Madeira Dams on Amazon Get Go-Ahead

by Glenn Switkes
Saturday, September 1, 2007

 A more than two year-long licensing process for two controversial dams on the Amazon’s principal tributary, the Madeira River, has culminated with Brazilian environmental authorities granting a provisional license to the projects. The Bolivian government immediately expressed concern regarding the dams’ potential impacts on Bolivian territory, health, and natural resources.   

The Santo Antonio and Jirau dams will be offered in late October to public-private consortia, who will bid for the right to construct them, and will then have to fulfi ll a series of requirements designed to mitigate the dams’ impacts. Reports indicate the auction may be delayed by legal challenges raised by companies seeking to gain an upper hand in the competition, and the Bolivian government is considering its next steps, possibly pressuring Brazil to delay approval for construction of the dams until all relevant technical questions concerning the project’s potential impacts on their country have been answered.   

 Most observers believe that the July 9 licensing decision was politically motivated. In March, technical experts at Ibama, Brazil’s environmental protection service, issued a 221-page opinion against licensing the dams, and arguing in favor of new studies which would more accurately ascertain the project’s likely impacts on the region’s biodiversity. Offi cials of Brazil’s electric sector began making statements forecasting blackouts in the near future if the dams were not approved. Around the same time, President Luis Inácio Lula da Silva demanded that Environment Minister Marina Silva issue a license or risk losing her job. In response, Silva engineered a shakeup at Ibama, breaking off the section of the agency responsible for licensing into a separate unit, relocating staff who were critical of the project to other areas, and promoting her assistant Bazileu Margarido to manage Ibama and oversee the licensing of the dams.    

Instead of requiring the new studies called for earlier by Ibama, Margarido directed a series of questions to the project proponents. The project backers – Odebrecht, a Brazilian construction company, and Furnas, a state energy company – responded to only a portion of the questions posed, alleging that some were outside of the terms of reference for the environmental impact analysis, and that other issues would be dealt with during the construction phase of the project.    

Despite the fact that their answers shed little light on critical issues surrounding the project, the provisional license was issued. Environmentalists and activists from the dam-affected peoples’ movement have strongly criticized the dams and the process that has gotten them this far, but the projects’ strongest critic may turn out to be the Bolivian government, whose foreign relations minister sent a strongly worded letter of concern to his Brazilian counterpart the day after the license was issued. David Choquehuanca wrote: “As we have repeatedly stated, Bolivia considers that, before any concession is offered to build hydroelectric dams so close to Bolivian territory, integrated Environmental Impact Studies must be carried out which analyze the entire Madeira basin, including the project’s impacts on Bolivia.” The Jirau dam would be built just 50 miles downstream from Bolivia.     

Two weeks later, a high-level Bolivian delegation met with Brazilian government offi cials in São Paulo and demanded answers to a series of technical issues concerning the project’s impacts. As a result of these meetings, Brazil’s Foreign Relations ministry agreed to form a series of bi-national commissions with Bolivia to analyze the project’s effects on the neighboring country. It is not clear what effect Bolivia’s position will have on the project moving ahead.   

 Under Brazil’s electricity sector rules, the right to build the dam will go to the consortium that offers to sell the energy generated to the national grid for the lowest price. The estimated cost of the Madeira project and of the energy the dams would generate have been steadily rising. In 2003, when the project was fi rst presented, its cost was estimated at US$5.25 billion. Latest estimates by Brazil’s Electrical Energy Agency (ANEEL) show that the cost of the two dams has more than doubled to $14.7 billion, including navigation locks which are part of the project. This fi gure does not include the 2,450km transmission line that will be required to link the Santo Antonio and Jirau dams to the national power grid, at an estimated cost of $5 billion. For this reason, the cap on the purchase price for the Madeira dams is expected to be set by the government at more than $70 per MWh, making electricity from the Madeira the country’s most expensive hydroelectric energy.    

With Brazil planning more than 70 large dams in the Amazon over the next 25 years, the questionable manner in which approval of the Madeira project has been handled has raised concern over whether a serious analysis of the impacts of future Amazon dams will even be allowed to take place. According to Iremar Ferreira of the Living Madeira Institute, “Lula decided he wanted the Madeira dams to be built, no matter what the cost. Now, it seems as if Amazonia is going to have live with its impacts.”