Peru in talks with Brazilian builder about restarting mega dam

LIMA, March 12 Wed Mar 12, 2014 9:27pm EDT

LIMA, March 12 (Reuters) - Peru is talking with Brazilian construction giant OAS about resuming construction on a $4 billion hydroelectric plant that has been stalled since 2011 because of local opposition, an official said on Wednesday.

Jesus Ramirez, general manager of state-run electricity company Electroperu, said in an interview that discussions about restarting the controversial 2,000-megawatt Inambari project started with the company last year.

An OAS representative in Peru said by telephone that the company did not have any comment.

The megaproject, in the Peruvian Amazon near the border with Brazil, was halted in June 2011 by the government of former President Alan Garcia amid protests by nearby indigenous communities.

The project would dam a river and flood lands where people now live, requiring the relocation of villages.

Inambari, opposed by several local and foreign indigenous and environmental groups, must be built before four other dams planned in the region can go forward, Ramirez said.

Ramirez said OAS reached out to Electroperu to help secure environmental permits and make progress with communities.

"We are talking about creating the right conditions...to develop these projects socially and environmentally," said Ramirez.

Inambari would generate twice as much electricity as Peru's biggest hydroelectric plant, Mantaro, and lay the groundwork for eventually exporting electricity to Brazil - a longstanding goal of both countries.

Ramirez said Peru is now sitting on 20,000 megawatts of hydroelectric potential in Amazonian rivers near the border with Brazil. Other dams planned in the area include Inambari, Tambo 1, Tambo 2 and Paquitzapango.

"These projects need to be developed because they are what will secure electricity over the long-term," Ramirez said. "They take 10 to 12 years to finish" and a total investment of around $60 billion.

Fast-growing Peru also needs to ramp up its electrical production in the near term to meet surging domestic demand and to power its important mining industry.

Peru is the world's third-biggest copper and silver exporter and sixth-biggest gold exporter.

But the lack of new electrical generation worries miners that have invested billions in mega projects set to come online in coming years, especially in southern Peru.

About half of the Andean country's electricity is now generated with natural gas from the Camisea fields in southern Peru.

Ramirez also said Electroperu is considering seeking private investment for a $1.2 billion expansion of the Mantaro plant. (Additional reporting by Mitra Taj; Editing by Ken Wills)