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Cosan Sees Potential to Triple Biomass Power Production

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June 26 (Bloomberg) -- Billionaire Rubens Ometto’s Cosan SA has the potential to triple its power generation by burning sugar-cane leftovers if the government offers power-purchase contracts for biomass producers.

Brazil’s biggest sugar and ethanol producer could generate a surplus of as much as 3 gigawatts of power if the company used all the bagasse and straw available in its units, Chief Financial Officer Marcelo Eduardo Martins said in an interview yesterday. Such a move wouldn’t require the company to expand its sugar and fuel output.

Brazil’s sugar producers say much of the industry’s energy potential is wasted because the government doesn’t provide the economic stimulus needed to increase biomass power generation while hydroelectric power plants have been struggling with lack of rain. Raizen Energia, Cosan’s sugar and ethanol production venture with Royal Dutch Shell Plc., wastes about two thirds of its sugar-cane biomass.

“Our potential is huge,” said Martins during a visit to Bloomberg’s office in Sao Paulo. “We can only invest if there are auctions at viable prices.” He said the company would need to invest 3 million ($1.4 million) to 4 million reais for every additional megawatt of power generating capacity.

To contact the reporter on this story: Gerson Freitas Jr. in São Paulo at gfreitasjr@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Will Wade, Jessica Brice

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