Source: DCI - São Paulo / SP - 31/08/2010

State Agency

SAO PAULO - Pedro Mizutani, president of Cosan Açúcar e Álcool, said yesterday that the company will not sell bioelectricity produced through biomass at the prices offered in a renewable energy auction, held last week. According to him, the final auction price of R $ 134 per megawatt (MW) makes cogeneration investments unfeasible, even for capacity expansion. “Cosan would sell energy from the Carapó Plant in Mato Grosso do Sul, to expand the production already existing at the plant. However, given the auction price, we decided not to sell. ”

For the executive, in order to invest in the expansion of already installed capacity, the price would have to be above R $ 150 per MW. Mizutani informed that to invest in retrofit plants (already ready and that need to be retrofitted to co-generate energy through biomass), the auction sale value would have to be above R $ 180 per MW. Cosan has ten plants generating energy and two others are expected to start operating in 2011 and 2012, respectively.

Mizutani also reported that Cosan does not intend to invest in cogeneration without having the demand guaranteed by auction sale or by contracts with electricity companies. The executive added that, now that the joint venture between Shell and Cosan has been sealed, the company will wait for about 45 days for the agreement to be endorsed by the European Commission, so that the new steps are defined.

Mizutani participated in the 12th International Forum on the Future of Alcohol, held in Sertãozinho (SP), in the Ribeirão Preto region, at the opening of the International Sugar and Alcohol Industry Fair (Fenasucro). At this moment, the forum began with the presence of the Minister of Agriculture, Wagner Rossi, and Rubens Ometto, chairman of Cosan's Board of Directors, also chairman of Fenasucro.

During the event, Ometto said that the trend is for the Esso brand to disappear in the medium term, within the new structure formed by the joint venture with Shell. According to the executive, the Shell brand tends to prevail in the new structure. "Everything is being organized, but it is natural that Shell has priority," he informed.

He said that reducing taxes on ethanol would be the most effective measure to end tax evasion in the sector. Ometto highlighted the example of the State of São Paulo, which reduced the Tax on Circulation of Goods and Services (ICMS) to 12%, and which should be followed by other states. "Equalization of the ICMS depends on political will and, in this sense, the State of São Paulo is an example to be followed," said Ometto.

In turn, the Minister of Agriculture said that the equalization of the ethanol tax rate in the country depends on a tax reform and the unanimity of the state finance secretaries.

Cosan's president commented that he did not share the criticisms of the sugar and alcohol sector in relation to the performance of the National Bank for Economic and Social Development (BNDES). The executive said he has no complaints about the bank's performance in relation to Cosan. "BNDES has always acted professionally with Cosan," he informed.

Rossi admitted the difficulty of a consensus in the country for the uniformization of the ICMS rate between the states, as well as the tax reform. “But we have the position that it is important to relieve production, there is no doubt about that; the government managed to do this by differentiating Cide in relation to gasoline, which is a positive point ”, said the minister.

He considered that one of the bottlenecks in the sugar and alcohol sector is still logistics, recalled that private companies make investments in the area and cited those also foreseen by the federal government in Growth Acceleration Plans (PACs) 1 and 2. “It would be unreal to say that we have a wonderful logistics, but investments in PAC 1 and 2 will change this issue, especially with the improvement in ports and the use of the railway modal and, eventually, also of the waterways ”, said Rossi.

The minister also recalled that "sugar cane occupies a very small part of less than 1% of the national territory, or about 8 million hectares and ratified the federal government's commitment to the sugar and alcohol sector". "President Lula is a great promoter of the ethanol program, so much so that he will be here," he concluded. Lula visits the event today.