Amigos da Terra – Amazônia Brasileira
Gustavo Pimentel - Eco-Finance Manager
Tel: +55 11 3887-9369 - Fax: +55 11 8622-4682
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The study argues that crucial potential impacts have not been adequately addressed such as failure to study the impacts of canal locks, and the contradictory technical assessments on broad issues including the project’s area of influence, possible impacts in Bolivia, indigenous lands, involuntary resettlement and extent flooding. The fee for environmental compensation, which is still undefined, may also affect cost and construction timeline.
Construction risks for the Rio Madeira Complex was yet another aspect of the risk analysis commonly ignored by financiers, as cost explosions are common for hydroelectric plants in the Amazon. The study analyses the possibility of delays, cost overrun and quality sub-performance along with their respective impacts. A second major threat is the legal weakness of the preliminary license and, consequently, of the construction license, which may result in postponement of the project, delaying the energy delivery. Similarly, the granting of the environmental license is based weak grounds, and is already being challenged by the Public Prosecution Office.
Gustavo Pimentel, Eco-Finance Manager at Amigos de Terra says that taking off the transmission line from the terms of reference to speed up the power plants license may backfire. “Now there is a risk of having two large power plants in the middle of the Amazon disconnected from the consumption centers in the southeast. The transmission line to Araraquara (state of São Paulo) does not have a defined path, nor any terms of reference for the Environmental Impact Assessment. Its license will take years to come, and nobody can predict when the works will be complete”.
Amigos da Terra is engaging with banks and pension funds about the study’s conclusions. “No creditor would like to enter this deal to lose money. Everybody we talk to is worried about the project’s financial risks. The beneficiaries of Petros and Funcef pension funds should be very concerned, as their pensions may be at stake”, argues Pimentel.