EDP Brasil records impairments of 230 million due to the Pecém coal-fired plant that will affect the Portuguese company's profits

EDP, which consolidates 57.5% of EDP Brasil, will be affected in its accounts by an impairment of 230 million euros that it had to set up to cover the impact of the postponement of an energy auction at the Pecém coal-fired power station in the state of Ceará.

In a statement to the CMVM, EDP says that "through its subsidiary EDP - Energias do Brasil, 57.55% owned, informs that its subsidiary Pecém Geração de Energia will record an impairment of 0.23 billion euros in 2022 (non-cash impact)".

Pecém is a 720 MW coal-fired power plant in the state of Ceará with an operating license until January 2044, contributing to the security of supply of the Brazilian electricity system. The plant has a Power Purchase Agreement (PPA) in place until July 2027, "providing a stable revenue stream, adjusted to inflation and availability levels."

The postponement of the A-5 energy auction (for new PPAs starting in 2027), which was scheduled to take place in November 2022, and the lack of visibility regarding upcoming energy auctions in Brazil has impacted expectations of the power plant's economic conditions upon maturity of the existing PPA, EDP says.

"Therefore, and in accordance with IAS 36, EDP has incorporated this scenario in the annual impairment tests, resulting in an extraordinary impairment charge to be recorded in EDP Brazil's net income in 2022, with a negative impact of E0.13 billion (130 million) on EDP's net income for the same year," EDP announces.

"The final impact is subject to the approval of the external auditors and this extraordinary accounting cost is neutral in terms of cash flow and net debt in 2022," says the company led by Miguel Stilwell de Andrade.

EDP guarantees that "it is committed to maintaining its leadership position in the energy transition, with a clear growth strategy focused on renewable energies, having set the goal of eliminating coal activity from the EDP Group's revenue mix by 2025. "

The post EDP Brasil records impairments of 230 million due to Pecém coal-fired plant that will affect Portuguese company's profits first appeared on O Jornal Económico.