Brazil court again halts construction of 1,087-MW Estreito

A federal court in Brazil’s Maranhao State has suspended construction of the 1,087-MW Estreito hydroelectric project on Brazil’s Tocantins River.

The Justicia Federal do Maranhao annulled the project’s installation license June 6 in response to a civil action by federal prosecutors for Maranhao and Tocantins states. The lawsuit contends environmental studies must be revised because the project’s reservoir is larger than previously stated.

As a result of the ruling, Brazil’s environmental agency, Instituto Brasileiro do Meio Ambiente (Ibama) must conduct hearings in affected cities and may not issue a new license until new studies are completed.

Failure to halt construction would result in a fine of 15 million reais (US$9.1 million) for the development consortium, Consorcio Estreito Energia (Ceste). Ceste includes Renova Energia Renovavel, a unit of Suez Energy Latin America, and Companhia Vale do Rio Doce, Alcoa Aluminio, and Camargo Correa.

In April, Brazil’s national development bank signed a 24-year loan agreement with Suez Energy Latin America, providing 380 million euros (US$590.8 million) for the project. (HNN 4/2/08)

In 2007, Brazil’s federal court lifted an order that had blocked construction of Estreito due to allegations the project would cause environmental damage to indigenous Indian lands. (HNN 6/5/07)

Ceste awarded a 230 million euro (US$326.6 million) contract in 2007 to Impregilo of Italy and OAS Engenharia of Brazil to build Estreito’s dam and powerhouse. Estreito construction started in early 2007 and was expected to be complete in late 2010.

In a 2007 government-organized power auction, a pool of electricity distributors bought 256 MW from Estreito at a maximum price for delivery between 2012 and 2042.

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