Brazil Finally Admits Belo Monte Will Cost Well Over US$ 11 Billion

Belo Monte dam in Xingu river, BrazilBrazilian Belo Monte hydroelectric power plant’s actual construction will begin in September or October. The president of the winning consortium, Norte Energia, José Ailton de Lima, says the final price of the project will be somewhere between 19 billion reais (US$ 10.85 billion) and 30 billion reais (US$ 17.13 billion).

The lower amount is the estimate made by the government (based on studies by the Energy Research Company (“Empresa de Pesquisa Energética” – EPE) while the higher price is what private construction contractors think it will cost.

That is the first time someone actually involved in the project on the government side has admitted that the lowball 19 billion reais price tag is unreal.

Even so, Lima went on to tell, “I am absolutely convinced that this will be a profitable enterprise. One of the reasons is that the lead partner in our consortium is a government holding company (the state-run electricity company CHESF) and there is the possibility of more state-run firms joining the project later and they operate with a minimum return on investment.” To insiders this is called “the patriotic return on investment.”

Lima explained that for the actual construction to get underway the consortium still needs another license from the Environmental Protection Institute (Ibama). The second license is an “installation license.”

Belo Monte received an “environmental license” in February with 40 socio-environmental tasks that are supposed to be completed before construction – even the government has allowed that the cost of this will be more than 3 billion reais (US$ 1.71 billion).

Among the tasks is the creation of three conservation units, salvation of animals and fish in the area that will be flooded, ensure that the river remains navigable, construction and repair of schools and hospitals in the region, along with implanting basic sanitation systems and protection of beach areas on riverbanks where turtles breed and reproduce.

Lima played down media reports of changes in the composition of the consortium and discontent among the partners, calling them mostly unfounded. The possibility of changes in shareholder participation is a part of the contract, he explained.
As for government participation in the construction of Belo Monte, Lima pointed out that it was less than 50% (CHESF has 49.98%), and added that it was possible for government participation to increase, although he considered that possibility remote:

“This is a profitable investment. The private sector will understand that and I believe they will want in. However, as Brazilian president Luiz Inácio Lula da Silva has said himself, if private investors do not appear it may be that the government’s participation will rise.”

ABr

Tags:

You May Also Like

There’s a Coup d’État Underway in Brazil, and We Congressmen Are to Blame

In an interview for Magno Martins’ blog, I responded that, in brief, I could ...

ExcelAire Says It’s Too Early to Blame It for Brazilian Air Tragedy

New-York based air-taxi company ExcelAire, which had kept silent, while the world raged outside ...

Bolivia Is Making More Than They Ever Dreamed Selling Gas to Brazil, Says Petrobras

Brazilian President Luiz Inácio Lula da Silva inaugurated Saturday, June 10, the lay out ...

Worries About Halt on Rate Cuts Lower Brazilian Shares

Brazilian shares moved lower Tuesday, June 20, amid uncertainty over domestic and overseas monetary ...

With a Name Like Aladim, This Brazilian Firm Had to Become a Hit in the Middle East

The United Arab Emirates, Oman, Algeria and Egypt, in a little over one year ...

On the color of the President’s private parts

Is there a Brazilian fixation with saco (scrotum)? The use of the less than ...

Pride and Prejudice

From the late 1950s on, bossa nova’s success didn’t spread out by chance or ...

LETTERS

There are between 16.5 million and 30 million Brazilians working in the informal economy, ...

Brazil’s Share of World Investment Grows from 1.7% to 3%

The Brazilian share of worldwide foreign direct investment (FDI) has grown. According to the ...

Marble and Granite Have Their Day in Brazil

Today, May 24, is the first day of the 2nd International Business Roundtable for ...