A consortium led by France’s Suez has won the right to construct a controversial hydropower plant on the Madeira river in Brazil.
The Consórcio Energia Sustentável do Brasil (CESB) group will construct and operate the 3.3 GW Jirau plant, which forms a major part of the Brazilian government’s plans to increase generating capacity. The project has been criticised by indigenous and environmental groups for the socio-economic and environmental impacts it will have.
CESB won the concession in an auction, offering to deliver electricity to Brazil’s regulated regulated market for R$71.37/MWh ($43.30/MWh). The plant is expected to enter operation in early 2013 and will require investments of R$8.5 billion (EUR3.3 billion), according to Suez.
Jirau will be a run-of-river plant with a 258 km2 reservoir. The project forms part of Suez’s plans to expand its presence in Brazil, where the economy is growing at 4-5 per cent per year.
Dirk Beeuwsaert, CEO of SUEZ Energy International, said: “Tractebel Energia, our operational company in Brazil, holds 6.4 per cent of the power generation market of Brazil. Our target is to expand our participation by means of profitable projects with high level of sustainability.
“The Jirau plant will considerably contribute to secure the energy supply of Brazil, its economic growth and development in the coming years.”
Jirau is the second major hydropower concession to be granted in Brazil in recent months. In December 2007, power regulator Aneel granted a consortium led by Brazilian power firm Furnas the right to construct Santo Antonio, a 3.15 GW plant also located on the Madeira river.
CESB’s winning bid represents a 21.5 per cent discount on the government’s stipulated maximum price. The consortium will operate the plant for 30 years, selling 70 per cent of the output to electric power distributors and the remainder to industrial consumers on the unregulated market.
Some 85 per cent of the project finance for Jirau has been committed by BNDES, the Brazilian development bank. The CESB consortium partners are SUEZ Energy International (50.1 per cent), Eletrosul (20 per cent), Chesf (20 per cent) and Camargo Correa (9.9 per cent).
Campaign groups say that the Madeira river is the Amazon’s most important tributary, and that the plans to dam it will threaten its biodiversity and the livelihood of thousands of people.
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