Amazon dam to have 10 per cent return

Belo Monte Dam faces scrutiny over hydropower tariffs, cost overruns, and Amazon ecosystem impacts, as Eletrobras leads a consortium in Brazil to deliver 11,000 MW, amid protests, displacement risks, infrastructure delays, and regulatory uncertainty.

A controversial hydroelectric dam in the Amazon rain forest will bring returns of more than 10 percent a year, Jose Antonio Muniz Lopes, chief executive of Brazil's state-controlled power utility Eletrobras told local media.

Eletrobras and a group of Brazilian construction companies won the bid to build the 11,000 megawatt Belo Monte dam in April following an Amazon river dam approval process that intensified debate, amid criticism the project was an environmentally hazardous money-loser.

Financial analysts say the government set an artificially low price for the power to be generated by the dam, in contrast to Brazilian wind auction details that signaled different pricing dynamics, adding it faces considerable risks including cost overruns and the likelihood that protests will frequently halt construction.

"We want returns of above 10 percent, and we will manage that," Lopes said in response to a question about yearly returns in an interview with O Globo newspaper after Brazil approved an Amazon hydroelectric dam earlier that month.

Asked how that would be achieved given the size of the investments foreseen and with a first wind-only energy auction approaching in Brazil, he said: "There is a lot of room for the reduction of costs."

Official estimates put the construction costs at 19 billion reais US$10.5 billion though private sector estimates go as high as 30 billion reais $16.6 billion for the project.

Government leaders say the project, due to start producing electricity in 2015, will provide crucial power for Brazil's fast-growing economy. But environmentalists and activists say it will damage a sensitive ecosystem, while a Chilean hydropower project still seeks environmental approval nearby, and displace around 20,000 local residents.

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