Pressure from indigenous people and environmentalists has forced the Brazilian government to postpone the bidding process for the giant São Luiz do Tapajós hydroelectric power plant in the north of the country.
The decision on who will manage the 8,040 MW generated by this latest major energy project will now be delayed until 2016. Among those hoping to secure the contract is China Three Gorges Corporation (CTG), which operates in Brazil as the main shareholder of Energias do Brasil, the Brazilian arm of Energias do Portugal (EDP) which was privatised in 2012.
But the hydroelectric plant has strong opposition, especially among the Munduruku indigenous people, who argue that the plant encroaches on their territory and that they have not been consulted on the environmental impacts.
"At no point did the government open space for dialogue,” read an open letter penned by indigenous groups which was presented in Brasilia in April, “instead of dialogue, the government has sent armed forces to our region in an attempt to intimidate us, ensuring that studies can take place in our territory, even against our will."
The president of Brazil’s Energy Research Company (EPE) Mauricio Tolmasquim said "there is an indigenous question that is affecting environmental licensing."
According to the environmental impact study (EIA/Rima) presented by the Tapajós Study Group to Ibama, the federal environmental agency responsible for the licensing process, the hydroelectric plant does not affect officially demarcated areas.
The complaint focuses specifically on the non-compliance with the International Labor Organization’s (ILO) Convention 169, which requires free, prior and informed consent of indigenous peoples before any development that affects their land.
But in 2012, Brazil’s congress has declared itself responsible for ‘regulating’ the convention, which in practice has resulted in its inconsistent application.
And on June 11, 70 organizations including civil society groups launched a manifesto against a proposed constitutional amendment (PEC) that transfers the right to grant official recognition to indigenous lands, protected areas, and Quilombola territories (communities established by escaped slaves) from the federal government to the legislature.
"Given the political divisions in congress and in the country, this process alone is capable of causing severe damage,” warned Mauricio Guetta, a lawyer for civil society organization Instituto Socioambiental (ISA), who added that the murder of indigenous people in recent weeks bears testament to the levels of tension and conflict.
"Building a trusting relationship has taken almost two years," the General Secretariat of the Presidency of the Republic said in a recent statement.
At the beginning of the year, the Munduruku presented a document outlining how they wanted to be consulted on the Tapajós hydroelectric plant to the secretariat's Minister Miguel Rosseto.
According to the EIA/Rima, the list of the dam's impacts is long. It is expected to cause water pollution, increase air pollution, the clearing of alluvial and açaí forests and the deaths of numerous animals and fish during construction of the power plant and the creation of the reservoir.
Another big problem listed in the EIA/Rima is that up to 13,000 people will be hired during the peak construction phase. Projections indicate that around 10,000 people would be taken on from other parts of the state of Pará or even from other regions of the country, with a further 12,500 people expected to come to the region in search of jobs.
The anticipated swell of an extra 25,000 people will have a significant impact the region’s infrastructure and services. The largest city, Itaituba, has a population of 97,000 and the second-largest city, Trairão, is home to only 17,000.
According to the study, this "will increase the demand for health, schools, and housing, and may also lead to disorderly occupation of the region, overloading urban infrastructure and environmental systems". Furthermore, demand for food and real estate is likely to drive up prices. But some welcome the prospect of increased economic activity in the region.
The official estimate of EDP Energias do Brasil’s investment in the Tapajós project is US$ 6.5 billion, but unofficial estimates suggest that this could rise to US$ 10 billion. This is because the hydroelectric plant is located in a remote region of Pará state accessible only by the Trans-Amazon Highway (a highway crossing seven states from Paraíba to Amazonas) or the Tapajós River, which will become an important waterway transporting goods to the Pacific Ocean.
CTG group will also have to contend with illegal mining activity, which is prevalent in the region and which adds to pollution and social conflicts.
"Creation of the reservoir will affect gold and diamond mining areas, which feed the Tapajós and Jamanxim Rivers and their smaller tributaries. Formal and informal mining activities will be affected, and jobs and income for those involved population may be impacted," the Tapajós Study Group said.
The Tapajós complex has stirred interest in various companies. And in an apparent conflict of interests, one of those leading the environmental study is state-owned Brazilian electricity giant Electrobras. The Tapajós Study Group also includes Brazilian construction company Camargo Corrêa, Cemig, Copel, Eletronorte (controlled by Eletrobras), and multinationals EDF (France), Enel (Italy/Spain), Engie (formerly GDF Suez, France/Belgium) and Neoenergia (Brazil, controlled by Spain's Iberdrola).
These companies are not expected to bid on the venture together, but to split into smaller consortia.
Eletrobras and CTG have already met to discuss cooperating on investment in wind and solar plants in Brazil along with Minister of Mines and Energy, Eduardo Braga.
CTG has already purchased EDP’s shares in renewable-energy projects such as the Cachoeira Caldeirão hydroelectric plant in the northern state of Amapá. But moving into the São Luiz do Tapajós project, even with a minority share, would boost its share of energy generation.
The group already has experience controlling the world's largest hydroelectric plant (the Three Gorges project), which has an output of 18,000 MW.
"We really want to participate in this project in Brazil. It is a long-term project that deeply interests us," said CTG representative Zhu Guangchao whilst in Brazil.
In 2014, the company signed a strategic cooperation agreement with Furnas, a subsidiary of Eletrobras.