Policy & Market


Peru dam 'can rescue lawless Amazonian region'

Peruvians seem to have little sense of what the Inambari and other dams will mean for them.

But Evandro Miguel, president of Inambari Geração de Energia — which is charged with overseeing the construction of the $4bn, 2.2-gigawatt dam — is clear on the issue.

The Inambari is the first of five dams totalling 6GW — to be built at an estimated cost of $16bn — that Brazil is negotiating with Peru. Brazil hopes to build up to 15 hydro projects in Peru totalling 20GW as it searches for more electricity for its rapidly expanding economy.

Miguel claims the Inambari dam can bring development, progress and state institutions to a lawless land, and can protect an area devastated by illegal logging, polluting gold mining and drug trafficking.

“The region will be devastated if you leave it as is. Instead, devastate 20% and save 80%,” he declares.

Construction of the dam in Peru’s Amazon region is expected to begin in 2011, and Miguel seems to have made it his personal mission to address the needs of the population, hiring anthropologists and sociologists, and coming up with 15 options for relocation.

Miguel blames the narcotics trade for threatening the local populations unless they stand up against the dam. “The big opponents of this project are not in the region,” he says.

He claims that each year, 300 tonnes of cocaine originates from Peru, 1% of which comes from San Gabán district, where the dam will be built and 500 hectares of coca is cultivated.

Although some say the coca is for personal — and legal — use, Miguel cites a study that says 95% becomes cocaine, with only 5% locally used as a tea.

The Inambari company is a Brazilian firm 49%-owned by the state utilities Eletrobras and Furnas and 51%-owned by the construction company OAS through its subsidiary, the southern Amazon electricity generation company, Egasur.

Brazil’s national utility group Eletrobras has opted to be an intrepid entrepreneur in its quest to become the largest clean-energy generator in the world. Brazilian President Luiz Inácio Lula da Silva wants Eletrobras to be the “Petrobras of the electricity sector”, a reference to the country’s semi-privatised state oil company. Eletrobras is already building hydropower plants in Nicaragua and studying projects in Colombia, but the company may be overreaching with Peru, say some industry sources.

“Building hydros in countries like Honduras and Nicaragua is a good thing for Eletrobras and for those countries,” says a high-level government official involved in the energy sector, who asked not to be named.

“We can transfer technology and help develop those nations. But projects need to be economically viable and justifiable.” He believes that Eletrobras’ plans in Peru are simply not financially smart. The cost of generating energy across the Peruvian border and transmitting it to Brazil is too high and cannot compete with power projects based in Brazil, he believes.

The Peruvian government will have to decide how much energy it wants from the dam, says Miguel.

“Peru can ask for zero or 100%,” he says. “If Peru wants no energy, the dam is not viable at all. If it won’t make money, we won’t do this project. Brazil doesn’t need Peru to satisfy its energy demand.”

He says that the Peruvian capacity will act to balance out power loss in drought seasons when run-of-river hydro schemes’ output dwindles.

Peru requires that a series of workshops be held to complete an environmental impact assessment, which is due by June.

Miguel has been unable to schedule a second workshop in the town of Puerto Manoa, however, because the first one held there in August ended badly and Miguel fears for the lives of his employees. “No one wants to go to this region,” says Miguel. “This dam will end contraband and narcotics trafficking, which control the region.”

At no other point will so much money be invested in the region’s social and environmental needs as Brazil is willing to do to compensate for the hydropower plant, he says.

“We will destroy something,” he adds, “but we will create more value than what we will destroy.”