UPDATE: GDF Suez Brazilian Hydro Project Facing Uphill Battle
May 27 2009 - 2:01PM
Dow Jones News
GDF Suez SA's (GSZ.FR) Brazilian hydroelectric project is on
indefinite hold as a battle between the company and the state where
the dam is to be built rages on, a GDF Suez executive said
Wednesday.
The 3,300-megawatt power station project in Rondonia state on
the Madeira River has been stalled since May 19, with no return
date in sight. GDF Suez said the project's total cost was around
EUR3.3 billion.
"We can reach an agreement today, tomorrow, or weeks from now,"
said Gil Maranhao, GDF Suez's director of business development in
Sao Paulo.
GDF Suez is the majority stakeholder in Energia Sustentavel do
Brasil, formerly known as Enersus. Brazilian construction company
Camargo Correa and government energy companies Chesf and Eletrosul
are minority partners.
Both Chesf and Eletrosul are owned by Centrais Eletricas
Brasileira, or Eletrobras (EBR). Jose Muniz, Eletrobras' chief
executive, told congress on Wednesday that the federal power
company was losing roughly 6 million reals ($3 million) each day
the project was in limbo, the local Estado newswire reported.
Rondonia has been against the project from the start, judging by
at least two filings by public prosecutors that stalled early phase
construction once last year.
Public prosecutors charged that the Environmental Protection
Agency, or Ibama, could not grant a partial license for the
project. A partial permit was granted to clear the area for major
construction. A similar dam is being built by Brazil's Odebrecht
and power companies Furnas and Cemig (CIG) up river.
On Wednesday, Brazil's biggest business daily, Valor Economico,
ran a front-page news story saying that Ibama agents rejected GDF
Suez's building permit.
But an Ibama press officer said the report was "non-conclusive
and was an opinion of agents at the time."
According to the newspaper, a preliminary Ibama report cited GDF
Suez in violation of 13 out of 32 environmental requirements,
including a study and monitoring of eggs and baby giant catfish
specific to the region.
"The only thing between us and the permit now is payment
agreements between the consortium, the state government of Rondonia
and the city of Porto Velho," Maranhao said.
"We have given them three proposals since this process began
back in December and they have rejected us every time," he
said.
Maranhao said that the project would be operational by January
2013.
The project is part of the federal government's Accelerated
Growth Program, or PAC. Environment Minister Carlos Minc said this
week that Ibama would grant the final construction permit once
Energia Sustentavel do Brasil partners and Rondonia officials can
agree on compensation to the state.
Early last week, Minc predicted that the project would be
approved by last Friday.
The press office from Rondonia's public prosecutor's office said
the state was meeting with project leaders.
-By Kenneth Rapoza, Dow Jones Newswires; 5511-2847-4541;
kenneth.rapoza@dowjones.com