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Economic and Social Policies, International Relations, PUBLICATIONS

Belo Monte Dam project: an outline

The Belo Monte Dam is a hydroelectric dam under construction in the state of Pará, Brazil. Upon completion, with a generating capacity of 11 233 Megawatts, it will be the third largest hydroelectric power plant in the world. The project faces widespread criticism on economic, environmental and social reasons. Commercial generation is expected to begin in 2015, with the whole plant scheduled to run at full capacity in 2019.

History

Dam

© Jorvik / Fotolia

Plans for the former Kararaô Dam began in 1975, with the military dictatorship aiming to build hydroelectric dams on the Xingu river, an affluent of the Amazon. A debt crisis, privatisation of the electricity sector, the introduction of environmental licensing and strong opposition from civil society and local indigenous communities (grouped in 1989 in the Encontro das Naçoes Indigenas do Xingu) were amongst the reasons why the plans – encompassing a set of five dams – were revised.

In 1998, new plans by the state-owned power company Eletrobrás reduced the area to be flooded and the reservoir’s size. The flow of the Xingu river is now set to be diverted through two canals. The dam and reservoir will impact on the daily life of local indigenous communities, even though located outside their territories.

Protests continued but the project was declared “of national interest” in 2001. Under former-President Lula’s “Programme to accelerate growth”, the renamed Belo Monte project became one of the flagship initiatives for large-scale infrastructure development. Opposition – including a Segundo Encontro dos Povos do Xingu – moved into the courts, with mixed results, while the Brazilian Institute of Environment and Renewable Natural Resources conducted an impact assessment of the proposal.

The environmental licence was granted to Eletronorte, a subsidiary of Eletrobrás, in 2010, setting conditions for obtaining the installation licence. This was finally granted in 2011, despite many disputing that the conditions had been fulfilled. Local and federal courts successively adopted conflicting judgments until, in August 2012, the Supreme Federal Court authorised the construction of the dam.

Brazilian Minister for Mines and Energy, Edison Lobão recently stated that hydroelectric energy is “clean, renewable and cheap“, and also affirmed that Belo Monte has the lowest environmental impact in the world, proportionate to its capacity. The government claims that the project will ensure the rational use of natural resources, environmental protection and sustainable development while improving the living conditions of 60 million people.

Financing

Total investment in the plant amounts to R$28.9 billion (approximately €10.3 billion). The project will be constructed under a public-private partnership.

20% of the costs will be covered by the companies in the Norte Energia consortium, of which 49.98% is held by Eletrobrás. Three major Brazilian pension funds, Petros, Previ and Funcef, have a 20% share in the consortium. The remainder of the consortium is made up of private investors and other energy companies. European companies are also involved in the project (see Annex 1).

In November 2012, the Brazilian National Bank for Economic and Social Development (BNDES), committed the remaining R$22.5 –the largest loan ever granted by the bank. Of this, R$3.2 billion will be allocated for social and environmental purposes, to investments in 11 municipalities in the Xingu region to mitigate the impact of the project. Civil society denounced that no guarantees are in place that this money will really go to the benefit of those affected. The accountability and transparency of the bank was also questioned.

BNDES claims that investments will directly create 18 700 jobs as well as 23 000 through construction works. According to them, 98% of the equipment used will be manufactured locally.

Contested issues

The adequacy, necessity and proportionality of the project are strongly disputed. Opponents criticise it because of its environmental impact, lack of consultation of indigenous people and other social effects.

As for the environmental effects, the impact assessment, often criticised as incomplete, foresees loss of vegetation and changes in water supply. The Belo Monte project would flood a reservoir area of 516 km² – 0.1% of the Amazon forest – and impact on its biodiversity. The Volta Grande and the Xingu regions would receive less flood-water, endangering the whole ecosystem, including aquatic and terrestrial fauna. Another environmental concern is the reduction of CO2 emissions. Using renewable energy is part of the national strategy to cut emissions by 38.9% by 2020, but experts doubt the official figures and warn that reservoirs in tropical regions can emit methane, a more dangerous greenhouse gas than CO2.

Social effects are also under discussion. Officially, 5 100 families would be displaced, but many commentators claim that the figure may actually be higher. Several indigenous communities would have to be moved, and, being highly dependent on the river, might face indirect consequences: for instance, the decreased flow of the Xingu would reduce fishing yields. The arrival of workers in the area could also provoke social tension. Strikes, protests, kidnapping of engineers and occupation of construction sites are signals of the strong opposition the project faces in the region.

Concerning human rights and legal issues, indigenous people claim that they have not been adequately consulted on the project, in violation of their rights under the Brazilian Constitution and United Nations and International Labour Organisation standards. The government questions the need for consultation and claims to have informed the affected communities. Locals and civil society have in response filed several complaints to local, federal and also international courts, including a highly controversial dispute before the Inter-American Commission on Human Rights. Locals also lament procedural violations, lack of relevant information being available, incomplete impact assessment and political interference in the technical decision-making process.

Alternatives

Electricity from hydro plants in the country already accounts for 80.2% of the total generated in Brazil.

In order to meet the growing demand for electricity supply, Brazil has many options, from offshore oil and gas to solar and wind power and hydropower potential. The Brazilian Energy Ministry has said it chose the Belo Monte Dam investment due to “availability, cheapness and renewability“. The government believes that meeting demand with wind and biomass energy would be twice as costly, and even more expensive with solar energy.

Civil society laments the unreliability of official figures, from full capacity and impact on affected communities to greenhouse gases and costs. A WWF study suggests that if Brazilinvested more in energy efficiency, it would reduce demand for electricity by the equivalent of the output of 14 Belo Monte dams and save R$33 billion.

Several commentators advocate greater investment in the field of wind energy, including the former director of the Brazilian Electricity Regulatory Agency Afonso Henriques Moreira Santos. He pointed out that Belo Monte is not necessary and that weak infrastructure hinders the transmission of electricity from the site, which could lead to major blackouts, similar to those which affected the country in 2001-2002.

A comparative analysis conducted by the Federal University of Rio de Janeiro in 2011 acknowledged the need for Brazil to increase capacity in order to meet demand. It also concluded that the impact of Belo Monte will be inferior to each of the alternatives, and that the “costs of alternatives are higher”.

 

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