BNA: Loan Granted for Amazon Hydro Project, Third Largest in World; Protests Lodged

• Originally published in Bloomberg BNA

RIO DE JANEIRO – The Brazilian Development Bank (BNDES) has approved a 22.5 billion real ($10.8 billion) loan to build the Belo Monte dam in the eastern Amazon, prompting human rights and environmental groups to call for an investigation of the project's social and environmental impacts, risk, and economic viability.

The R$28.9 billion ($13.7 billion), 11,283-megawatt hydroelectric project would be the third largest dam in the world after China's 21,000 MW Three Gorges Dam and the 14,600 MW Itaipú Dam in southwestern Brazil.

The BNDES approved the loan Nov. 26. Nine Brazilian environmental and human rights groups signed a petition Nov. 28 urging the federal prosecutor's office, a government watchdog agency, to investigate “apparent violations of legally-binding requirements related to the project's social and environmental impacts, risks and economic viability,” according to a statement by the U.S.-based International Rivers, an environmental group with an office in Brazil.

Environmental, Social Impacts Noted

“The petition accused the BNDES of overlooking illegalities and irregularities surrounding Belo Monte, including the fact that Norte Energia S.A., the dam's developer, did not comply with construction license conditions to mitigate and compensate the dam's social and environmental impacts, and the fact that Brazil's congress did not consult with indigenous groups that will be affected by the dam, in violation of Brazil's constitution and the International Labor Organization's Convention 169,” Brent Millikan, the Amazon program director of International Rivers, told BNA Nov. 30.

The petition also said that, due to a long dry season in the Amazon, the dam would be able to function at only 39 percent of its installed capacity, compromising its economic viability.

The petition asked federal prosecutors to prevent the BNDES from disbursing the R$22.5 billion loan to Norte Energia, a consortium led by the federal electricity holding company Eletrobras, until any potential investigation is completed, Millikan added.

History of Legal Challenges

In February 2012, the Environment Ministry's licensing and enforcement arm (IBAMA) fined Norte Energia R$7 million ($4.1 million at the time) for delays in implementing its Basic Environmental Project (PBA) to mitigate and compensate for the hydro plant's environmental impacts. Implementation of the PBA was a condition IBAMA set in June 2011 to grant the license to build the dam, whose construction began that month.

Federal prosecutors have already filed more than a dozen lawsuits that have failed to prevent the dam's licensing and construction. They argued that Belo Monte would greatly reduce water volume and fish biodiversity of the Xingú River, threaten navigability along a 100-kilometer (62-mile) stretch of river downstream from the hydro plant, and force the relocation of up to 5,500 riverside dwellers (35 INER 825, 8/29/12).