BNDES, the National Bank for Economic and Social Development, is financing approximately 80 per cent of the R$ 48 million (US$ 20.7 million) investment for the first phase of the project, following the technical specifications described above. This is done through the Special Agency for Industrial Finance (FINAME) as shown:

Companhia Energetica Santa Elisa

R$ 35 million (US$ 15 million, April 2002)

10 years, including 2 years of grace period

3.5 per cent + TJLP[21], including 1.5 per cent risk spread

The funding sources for the second phase are of the order of US$ 13 million to increase the installed capacity to 20 MW but had not yet been secured at the time of this writing.

The total volume of carbon credits expected to be generated over the seven-year (2003-2009) crediting period is 635 501 million tons of СОг — Even though the economic impact of the certificates on the investment is relatively small from the investors’ point of view, it is a means of improving the rank of the proposed project against other competing investment options. It helps to make renewable energy more competitive against fossil fuel plants such as natural gas combined cycle plants, which are very competitive and, currently, the business-as-usual case in Brazil. Thus the CDM framework brings the cogeneration expansion plan closer to any other alternative investments of equal risk.