Bankrupt Enron starts US$570mn Cuiaba expansion

By
Thursday, March 7, 2002

Bankrupt US-based energy group Enron on Thursday kicked off a US$570mn expansion of its Cuiaba integrated electricity project, which includes a thermoelectric plant in Brazil's Mato Grosso state and a 630km gasline from Bolivia.

Through EPE (Empresa Productora de Energia), Enron owns 71.8% of the thermoelectric plant and UK-based Shell 28.1%; while the troubled US firm has 56.2% and Shell 43.7% of the Brazilian portion of the gasline and a 50:50 split of the Bolivian portion.

The Cuiaba thermo plant has been operating at 240MW since last year, but with natural gas it will operate in combined cycle and increase capacity to 480MW.

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The US congress is investigating Enron's involvement in the Cuiaba project in light of the company's history-making bankruptcy. The investigation is focusing on the purchase and sale of shares in the project between Enron and investment company LJM.

In September 1998 Enron sold 13% of EPE to LJM, owned by then Enron financial director Andrew Fastow, forUS$11.3mn. In August 2001 Enron bought LJM's stake in EPE for US$14.4mn, according to a US congressional report cited in newspaper Diario de Cuiaba.