Located in the state of Rondônia - Brazil, the Madeira River is the principal tributary of the Amazon River, with its basin covering about one-quarter of the Brazilian Amazon. The Madeira River project consists of two huge hydroelectric dams: Santo Antonio (projected cost US$ 4.35 billion, current estimate US$ 6.7 billion, installed generating capacity 3,150 MW) and Jirau (projected cost US$ 4.55 billion, installed capacity 3,300 MW).
The project is the cornerstone of the Brazil-Bolivia-Peru hub of the Initiative for the Integration of South American Infrastructure, or IIRSA. IIRSA is a blueprint for 335 large-scale infrastructure projects being proposed by the governments of South America, and supported by the Inter-American Development Bank (IDB), the Andean Development Corporation (CAF), and Brazil's National Development Bank (BNDES).
The construction of the project - plus two additional dams upstream - would, according to the project sponsors, open a 4,200 km industrial waterway for barge passage, permitting transport of soybeans, timber, and minerals to Atlantic and Pacific ports.
In January 2007 the project was included in the Accelerated Growth Programme (PAC in Portuguese) - an ambitious Brazilian Federal Government plan to invest more than BRL 900 billion (US$400 billion) between 2007 and 2010, in more than 2000 infrastructure development projects. Since then, the Rio Madeira dam project has been pushed forward rapidly.
The preliminary license for Santo Antonio and Jirau
was granted by the environmental agency, IBAMA, on July 9th, 2007, with 33
conditions with which the dam builders must comply. This license is subject to
litigation, since it failed to consider the impacts of transmission lines,
public hearings did not comply with the law (and, for that matter, the Equator
Principles) and the license was granted over the objections of IBAMA's
technical staff. Legal challenges are currently awaiting judgement by the
courts. Notwithstanding these issues, the license for the construction of Santo Antonio
dam was granted in August 2008. In addition, a partial license for the
installation of cofferdams for Jirau was granted in November 2008, despite the
fact that mitigation measures were not yet in place. In June 2009, the
installation license was granted by IBAMA, with some conditions proposed but still
no mitigation measures in place.
So far, eight civil legal actions were filed against
the Santo Antonio and Jirau projects. They have the potential to delay or halt
The consortiums responsible for the construction of
the Santo Antonio and Jirau dams were fined three times for environmental
damage (total volume of fines in excess of R$ 9 million) including a 11-ton
fish kill and illegal deforestation for the work site. Moreover, in
September 2009, employees were found working in irregular conditions in a
construction site related to Jirau's hydroelectric plant. Still, workers went
on strike to ask for better payment and working conditions.
Kanindé Ethno-environmental Defense Association has
accused the hydro plants on the Madeira River of violation of indigenous rights
at the Latin-American Water Tribunal (TLA), an independent international
environmental court established in 1988 in order to provide a venue for
traditional communities to be heard in conflicts involving water. The TLA
resolved to censor the Brazilian government on three accounts:
1. for the intention to build high impact projects at social and environmental
2. for not observing the indigenous peoples rights by not enforcing the
International Labor Organization's Covenant 169, the Rio de Janeiro
Declaration's principle No.10; the Federal Constitution of the Republic of
Brazil (articles 1, 225 and 231) as well as the article 2º, item III, from the
3. for not considering these projects impacts beyond Brazil's territorial
what must happen
These mega-projects are not indispensable for providing energy for Brazil’s development, although the government is trying to present them as such. The Brazilian government must be convinced that the river bank dwellers and indigenous peoples, and ecosystemsalong the rivers of Amazonia are worth protecting.
A key alternative to the Madeira River dams is increased energy efficiency. Losses in the distribution of energy in the country's electricity system - for both technical and commercial reasons - amount to 16.5% (compared to 6.5% on average in Europe). Tackling these losses would be another lucrative alternative to expensive mega-projects. Wind, biomass, and solar energy and small hydro projects could also contribute significantly towards meeting Brazil’s future energy needs. With the global economic crisis, energy consumption in Brazil has fallen, providing an opportunity to reorient the country’s energy policy.
In order to live up to their responsibilities and to protect their own and clients' assets as well as their reputation, financial institutions must abstain from getting involved in this project.
For further information, please get in touch. Our contacts are mentioned above.
According to the project Environmental Impact
Assessment (EIA), some 3,000 people will be forced to move from their homes,
although judging from past dam projects in Brazil, this number is probably an
underestimate. The decline in fisheries will seriously affect commercial and
subsistence fishermen. Thousands of people living downstream will face
declining crop yields as a result of the loss of the annual deposition of
fertile silt on the flood plains,will be deprived of transportation and run the
risk of mercury contamination.
Indigenous groups will be affected by thousands of
migrants arriving in search of work on construction crews. Public health
impacts in a region where malaria and other tropical diseases are endemic are
likely to be substantial, with stagnant pools of water providing breeding
grounds for mosquitoes and other disease-carrying insects. A study in August
2009 from the health and environmental department in Porto Velho, Rondônia,
showed that since the construction of Jirau's plant began malaria incidents
have increased 63,6%.
Furthermore, there are signs that indicate the
presence of isolated indigenous groups in the area to be flooded by the dams.
The region is a treasure of biodiversity. The Madeira
River supports the life of an estimated 750 fish species, 800 bird species, and
other endangered rainforest wildlife, and is home to rubber tappers, Brazil nut
gatherers, and fishermen. Protected areas, including a reserve used by people
who extract natural forest products, will be inundated by the dams.
The Madeira River project will further contribute to
the fragmentation of Rondônia's ecosystems and to the clearing of vast areas of
the region's remaining forests. A 600% increase in deforestation rates over
last year was already reported in the area surrounding the Rio Madeira, after
the preliminary license for the dams was granted in July 2007. The dams will
seriously affect migratory fish and other aquatic species on the Madeira.
Several species of large catfish migrate some 4,500 km each year to the upper
Madeira to reproduce. Construction of the dams will block these migration
routes, affecting the survival of the catfish. In addition, the dams are likely
to cause more flooding than expected due to the huge amount of sediments
carried by the Madeira river (around 500 million tons/year, equivalent to all
other rivers in the Amazon basin) and cause the disruption to 33 endangered
mammal species that are found in the project area.
suspect that the project sponsors are after something more ambitious: opening
the upper Madeira to navigation by fitting the dams with locks. The extra cost
would be small. Lower transportation costs would encourage farmers to plant
much more soya and grains - at the expense of the remaining forest.
Large dams in the rainforest also emit enormous
quantities of greenhouse gases, including methane, contributing to global
Survival International has stated that "there has been very little consultation with indigenous peoples about the project, and they did not give their free, prior and informed consent for the dams to be built. This is in violation of Brazil's constitution and Convention 169 of the International Labour Organisation which has been ratified by Brazil."
Amazon Watch documents that Brazil's National Indian Foundation (FUNAI), the government indigenous affairs department, has strong evidence that indigenous peoples in voluntary isolation live in the region of the Madeira Complex. The two consortiums building the project disregarded warnings about the presence of these peoples. In late 2009, an expedition led by FUNAI and the Brazilian NGO Kanindé, among others, confirmed the presence of four communities of isolated indigenous peoples in the area where the Madeira Complex is being constructed. The report issued by the expedition concluded that the groups are likely to have already fled their territory due to noise coming from the construction sites. As has frequently happened in the past, the contact between isolated indigenous peoples and outsiders could decimate the indigenous peoples because of their lack of immunity.
Other human rights issues
Bolivian organizations filed a
complaint at the Organization of American States (OAS) alleging violation of
human rights, such as the right for information, due to Brazilian
government's reluctance to consult the government of the neighboring country
and perform studies to assess potential trans-boundary impacts of the Madeira
Populations living in the area
affected by the dams say they have been pressured by the companies to move,
despite the fact that they have not come to agreements regarding compensation
Brazilian and international labor legislation have already occurred since
irregular working conditions at a construction site associated with Jirau's
plant have been confirmed. Moreover, also in September, workers at the Jirau's
construction site decided to strike for better payment and working
The World Commission on Dams found that women and ethnic
minorities were disproportionately affected by dam projects. As women are often
responsible for ensuring the sustainable livelihoods of their families, impacts
on these livelihoods through destruction of fisheries, flooding of agricultural
land and forests, and displacement often result in women bearing a
disproportionate share of the costs. It is women who are often left with the
burden of caring for their families, finding alternative land and water sources
and alternative livelihoods when these are taken away through the development of
destructive dam projects.
Floods in the madeira river are being linked to the Jirau and Santo António dams, in the madeira.
Apr 13, 2010
GDF Suez, the construction company partially owned by the French government and heavily involved in the construction of the Jirau hydroelectric dam, was nominated for the Public Eye Award 2010. After a head-to-head contest with farmaceutical firm Roche GDF Suez ended in the second place.
Independent experts analyzing official project studies reported that due to sediment accumulation the flooded area may cover more than twice the 529 km2 indicated in the EIA, affecting protected areas and a forest reserve in neighboring Bolivia, and that impacts on migratory fish species may lead to their extinction. The Madeira dam projects have been the subject of official protests by the Bolivian government, and the country’s Environment Directorate is now coordinating a process to analyze the EIA.
advisory service Advising on financing structure of Santo Antonio
Coordination of the pool of banks that finance the Santo Antonio dam
corporate loan Loan to MESA with specific funding of BNDES for the Santo Antonio dam
Equator Principles signatory
In January 2010 Santander sold a 5% equity stake of the special purpose vehicle MESA (Santo Antônio). In May 2011 Santander reported it was suspending finance for the dam citing environmental and social concerns.
Equity ownership: Acquired 20% equity of ESBR Participações S.A., which owns the Project (May 13, 2013) Mitsui & Co., Ltd, part of the Mitsui Group, acquired the equity source: www.mitsui.com
national development banks
- profile The Brazilian Development Bank BNDES (Banco Nacional de Desenvolvimento Econômico e Social)
The Brazilian Development Bank BNDES (Banco Nacional de Desenvolvimento Econômico e Social – the Brazilian Development Bank) is the main financier of both dams
In the case of Santo Antonio, BNDES combines direct and indirect financing. Its direct financing is between R$ 6.1 bn and R$ 6.6 bn (65% of the estimated total). BNDES also mobilises a R$ 2.51 billion co-financed portion from Santander, Bradesco, Unibanco, BES Investimento do Brasil, Caixa Economica Federal, Banco do Brasil, Banco do Nordeste and Banco da Amazonia
BNDES announced that it will also finance part of the investments for the construction of the transmission lines (estimated total: R$8 bn) to transport the energy from Porto Velho (in the state of Rondônia) to Araraquara (state of São Paulo), a distance of 2.450 km
In the case of Jirau, its direct financing is R$ 3.635 bn (US$1.78bn) with a 20-year tenor (approved August 2009). BNDES also mobilises R$ 3.585 billion in 25-year cofinancing from Banco do Brasil, Caixa Econômica Federal, Bradesco BBI, Unibanco and Banco do Nordeste do Brasil. The total sum of BNDES financing of R$ 7.21 bn correspond to 68.5% of the estimated total cost of Jirau
Fundo de Investimento do Fundo de Garantia do Tempo de Serviço
Owning or managing shares or bonds: Holds 9,98% equity share of the SPV MESA/Madeira Energy and acquired debentures of MESA valued at R$ 1.5 billion (approx. US$ 700 million) issued by Madeira Energy SA (MESA) in April 2009.
IDB backed Odebrecht debt issues for infra-structure investment
World Bank (IBRD, IDA)
- international -
The World Bank's IBRD and IDA constitute two of the five organisations that make up the World Bank Group. The IBRD aims to reduce poverty in middle-income countries and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services. The IDA is part of the World Bank that helps the world's poorest countries. It complements the IBRD.
On 5 March, 2009, the World Bank approved a US$1.3 billion loan to Brazil for "environmental protection” which is weak in terms of environmental performance criteria and a number of governance issues. Bolstering BNDES, part of money could be used for the Madeira River dams.
Brazilian private holding with over 61 thousand collaborators working in different areas such as engineering, construction, generation and power distribution, public service concession, real estate, naval building, oil and gas, cement, steel, footwear and textile.
Brazilian power company, claimed to be Brazil's largest electricity distributor.
Dongfang Electric Corporation (DEC)
Dongfang Electric Corporation is located in Chengdu in Sichuan Province, China. Established in 1984, it is one of the largest enterprises in China engaging in the manufactures of generating equipments and the contracts of generating station projects.
- profile Brazilian energy concern that claims to be Latin America's biggest electricity company.
Brazilian energy company, subsidiary of Eletrobras.
Pronunciamiento de los Pueblos Amazónicos de Bolivia y Brasil frente a la próxima reunión de los presidentes de los gobiernos de Bolivia y Brazil, Evo Morales e Ingácio Lula da Silva, sobre las represas del río Madera
Feb 03, 2007 | Representatives of towns and communities of the Amazon region of Bolivia and Brazil
Representatives of the towns and communities of the Amazon region in Bolivia and Brazil declare their alliance with the…
May 19, 2010 - Video shot during the BankTrack annual meeting in Zurich, January 2010.
GDF Suez nominated for Public Eye Awards 2010 Davos
Apr 13, 2010 -
The Madeira River: Life Before the Dams
Feb 22, 2010 - The Madeira River: Life Before the Dams tells the story of the people of Brazil and Bolivia affected by the construction of the Santo Antonio and Jirau dams, part of the Madeira Hydroelectric Complex. The film was shot both in the dry and rainy season, in Amazon riverine communities in Brazil and Bolivia. It documents expectations, opinions, and fears of people, whose livelihood depends on the river, including indigenous communities.