April 20 Brazil is planning a massive
hydroelectric dam in the Amazon region that has sparked
controversy over its environmental impact and its displacement
President Luiz Inacio Lula da Silva insists the
11,000-megawatt Belo Monte dam, which would be the world's
third-largest, will provide much-needed power for Brazil's
fast-growing economy. [ID:nN20217050]
* The project calls for a massive hydroelectric facility on
the Xingu River, a tributary to the Amazon, designed to provide
power to local industries and eventually all of Brazil.
The dam is the flagship project of an $878 billion public
works crusade that is a key campaign platform of Lula's ruling
party candidate, Dilma Rousseff, in this October's presidential
* Activists estimate as many as 20,000 people, including
800 native Indians, will be displaced by the dam, which will
flood 400 square kilometers (154 square miles) in the area.
Critics, including Hollywood director James Cameron and
actress Sigourney Weaver, say thousands of fishermen and forest
dwellers in the area will be indirectly affected by changing
They say the project will require as much concrete as was
used to create the Panama Canal in order to make two channels
that will move the water from the main dam toward the
* The project was originally conceived in 1975 during
Brazil's military dictatorship, as part of a larger group of
five dams that would generate power throughout the year, even
when river flows fell during the dry season.
Due to environmental concerns, authorities in 1994 decided
to scrap the four other dams originally slated for construction
there, reducing the total area to be flooded.
But during the dry season the river slows to a trickle and
will leave the dam generating only a fraction of what it does
during the rainy season. That means on average it will supply
only 4,600 megawatts or a bit more than a third of its
* Private investors have described the project as highly
risky due to the chance of lawsuits and protests halting
progress of the operation. Analysts also say the government's
cap on the price of power to be sold from the dam is too low,
meaning the project offers low returns.
Official estimates show the project costing 19 billion
reais ($11 billion), though private sector estimates say the
figure could be as much as 30 billion reais ($17 billion).
* Two of Brazil's largest infrastructure companies walked
away from the project this month due to complaints of low
The government at the last minute sweetened the deal with a
75 percent income tax reduction and an improvement in the terms
of the financing from the state development bank, helping
convince more companies to join the bid.
The first consortium, called Belo Monte Energia, includes
Brazilian miner Vale SA (VALE5.SA), the world's largest iron
ore producer, construction company Andrade Gutierrez, utility
holdings company Neoenergia, and a division of industrial
The second consortium, Norte Energia, includes state energy
company Eletrobras (ELET6.SA) subsidiary Chesf, along with a
group of energy construction companies.
(Reporting by Denise Luna in Brasilia, Writing by Brian
Ellsworth; Editing by Raymond Colitt and Bill Trott)