Brazil judge suspends operating license for Belo Monte hydrodam

RIO DE JANEIRO (Reuters) - A judge in Brazil’s Amazonian state of Para suspended the operating license of the controversial Belo Monte hydroelectric dam on the Xingu River for failing to provide required water and sewage services to local communities.

An overview of the site of the Belo Monte hydroelectric dam, planned to be the world's third largest, in Pimental, near Altamira in Para state, November 23, 2013. REUTERS/Paulo Santos

The decision by Judge Maria Carolina Valente do Carmo of Brazil’s 1st District Federal court in Altamira was handed down on Wednesday, federal prosecutors who filed the action said on Thursday.

Prosecutors filed the case against the dam, its owner Norte Energia and Brazil’s environmental protection agency Ibama.

The construction of Belo Monte was bitterly opposed by indigenous groups and environmentalists because of its scale and location.

The dam, which is ramping up production, is set to have a maximum generation capacity of 11,233 megawatts, one of the largest in the world. But as a result of a relatively small reservoir compared to other large dams, a response to concerns from environmentalists about flooding large areas of Amazon rainforest, its average capacity will only be 4,571 megawatts.

Norte Energia is 49.98 percent owned by state-led utility Centrais Eletricas Brasileiras SA, or Eletrobras, and two of its subsidiaries. Eletrobras is facing a severe financial crisis due to cuts in electricity rates and government insistence it operate money-losing electricity distributors.

“Norte Energia has repeatedly failed to meet deadlines to provide water and sewage services to the people of Altamira who live right in front of the dam reservoir,” said a spokeswoman for federal prosecutors in Altamira.

“Without these services, the city’s water source will be contaminated with sewage,” she added. “It is an absolutely essential part of limiting negative dam impacts.”

While Norte Energia has built the bulk of the water and sewage services, few houses have been hooked up to the system, missing a Sept. 1 deadline for compliance, prosecutors said in a statement.

Prosecutors said they have no information on whether Belo Monte’s operations have been halted, but they say Norte Energia may not have yet been formally informed of the suspension yet.

Prosecutors expect an appeal.

Norte Energia’s press offices in Altamira and in Brasilia did not answer calls requesting comment.

Norte Energia’s other shareholders include Brazil’s Centrais Eletricas de Minas Gerais SA, the utility owned by the government of Brazil’s Minas Gerais state and the employee pension funds of state-led oil company Petroleo Brasileiro SA and state-owned bank Caixa Economica Federal [CEF.UL].

Reporting by Jeb Blount; Editing by Cynthia Osterman