The proposed Belo Monte mega dam in Brazil lacks participation investment from the private sector, according to a lobby group.
International Rivers said the members of the consortium who are to build the hydroelectric facility, details of which were announced last week, has a ‘striking lack’ of private sector involvement.
The 18-strong Norte Energia consortium comprises 77.5 per cent state-owned or state-controlled participation.
International Rivers said this dwarfs the role of private sector investors and reflects concerns about the financial risks associated with the world’s third-largest planned hydroelectric project.
‘The lack of private sector enthusiasm reflects a series of unanswered questions, including the dam’s higher-than-projected construction costs and uncertain generating capacity, as well as doubts about costs stemming from mitigation of its massive social and environmental impacts,’ the group said.
Instead of aiming to attract the private sector, the government plans to use public subsidies and pension funds to finance the project.
The controversial project will be built at a cost of $17bn and when complete will generate 11GW of hydroelectric capacity, behind only the Three Gorges and Itaipú dams.
But with questions raised that it may only produce on average 39 per cent of its total capacity due to seasonal fluctuations the Brazilian government has announced a series of incentives to attract the private sector.
The country’s national development bank, BNDES, said it will commit up to 80 per cent of the project’s total price tag with interest rates at just four per cent and a 30 year repayment period.
In addition, it has already subsidized credit to the tune of $8bn, on a 50 per cent tax break scheme over ten years in order to entice European turbine suppliers Alstom, Andritz and Voith-Siemens into signing the build contract in April.
Raul do Vale, spokesperson of environmental group Instituto Socioambiental, said, ‘Taxpayers and workers with investments in pension funds have no idea of the huge risks associated with Belo Monte. The workers of Petrobras, Caixa Economica Federal, and Banco do Brasil are spending their retirement money to subsidise what private investors are afraid to touch.’
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