UPDATE – Brazil court lifts injunction from 1,087-MW Estreito

A federal appeals court has reversed a lower court ruling that suspended construction of the 1,087-MW Estreito hydroelectric project on Brazil’s Tocantins River.

Federal appeals court Judge Jirair Aram Meguerian overturned a federal court in Maranhao State that annulled the project’s installation license June 6 in response to a civil action by federal prosecutors for Maranhao and Tocantins states. (HNN 6/11/08) The lawsuit contended environmental studies must be revised because the project’s reservoir is larger than previously stated.

Meguerian, of Tribunal Regional Federal de 1 Regiao, ruled June 23 that all steps of Estreito’s environmental impact studies had been fulfilled, the government’s Agencia Brasil reported.

He added the project has vital importance for Brazil’s energy infrastructure. In a 2007 government-organized power auction, a pool of electricity distributors bought 256 MW from Estreito for delivery between 2012 and 2042.

The appeals judge said the license had been suspended based on suspicion of bias by Brazil’s environmental agency, Instituto Brasileiro do Meio Ambiente (Ibama), and of pressure by the Executive Branch resulting in license issuance.

�These suspicions are not enough to invalidate the presumption of validity of this administrative act,� Meguerian said.

The lower court ruling had said Ibama must conduct hearings in affected cities and could not issue a new license until new studies were completed. Faced with a potential fine of 15 million reais (US$9.1 million), the development consortium, Consorcio Estreito Energia (Ceste), had scaled back on-site work until the appeals court ruling.

Ceste includes Renova Energia Renovavel, a unit of Suez Energy Latin America, and Companhia Vale do Rio Doce, Alcoa Aluminio, and Camargo Correa. Ceste awarded a 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 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)

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