UPDATE – Madeira competitors agree to settle dispute

Brazil’s energy minister says two international consortia planning to construct giant hydroelectric projects on Brazil’s Madeira River have agreed to settle a dispute over one of the projects out of court.

Mines and Energy Minister Edison Lobao said August 19 that Consorcio Jirau Energia and Consorcio Energia Sustentavel do Brasil (CESB) agreed to wait for a decision by government agencies, rather than file lawsuits that could delay one or both projects.

“There was a promise not to seek recourse,” Lobao said. “They have promised to wait for the decision of Ibama and ANEEL,” Lobao said, referring to the country’s environment agency, Brasileiro do Meio Ambiente e dos Recursos Naturais Renovaveis (Ibama), and the electricity regulator, Agencia Nacional de Energia Eletrica (ANEEL).

Consorcio Jirau Energia, whose members won a concession auction in December to develop the 3,150-MW Santo Antonio project, contested CESB’s winning of a May concession auction for the 3,300-MW Jirau project, Santo Antonio’s sister project on the Madeira River in the Amazon Region.

A week ago, Victor Paranhos, the head of CESB, accused Consorcio Jirau of espionage after Consorcio Jirau sent a report about CESB’s building plans to Ibama. A partner in Consorcio Jirau, construction group Odebrecht, responded by starting legal proceedings that could have led to a defamation case against Paranhos.

Consorcio Jirau was critical of CESB’s plans to move the Jirau dam nine kilometers downriver, toward the planned Santo Antonio dam. The government agencies are still studying whether to approve the relocation plan. (HNN 8/13/08)

Lobao had warned August 5 that the government’s utility holding company could take control of both Jirau and Santo Antonio if their progress was threatened by court action between the development consortia. (HNN 8/7/08) To prevent such a delay, Lobao said the federal government could annul the auction results for both projects and take them over.

Lobao suggested federal utility holding company Centrais Eletricas Brasileiras S/A (Eletrobras) could develop both projects instead. Eletrobras subsidiaries are members of each of the competing consortia. Furnas Centrais Eletricas S/A leads Consorcio Jirau, while Eletrosul Centrais Eletricas S/A is a member of CESB.

Another option might be for the government to order a new concession auction, he said.

�The government will not allow the public interest to be wronged on account of a conflict of business interests between the two consortia,� Lobao said, adding that both consortia could be impugned in a court dispute, delaying both projects.

�We have energy planning that does not allow delays in the schedules,� the minister said. �If we have this threat, with the adjudication of the two hydroelectric plants, it is up to the state to intervene so that nearly 200 million inhabitants are not wronged.�

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