Belo Monte’s Avatar

Miriam Leitão, O Globo
Thursday, June 24, 2010

President Lula wittingly oversimplifies the issue of Belo Monte.  As an intelligent man, he knows that what is still keeping doubts about the hydroelectric plant alive has nothing to do with the visit of a “gringo filmmaker.” Simplifications are great during election time, but the truth is that the dam’s administrative process is occurring without the necessary environmental, fiscal or economic caution.

In a democracy, it is necessary to sway public opinion.

Belo Monte is being shoved on the country very authoritatively, in a hurry, that doesn’t make any sense except to the construction companies that profit from dam-building. Curiously, even these companies don’t want any part of the project itself. They prefer to stay on the outside, as service providers.

An honest conversation with any of these companies will show that this venture was not properly planned.  The model of “low tariffs” invented by the Minister of Mines and Energy at the time, Dilma Rousseff, is growing weak. It creates illusions. It only changes who ends up paying. If the energy of Belo Monte is sold for its current price, the consumer would supposedly have an advantage, but the taxpayer is the one who will end up paying for this party.  In other words, what doesn’t come from one Brazilian’s pocket will come from another.

Supposedly, the construction would cost R$ 19 billion (USD $11 billion). But more precise information shows the price to be at least R$ 30 billion (USD $17 billion). The difference will be paid for in different ways.

The first is through 4% interest on a 30-year-loan, from a government that finances itself with short-period bonds and 10% interest. The second is with an excessive participation of national companies, federal pension funds and state pension funds. Nobody in the energy market doubts that the hydroelectric plant is, in practice, a state enterprise, and that the private companies are the ones who are going to reap the benefit of the bonus while leaving responsibility for the project to the public sector. Third, in the future we’ll see a lot of revisions of the construction costs that will increasingly be financed by public money.  As a business idea, the project has doubtful economic returns.

What’s more, there are engineering doubts that haven’t been answered. There was no time for the viability studies because of the rush to send the project on its way before the Chief of Staff in Brazil left for her presidential race.

I’m not hearing this from environmentalists, but from engineers.

Nobody knows exactly how the diversion canals will be built to change the course of the Xingu on the Big Bend, which is going to require moving more land than was moved to build the Panama Canal.  And I’m only mentioning one of the many engineering doubts.

The environmental doubts were crushed under the weight of the cover-up that originated from the Chief of Staff in Brazil in the meeting of January 7th, which I mentioned previously in this column. On April 17th I published copies of internal documents from Ibama in which employees recognized that the time established by the Chief of Staff to grant the license was insufficient; I also published a communications exchange between Ibama and Eletrobrás about the Chief of Staff meeting to finish the studies before the deadline. These documents are explicit proof that the environmental regulation agency was pressured to grant the environmental license for Belo Monte. This is an administrative irregularity which highly increases the risk of an environmental disaster.

The fear that only one consortium entering the auction would give an impression that Belo Monte hadn’t attracted enough investors forced the government to become directly involved in creating a second consortium, changing the rules to increase these companies’ advantages. And even after the auction ended, doubts about the participation of one of the winning consortium members still remain.

Ultimately, no matter where you look, there are doubts about Belo Monte.  From indigenous to non-indigenous people, environmentalists to engineers, energy specialists to economists. Each of them, from their point of view, has questions that were not sufficiently debated and cleared up before the conclusion of a weird auction and a hasty enterprise.

President Lula oversimplifies when he compares Belo Monte to Itaipu. At the time, the biggest hydroelectric dam in the Americas was imposed as a done-deal by the power of a military dictatorship. Lula shouldn’t make any comparisons using those methods. Democracy helped reduce the environmental impact of the dam a lot, demanding compensations that have been implemented. The public fear that Itaipu would be used as a weapon against Argentina by flooding the neighboring country was overcome through long negotiations which took years of efficient Brazilian diplomacy. The debates over whether it would have been better to build a bit further upstream to save the touristic site of Sete Quedas (Seven Falls), or to construct a dam that was entirely Brazilian, were crushed by the dictatorship.  Today, Itaipu is fundamental to the country, but it has invested a lot in environmental compensation, we remain under constant pressure from Paraguay, and we are still paying off its endless foreign debt.  

Itaipu dam makes more sense because it is geographically closer to the center of consumption, as opposed to Belo Monte. There are no comparisons between the two. What is fundamental to keep in mind is that the method of imposing Itaipu on public opinion cannot be transferred to the present context.  This is because of the simple – and excellent – reason that the country is democratic, and the government should have dedicated more time to taking the doubts about Belo Monte more seriously. Belo Monte suffers from a lack in planning, viability studies, environmental precaution, fiscal security, and economic analysis.  But its fundamental mistake is its flaw in democracy.  It’s being imposed by the Lula government.

Read Lula's speech in Altamira, Pará, to which this column was a response.
Read the original column in portuguese.