Brazil's development bank approves new loan for Jirau dam

Fri Sep 28, 2012 6:02pm EDT

* Project controlled by GDF Suez

* New investment aimed at increasing dam's power

* Dam's $7.8 billion price tag almost 50 pct over budget

RIO DE JANEIRO, Sept 28 (Reuters) - Brazil's development bank BNDES said on Friday that it had approved a $1.16 billion loan for construction of the Jirau hydroelectric dam in the country's northwestern Amazonian state of Roraima.

Energia Sustentável do Brasil SA, the company building the dam on the Madeira River, is controlled by French energy company GDF Suez Group. Partners include units of Eletrobras , Brazil's state-led electricity utility holding company and Brazilian construction company Camargo Corrêa.

The new investment is aimed at increasing the dam's generation capacity by 450 megawatts (MW), or 14 percent, to 3,750 MW by installing six additional power turbines. It will also be used to pay for construction of transmission lines.

The expanded dam will have the capacity to supply the power needs of a city of more than 5 million people, according to electricity use rates used by the Brazilian government.

Half of the loan comes directly from BNDES, while the other half comes from Brazilian private lenders Banco do Brasil , Caixa Economica Federal, Banco Bradesco SA and Itau BBA.

With the new loan, the total amount of investments in Jirau will be $7.8 billion, nearly 50 percent more than the $5.3 billion original budget. BNDES had approved a $3.5 billion loan in 2009 and its funds now count for over half of the project's total investments.

The Jirau dam is the second-largest electric energy generation project under way in Brazil. The power plant's first unit is expected to start functioning in January 2013 and full operation is expected in March 2015.

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