Hydroelectric Power: Spate of Dam Building Meets Resistance

By Naomi Mapstone, the Financial Times
Monday, November 28, 2011

Originally printed in the Financial Times.

Peru’s Asháninka people have torn down the signs erected by Odebrecht, a Brazilian construction company, but the spectre of the Pakitzapango dam remains. The Asháninka, an Amazonian nation decimated in a brutal civil war in the 1980s and 1990s, say they are once again facing a threat to their survival in the form of the 2,000 megawatt hydropower project.

“This concession was granted without informing or consulting us,” their leaders said in a protest letter.

Their opposition is the latest sign of regional unease about the scale of Brazil’s hydroelectric ambitions. The country is already one of the world’s biggest generators of hydroelectric power, but under a 10-year energy plan launched this year, its companies plan 30 more projects at home and abroad by 2020.

Peru, Bolivia, Guyana and the border with Argentina are scheduled to host new dams. Eletrobrás, Brazil’s state-owned power company, has also held talks about a $200m plant in Nicaragua and is discussing projects in Suriname and French Guiana.

Peru has agreed to build six dams, largely for Brazilian supply, as part of a $15bn energy accord signed in 2008.

Violent protests have already forced the suspension of Inambari, the first of the six Peruvian dams, and Pakitzapango, where the concession lapsed before Odebrecht could complete an environmental impact study.

In Bolivia, where President Evo Morales was recently forced to cancel a Brazilian-backed highway through the Amazon after protests by indigenous people, two dams are under construction on the Madeira River, and two more have been proposed.

“Brazil has a lot of cash and BNDES [the Brazilian development bank] has more investments and loans in the region than the World Bank and other international finance institutions. There is a lot of pressure for countries such as Peru to work with them; agree with them,” says Gregor MacLennan, the Peru programme co-ordinator of Amazon Watch, a conservation organisation.

“In the case of the Asháninka, there is the displacement of 10,000 people, as well as the environmental costs.”

Carlos Herrera Descalzi, Peru’s energy minister, has criticised the 2008 energy accord with Brazil as a deal “without planning, analysis or prior consultation” that prioritises Brazil’s energy interests over those of Peru. But sceptics note that President Ollanta Humala came to power with the aid of Brazilian advisers.

Back on home turf, Brazil’s government has attracted international criticism – and a stream of high-profile protesters such as James Cameron, the film director, and Sting, the musician – over the proposed 11,200MW Belo Monte dam.

This month, a Brazilian federal court gave Belo Monte the green light, opening the way for what will be the world’s third-biggest dam after China’s Three Gorges and the Brazilian-Paraguayan Itaipu.

The case is likely to go to the Supreme Court, after the federal court ruled indigenous people had no right to be consulted because the dam was not directly on their property, although it will divert water they depend on.

“There’s a precedent being set in the Amazon by Belo Monte in terms of the reputational risk for Brazilian banks, and the legal risks that Brazilian developers are facing,” says Zachary Hurwitz, policy programme co-ordinator at International Rivers, an environmental organisation.

“There is still a difference between how proper standards and best practice are understood in the Brazilian context and how they’re understood on the international level.”