Info Report Check
Submission incomplete:
The DOE is requested to describe how it has validated the suitability of the benchmark as per VVS version 3 paragraphs 121, 123 (b) and EB 62Annex 5 paragraph 13.
1. The PDD (p.11) states that “the cost of equity was calculated as the sum of a tax free of risk (US Bonds) plus a Brazilian risk premium plus a global risk premium to the equity investment” which are values standard in the market; however the validation report (Pg. 26) mentions that “the beta value of 1.47 was calculated by the PPs based on the value of unlevered beta of 0.72 of Light SA; and Debt/Equity of 1.59” which are internal company information. The DOE (p.26) further confirms that “the data applied on beta calculation are data from Lighter S.A, which is the project participant, thus properly applied on investment calculation”. The PP/DOE are requested to address this inconsistency,
2. The PDD (page 11) mentions that the data vintage for “Tax free of risk and global risk premium” corresponds to years between 1999 and 2008. The DOE (VR, p.26) concluded that the period applied in the analysis is in line with investment decision and also due to the considered period, the values are higher than suggested by the “Guidelines on the assessment of investment analysis” (i.e. Tax free risk_ 3.00% and global risk premium_ 6.5%). The DOE is requested to provide information on why it considered the period of 1999-2008 to be “in line with the investment decision”.