Dead Catfish May Be the Least of Lula's Worries

Dead fish in the Madeira River
Dead fish in the Madeira River
In 2007, Brazilian President Luiz Inácio "Lula" da Silva famously announced that "environmentalists are trying to dump some catfish on my lap" by opposing dams on the Amazon's Madeira River. The quip came after scientists released studies documenting the serious impacts that the dams would have on catfish and other migratory species on the Madeira River. Well, over the past few weeks, dead catfish are just one of the many problems that have been plaguing the Santo Antonio and Jirau Dams.

Last week, the Brazilian press reported that 11 tonnes of fish, including catfish, had been killed during the initial stages of construction for the Santo Antonio Dam (construction began in September). Today Brazil's environmental protection agency, IBAMA, announced that the consortium would be fined US$3.25 million for the mass killing.

Meanwhile, the Jirau project, upstream of Santo Antonio, has been plagued by legal disputes. In mid-November, IBAMA granted a "preliminary" construction license for the Jirau Dam despite the fact that the consortium moved the site of the dam 9 km away from its original site after winning the project auction. The license seems to be have been pushed through at the behest of the Lula administration. The Brazilian Forum of NGOs and Social Movements for Environment and Development challenged the legality of the preliminary license and a judge revoked it. On appeal, this decision was overturned and initial construction started. But in mid-December, the Federal Public Attorney's office filed a lawsuit demanding the ouster of IBAMA's President, Roberto Messisas Franco, for granting the partial license to the Jirau Dam despite the fact that there was insufficient evidence to determine the environmental impacts of moving the dam's location. This case is still under consideration by the courts.

Meanwhile, the Folha de São Paulo reported last week that the global financial implosion, coupled with the environmental risks of the projects, may be affecting their ability to attract financing. Last week, the Brazilian National Development Bank, BNDES, announced that they had awarded US$2.6 billion for the construction of Santo Antonio, amounting to about 60% of the project costs. While this is BNDES's largest ever investment, it is less than was originally promised, apparently because even BNDES is scared about the project's risks and wants to share them with other investors. The consortium hopes to attract investment from private banks, but apparently none have committed so far. One of Brazil's major banks, Itaú, has declined to finance either Santo Antonio or Jirau. Spanish bank Banco Santander has refused to finance the Jirau Dam, due to the location change of the dam site. All the other banks have stated that their participation will depend on an analysis of whether the projects are in accordance with the Equator Principles, a set of voluntary social and environmental standards for private banks. NGOs have long charged that the projects are inconsistent with the Equator Principles.

Whether the banks will cough up the dough in these tough economic times remains to be seen. If they don't, dead catfish will be the least of Lula's worries. Stay tuned...