Source: BusinessWeek
April 20 (Bloomberg) -- Brazil’s government will seek to get a last-minute appeal to allow it to proceed with an auction for the $11 billion Belo Monte hydropower project, which has been criticized by “Avatar” director James Cameron and Amazon Indians.
Brazil’s federal justice office in Para state yesterday ordered the suspension of the auction, which was scheduled for today, according to a statement on the court’s Web site. The press office of the attorney general’s office said the agency will appeal the ruling in a bid to let the auction go ahead.
Belo Monte is the largest infrastructure project in President Luiz Inacio Lula da Silva’s plan to boost growth and energy supplies as Latin America’s biggest economy is expected to grow on average 5.5 percent a year through 2014. The project deep in the Amazon, the world’s biggest rainforest, caught the attention of Cameron and actress Sigourney Weaver, who visited Brazil last week to protest potential environmental damage.
“This dispute on whether the auction will happen or not sounds like a joke,” said Eric Conrads, a hedge fund manager at Mexico-city based Armada Capital SA. “The image we have is that the government can’t be serious and should better review its rules properly.”
Bidding Groups
Two groups, both led by units of state-run utility Centrais Eletricas Brasileiras SA, had planned to bid for the rights to build and operate Belo Monte today. Eletrosul Centrais Eletricas SA, Furnas Centrais Eletricas SA, Vale SA and three other companies will bid in one group, Brazil’s electricity regulator said. Nine companies, including Cia. Hidro Eletrica do Sao Francisco and Construtora Queiroz Galvao SA, will make up the second group.
Construction companies Camargo Correa SA and Odebrecht SA had expressed interest and later opted not to participate after the government set a price cap on energy from the dam that was lower than previous hydroelectric projects.
The government set a maximum price of 83 reais per megawatt-hour for energy sales from Belo Monte. That compares with a 122-real price cap for the 3,140 megawatt Santo Antonio dam and 91 reais for the 3,300-megawatt Jirau project on Brazil’s Madeira river, which were auctioned in 2007 and 2008, respectively.
The group that offers to sell the energy for the biggest discount below the maximum price will be awarded the contract for the dam.
Indian Protests
About 150 Amazon Indians planned to invade Volta Grande do Xingu today, the section of the river where the dam is set to be built, Indian Chief Luis Xipaya said yesterday in a telephone interview from Altamira. During previous auctions for Jirau and Santo Antonio, Indians stormed the headquarters of the electricity regulator in Brasilia.
“Nobody has ever listened to us and how this dam could affect our lives,” Xipaya said. “Our land will be flooded and it will be extremely difficult for us to move around.”
Brazil’s national development bank, known as BNDES, said last week it will finance as much as 80 percent of the investment. Estimates for the dam project range from 19 billion reais to 19.6 billion reais.
Eletrobras, as Latin America’s largest utility is known, fell 20 centavos, or 0.7 percent, to 30.70 reais in Sao Paulo trading. The stock has gained 12 percent in the past year, less than the 51 percent increase for Brazil’s benchmark Bovespa index.