French power producer Albioma has signed a joint venture (JV) agreement with Vale do Paraná to establish a new cogeneration operation in the state of São Paulo, Brazil.

With a crushing capacity of two million tonnes of sugar cane every, the Vale do Paraná mill is a subsidiary of Manuelita, a diversified Colombia-based agro-industrial producer, and the Pantaleon Group, Central America’s leading producer of sugar cane based in Guatemala.

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Albioma will develop a project company that will own and operate the mill’s cogeneration plant collaboration with Vale do Paraná.

This new company will build an extension, enabling the facility to increase its power generation capacity from 16MW to 48MW.

“Our objective is to develop one of the most efficient cogeneration plants in Brazil.”

Of the 48MW of power generated, 30MW will be exported to the grid.

Albioma will own a 40% stake in the project company, and serve as a technical partner during construction and operation phases of the project.

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Albioma chairman and chief executive officer Jacques Petry said: “This project is perfectly in line with Albioma’s development strategy in Brazil.

“The selection criteria, which we have set for our new investments, have been met: quality of the counterparty, sale of energy on the regulated market and long-term financing under good conditions. With this third facility, our objective is to develop one of the most efficient cogeneration plants in Brazil.

“We are delighted with the partnership with Vale do Paraná, whose shareholders are two strong family-owned groups, and have been active in sugar production in Latin America for more than 150 years. We wholeheartedly share their vision and values in terms of social responsibility and operational excellence.”

On 2016 basis, the investment, estimated to be R$100m ($27.7m), is eligible for a Brazil National Bank for Development (BNDES) long-term loan.