The Brazilian National Development Bank (BNDES) has announced it will not grant a $640 million loan for the hugely controversial Belo Monte dam until 40 social and environmental conditions are met. In response, the company contracted to build the dam, Norte Energia, S.A. (NESA), has stated it may drop the bank’s loan altogether and seek less discriminating private funding to start construction. Last week the Brazilian government’s environmental agency IBAMA announced that the dam had been granted a partial license, an aberration in Brazilian law, to jumpstart construction. But BNDES also says it will not hand out the loan until a full license is granted.
“[Norte Energia, S.A.’s] decision to drop the bridge loan issued by BNDES sends a pretty clear message that the project’s legal risk is higher than analysts thought,” says Zachary Hurwitz, Policy Program Coordinator at the environmental NGO International Rivers, in a press release. “It is a signal that NESA is not interested in following Brazilian federal legislation. If they are unwilling or unable to oblige BNDES’ standard loan conditions now, there’s a good chance they will also ignore subsequent legislated loan conditions further on, when the real costs of the project start to emerge.”
Critics of the massive dam project on the Xingu River contend that 50,000 indigenous people will lose their livelihoods and at least 12,000 will have to be relocated. Environmentalists say the dam will release massive amounts of the potent greenhouse gas methane due to rotting vegetation and disrupt fish migrations. In addition, the dam will flood over 100,000 acres of primary rainforest.
While the BNDES has said it will finance 70-80% of the $17 billion dam, the announcement that it will wait for full licensure gives the world’s second largest development bank time to weigh its options.
“We welcome the BNDES decision to observe Brazilian environmental laws,” said Atossa Soltani, Executive Director of Amazon Watch, in a press release. “Given that the Belo Monte Dam project clearly violates the Equator Principles for environmental and social sustainability, we urge BNDES and other potential investors to reject future financing of the project.”
Following the partial licensure, Brazil’s Federal Public Prosecutor’s Office (Ministério Público Federal or MPF) issued a lawsuit—its tenth related to the dam—contending that the license violated Brazilian law.
(01/27/2011) Arguably the most opposed dam project in the world received the go-ahead this week, reports the BBC. Brazil’s environmental agency, IBAMA, has approved the first step of the massive hydroelectric project: clearing 588 acres of rainforest in the Amazon, although the dam would flood nearly 200 square miles (500 square kilometers) of forest.
(01/14/2011) The president of Brazil’s environmental agency IBAMA has resigned over pressure to grant a license for the Belo Monte dam, a hydroelectric project on the Xingu River that faces strong opposition from environmental groups and indigenous tribes, reports O Globo.
(11/11/2010) The struggle against Brazil’s Belo Monte dam on the Xingu River continues as today indigenous groups sent a formal petition to the Inter-American Commission on Human Rights (IACHR) to suspend the dam’s construction, stating the dam violates human rights. The dam, which has been contentious in Brazil for decades, would flood 500 square miles of rainforest, lead to the removal of at least 12,000 people in the region, and upturn the lives of 45,000 indigenous people who depend on the Xingu River for survival.