It probably isn’t coincidence that Eletrobras Furnas president Flavio Decat remarked that “hydro is treated as an evil” during his HydroVision Brasil 2013 keynote address just days after work was suspended at the country’s 1.8-GW Teles Pires hydropower project.
And even though Decat’s frustration might stem from the fact that his company holds a 24.5% share in the consortium developing Teles Pires, it also reflects a continuing trend and a larger issue.
To summarize a 2009 study prepared by Mateus Machado Neves of George Washington University’s School of Business and Public Management, Brazil has a series of federally-mandated approvals most hydroelectric projects must receive before receiving approval to operate.
The process isn’t markedly different than it is in many other countries, with a number of criteria required before a project is given the go-ahead for commercial operation by the Agencia Nacional de Energia Electriqa (ANEEL).
Brazil’s government even adds another caveat to the mix with environmental regulatory agency Instituto Brasileiro do Meio Ambiente (Ibama), whose own three-stage licensing process is yet another issue developers must consider.
As Neves notes, the process is, at times, arduous, but undeniably thorough.
The lengthy system of checks-and-balances and federal approvals can be wiped away in an instant, however, by powers given to the country’s Public Prosecutor’s Office.
“The Federal Constitution from 1988 attributed to the Ministerio Publico (MP) functions and technical conditions that surpass other public institutions, including the Judiciary,” Neves writes.
In other words, the agency has the authority to make arbitrary decisions regarding project development — even for those already approved by ANEEL and Ibama.
“The unlimited autonomy that the prosecutors have and the fact that there is no hierarchy in the institution are important aspects related to the difficulties of implementing a hydropower project,” Neves continues. “The MP uses its wide power to interfere in issues that are not direct or clearly under its legal or technical competencies in an open disrespect to other institutions.”
Such a stretch of authority seems to have been the cause for Teles Pires’ most recent delay since the project was awarded an installation license by Ibama in August 2011, though construction was also halted in March 2012 for similar reasons.
That an agency would arbitrarily impede project development seems particularly curious given Brazil’s emphasis on improving the country’s electrical supply in anticipation of strains caused by the 2014 FIFA World Cup and 2016 Olympic Games.
In fact, Eletrobras Furnas’ own budget also reflects this, with proposed hydropower investments in 2013 up US$265 million from 2012.
“Hydro is clean and good,” Decat says.
Still, Decat acknowledges that perhaps public perceptions of hydropower in a country like Brazil — where environmental preservation and consideration for indigenous groups are issues almost always thrust to the forefront of any developer’s mind — might be causes of difficulty.
“We are losing this communications battle,” Decat says.
So, for those who are currently developing projects in Brazil or have developed projects in Brazil, I’m interested in hearing more about your experiences.
Is Decat correct in implying hydropower has a bad image, or are there other factors hindering the industry as well?
