UPDATE – Brazil attorneys sue to block 3,300-MW Jirau concession

Brazil federal and Rondonia State attorneys filed a civil action August 25 to overturn the concession auction for the 3,300-MW Jirau hydroelectric project, planned for the Madeira River in Brazil’s Amazon Region.

Business News Americas reported the attorneys’ offices filed the action against electricity regulator Agencia Nacional de Energia Eletrica (ANEEL), environmental regulator Brasileiro do Meio Ambiente e dos Recursos Naturais Renovaveis (Ibama), and the winning consortium, Consorcio Energia Sustentavel do Brasil (Enersus, formerly CESB).

The lawsuit contends Enersus broke environmental regulations by changing the location of the proposed hydro project. Enersus said it planned to move the Jirau dam nine kilometers downriver as a way to save 1 billion reais (US$626 million).

�New environmental licensing is needed to evaluate if the plant’s new location is viable,� the government attorneys said.

If the new location is found to be viable, the attorneys contended a new concession auction would be required to promote fair competition.

Consortia agreed to settle dispute

The legal action came less than a week after Brazil’s energy minister said Enersus and a competing international consortium agreed to settle a dispute over Jirau out of court. (HNN 8/21/08)

Mines and Energy Minister Edison Lobao said August 19 that Enersus and Consorcio Jirau Energia 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.

Consorcio Jirau Energia, whose members won a concession auction in December to develop the 3,150-MW Santo Antonio project, also on the Madeira, contested Enersus’ winning of a May concession auction for Jirau.

A week earlier, Victor Paranhos, the head of Enersus, accused Consorcio Jirau of espionage after Consorcio Jirau sent a report about Enersus’ 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 Enersus’ 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)

Minister warns of government takeover

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 and Companhia Hidro Eletrica do Sao Francisco (CHESF) are members of Enersus.

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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