Lawsuits Won’t Stop Brazil from Building World’s Third Largest Hydroelectric Plant

Belo Monte Despite nasty court battles started by Indians, environmental activists and some of its own federal attorneys, and the surprise decision by two of the country’s biggest construction companies to drop out of the bidding for the opportunity to build the world’s third biggest hydroelectric dam, the Luiz Inácio Lula da Silva administration says it plans to move ahead with the April 20 auction on the construction of the Belo Monte project.

Mauricio Tolmasquim, the president of the government’s Energy Research Company (EPE), which is housed in the Ministry of Mines and Energy, stepped forward to speak for the administration and stated that expectations are that at least two consortiums will bid for the Belo Monte project.

Tolmasquim explained that a number of small companies have expressed interest and that they will probably join forces with other companies. “We will know only after we get the guarantee deposits,” he said.

Tolmasquim added that because of the size of Belo Monte (the government says the total cost will be 19 billion Brazilian reais – US$ 10.7 billion – but private investors say it could come in at over 30 billion reais – US$ 16.9 billion) the state-run sector holding company, Eletrobrás, will certainly be part of the consortium that eventually builds the dam and power plant.

At the moment, only one consortium has confirmed its participation in the April 20 auction: a group consisting of Vale (the mining company), Andrade Gutierrez Participações (construction), Neoenergia Investimentos and Votorantim Energia.

Tolmasquim says that even if the auction is canceled, the established price per megawatt hour, at 83 reais (US$ 46.9), is a victory. “If the power plant electricity eventually comes in at that price, we will have a victory. It is a very low price for electricity.”

At US$ 46.9 per megawatt hour the price of electricity at Belo Monte is, in fact, very low. However, that is definitely not the price Belo Monte electricity will be when it reaches somebody’s home or business somewhere else in Brazil.

For the sake of comparison, the average price of a megawatt hour in the United States in 2008 was US$ 100 after financial, administrative, transmission and distribution costs were factored in.

And, during the bizarre rolling blackout crisis in California in 2001, when deregulation went berserk, a megawatt hour rose to US$ 3,880.



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