Real Cost of Belo Monte Dam Begins to Emerge
The newspaper O Globo reported yesterday that leaders of President Lula's own party are having second thoughts about the project, given its US$12-13 billion cost. The paper notes that the real generation of the project would be only half of that of Itaipu, for a comparable construction cost.
Alstom, which would be in line to supply the turbines and other equipment for the dam, in addition to being a possible investor, estimates the total cost as nearly US$16 billion. Alstom's vice-president Marcos Costa said "The $4 billion estimate in the PAC is unreal". Alstom says it is negotiating potential partnerships with companies interested in the project including CPFL (Votorantim, Camargo Correa, pension funds, BNDES, IFC), Tractebel (Suez), Cemig, Neoenergia (Iberdrola, Previ pension fund, Banco do Brasil) and Eletrobrás.
These higher cost estimates echo what critics of the project have said for years. Eletronorte's president has admitted that Belo Monte would generate less than 1,000 MW during low-water periods, making the dam perhaps the world's most inefficient project. But, Brazil's electric sector says it will guarantee a constant income stream for the sale of over 4,000 MW of what it calls "firm energy" to investors, based upon Belo Monte's supposed value in permitting "potential energy" to be stored in reservoirs in southern Brazil during its period of peak generation.
It should also be noted that these costs do not include linking Belo Monte to the central grid, which by some estimates would be at least as great as the cost of building the dam itself. At some point, someone's going to have to answer for the apparent attempt by the Lula government and Eletrobrás to sell snake oil to the Brazilian public.
