August 28, 2017 / 11:22 PM / 2 years ago

Brazil cancels 25 wind, solar power projects at request of firms

A wind turbine used to generate electricity is seen in the coastal of the city of Fortaleza, Brazil, April 26, 2017. REUTERS/Paulo Whitaker

SAO PAULO (Reuters) - Brazil’s government on Monday canceled the construction of 25 wind farms and solar parks in the country after companies behind the projects requested to return construction licenses.

These companies took part in the first so-called “cancellation round” for power projects, as the government moved to allow firms struggling to develop the projects to return the licenses at a fee.

Brazil’s power sector has been rattled by a combination of slumping demand, rising construction costs and reduced credit availability as the country has gone through its harshest recession on record.

Many companies that were awarded licenses to build new power generation projects have said they would not have the financial conditions to build them. The situation led the government to call for the unusual cancellation round.

At the end of the round, companies paid a combined fee of 105.9 million reais ($33.43 million) for the cancellations. Besides the fines, they will be bared for two years from participating in any new round for new projects.

Construction licenses for 16 wind farms and 9 solar parks were scraped.

But new rounds are scheduled for December, the first ones since 2015, as the government sees the beginning of a recovery in power demand.

Reporting by Marcelo Teixeira; Editing by Cynthia Osterman

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