SAO PAULO--Following a Brazilian court order to stop
construction, the company building the controversial
11,200-megawatt Belo Monte dam said Thursday that it was suspending
all work on the project.
Earlier this month, a federal court ruled that the government's
authorization of the 26 billion Brazilian reais ($13 billion) dam
was unconstitutional. The court threatened to fine Norte Energia,
the company in charge of the project, BRL500,000 a day should it
continue with construction of the dam on the Xingu River in Para
state.
"Norte Energia communicates that, due to a court decision, it is
suspending the execution of civil construction on the Belo Monte
hydroelectric dam and all other activities directly related to it,"
the company said in a news release. Norte Energia "is taking all
available measures to reverse the decision, with the objective of
returning the suspended activities to normality in the shortest
time possible."
Because heavy rains impede progress during the southern
hemisphere's coming summer months, company executives have said the
suspension this month could delay work on the dam by as much as a
year, depending on when they are permitted to resume work. The dam
is set to go online by 2015, at which point it would be the world's
third-largest hydroelectric dam.
In a decision earlier this month, federal judges in Brasilia
said the government didn't hold the constitutionally-required
meetings with indigenous communities that are affected by the dam
before granting permission to build it.
Federal prosecutors in Para have asked courts on numerous
occasions to block the dam's construction, alleging that required
measures meant to alleviate the impact of the dam haven't been
taken. Despite occasional success by the prosecutors, the federal
government had managed to overturn all previous injunctions.
Norte Energia is composed of government-controlled utility
Centrais Eletricas Brasileiras (EBR, ELET6.BR), or Eletrobras.
Other stakeholders include the pension funds of state-run oil
company Petroleo Brasileiro (PBR, PETR3.BR) and government lender
Caixa Economica, as well as the utilities Neoenergia (GNAN3B.SM)
and Cemig (CIG, CMIG4.BR), and mining company Vale (VALE,
VALE3.BR). Eletrobras is the biggest shareholder, with a 49.98%
stake.
Last month, indigenous leaders held three company engineers
captive, saying they would only be released after the company
provided means for the natives' boats to circumvent the
construction site, which is impeding free travel along the Xingu.
The engineers were released after Brazil's national indigenous
institute Funai helped work out an agreement.
Write to Paulo Winterstein at paulo.winterstein@dowjones.com
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