high by 20 m wide

Jirau HPP: Location

Power HouseRight Bank

SpillwayLog-Boom

Logs Discharger

Power HouseLeft Bank – 1ª Phase

Power HouseLeft Bank – 2ª Phase

Jirau HPP: Overview

• 13 units in operation (975 MW);

• 8 additional units already being commissioned (600 MW);

• Jirau units have already operated successfully at full power and with aperformance above auction requirements;

• 95,5% overall project progress;

• Work force and night shift increased in order to speed upcommissioning.

Jirau HPP: Project Update

Spillway

Power HouseLeft Bank – 2ª Phase

Largest HPP in the World

HPPInstalledCapacity

1 Three Gorges Dam – China 22,500 MW

2 Itaipu Dam – Brazil/Paraguay 14,000 MW

3 Xiluodu – China 13,860 MW

4 Guri – Venezuela 8,850 MW

5 Tucuruí – Brazil 8,370 MW

6 Xiangjiaba – China 7,750 MW

7 Grand Coulle – United States 6,809 MW

8 Longtan Dam – China 6,426 MW

9 Krasnoyarsk – Russia 6,000 MW

10 Nuozhadu – China 5,850 MW

HPPInstalledCapacity

11 Churchill Falls – Canada 5,828 MW

12 Robert-Bourassa – Canada 5,616 MW

13 Jinping-II – China 4,800 MW

14 Bratsk – Russia 4,500 MW

15 Laxiwa Dam – China 4,200 MW

16 Xiaowan Dam – China 4,200 MW

17 Sayano-Shushenskaya – Russia 3,840 MW

18 Ust Ilimskaya – Russia 3,840 MW

19 Jirau – Brazil 3,750 MW

*HPP under construction are not included. Some HPP mayhave additional units under construction, but only currentinstalled capacity is listed.

A True Challenge

INSTALL ONE OF THE LARGEST HYDROELECTRIC PLANTS IN THE AMAZON

REGION

MEET THE PROJECT DEADLINES

INCREASE THE POWER-GENERATING CAPACITY (6 MORE TURBINES)

TECHNOLOGICAL CHALLENGES – TURBINES, LOG-BOOMS, SEDIMENTS

LOGISTICAL CHALLENGES FOR TRANSPORTING OF EQUIPMENT AND MATERIALS

CIVIL WORKS

ENVIRONMENTAL LICENSING PROCESS

Challenge: Jirau HPP’s Schedule

50%55% 61%

68%75%

KEY SUCESS FACTORS

Best suppliers;

Responsabilities cleary allocated;

Owners-engineer arrangements forevery aspect of the project

– Civil works: LEME Engenharia

– Transmissions lines: LEME Engenharia

– Nova Mutum Paraná and worksaround the reservoir: INTERTECHNE

Interface Management:

– CONCREMAT is a contractor focussedspecifically on interface issues withrespect to technical aspects of theconstruction activities, focussing onlogistics control, storage, transport,and others.

Mix of national and foreigncompanies.

Contractors and Interfaces:

Pursuit of Excellence

Civil Project

THEMAG

Civil Works

CCCC

Civil Works

JMalucelli

Turbines and Generators

DONG FANG

Turbines and Generators

ALSTOM / VOITH / ANDRITZ

Electro-mechanical Equipament

SIEMENS/CNEC

Hydro-mechanical Equipament

BARDELLA

Assembly and Mounting

ENESA

Transmission Lines

TOSHIBA

Logistics

BERTILING

International Supervision

COYNE ET BELLIER

Nova Mutum Paraná

BS Construtora

MAJOR CONTRACTORS:

Difficulties and Risks

Jirau HPP is being built in a remote area;

There are a lot of construction risks: geological, hydrological, topographyand others;

There is a concentration of players in charge of the civil constructionindustry:

Great difficulty in replacing companies that do not perform in accordance tocontracts.

Low productivity;

High labor turnover;

Constructions claims (very common in the construction industrynowadays);

Large projects as Jirau HPP tend to suffer adjustments duringimplementation;

Consume precious time, money and resources for both parties.

Delays and disruptions (caused by criminal acts);

Risks of tax changes.

EPC

• There is only a basicdesign of the projectwhen the contract issigned.

• The size of theseprojects is such thatno one contractor iswilling to take theoverall risk.

• There are so manytecnhological risksinvolved.

Contractual Structures

Unit Price

• Higher risk for owner.

• The exact final priceof the project is notknow until thecompletos of theproject.

Open Book

• Require more workfor the owner tomanage.

• Require auditingcontractor’s invoices.

• Difficulties to predictthe final cost of theproject.

• Contractors pay lessattention to costcontrol andproductivity.

Final Considerations

Local and regional governments should provide health and education services andpublic safety to ensure that the projects benefits delivered by the project are sustainedinto the long term.

Non-insurable risks (vandalism and others events) cannot be imputed to the owners ofthe project because they do not have the police power.

Risks need to be shared between the owner and the contractors.

– Types of contracts;

– Long-term relationship.

It is important to have stable and fixed rules from the beginning of the project and toavoid changing existing measures which causes significant increases in a project’s cost.

Environmental licensing should be simplified.

Investors must have a clear vision of what will be their future costs.