Nov 26, 2012

• Portion earmarked for socio-environmental efforts, totaling R$ 3.2 billion, is the largest approved by the Bank

The Board of Directors at the BNDES has approved R$ 22.5 billion in financing for Norte Energia S/A. Resources will be earmarked for construction of the Belo Monte Hydroelectric Plant,  on the Xingu River (PA), with 11,233 MW in installed capacity.

Energy generated will account for 33% of the country’s expanded capacity forecast for the 2015-2019 period, equivalent to supplying 18 million residences (60 million people) or all the energy used in the South and Northeastern regions together.

Investments in the plant, which total R$ 28.9 billion, will create 18,700 jobs directly, and a further 23,000 indirectly during the construction works. The project will also contribute to boosting the production of Brazilian industry since 98% of the equipment used will be manufactured locally.

A part of the credit (R$ 9 billion) will be sent on through two financial agents:  the federally-owned bank, Caixa Econômica Federal (R$ 7 billion) and BTG Pactual (R$ 2 billion). Financing includes approval of R$ 3.7 billion for Norte Energia, earmarked for purchases of equipment within the Investment Maintenance Program (PSI). Besides the BNDES’ resources and that of shareholders, the sources for the project includes issuance of infrastructure debentures to the tune of R$ 500 million. 

For contracting the financing and for each release of resources, the project must present approved and up-to-date environmental licenses. The socio-environmental efforts established in the licensing will be monitored by the BNDES, which will rely on an independently-hired environmental auditing company for support.

The Belo Monte plant will be the third largest in the world, following China’s Three Gorges plant, with 22,500 MW, and the bi-national plant, Itaipu, with 14,000 MW. However, contrary to the other large-scale hydroelectric plants, Belo Monte has a small reserve in comparison with its installed potential. The ratio between the flooded area and the generation capacity is one of the best in the world.

The hydroelectric will have 24 generation turbines. The first will be operational in February of 2015, and the last on the list is slated for January 2019. Release of the BNDES’ resources will be made in accordance with the Schedule for the plant works.
Norte Energia is a special purpose company comprising Eletrobrás, Chesf, Eletronorte, Petros, Funcef, Grupo Neoenergia, Cemig, Light, J. Malucelli Energia, Vale and Sinobras.

Social and environmental investments – The BNDES will finance investments for social and environmental efforts to the tune of R$ 3.2 billion. This is the largest amount ever approved by the Bank for socio-environmental initiatives, equivalent to 11.2% of the total resources invested in the plant.

For each impact identified in the environmental studies (EIA-RIMA), measures to control, monitor, mitigate or compensate have been proposed. Such measures resulted in the elaboration of several programs, which brought about the Basic Environmental Program (PBA), approved by Ibama, and which encompasses 117 environmental projects, 49 social and economic projects, 11 related to land-title regularization and 57 of a biotic-physical nature (related to living beings).

The BNDES will also provide support for investment of resources in the surrounding areas of the project, aimed at economic and social development of the areas directly and indirectly affected by the hydro plant, and which involves 11 municipalities in the Xingu region. Norte Energia expects to earmark some R$ 500 million for the Regional Sustainable Development Program in the Xingu area (PDRS Xingu), drawn up together with the federal government and the Pará state government. The aim of the project is to improve the standards of living for the population in the region. For this, a management committee was created, with 15 representatives of the government and 15 others form civil society.

The BNDES will also finance studies to aid the PDRS Xingu management committee in identifying and prioritizing investments required in the region. Social infrastructure projects will boost the local economy. The BNDES’ proposed efforts in the surrounding areas of Belo Monte will supply and contribute more effective investment of the resources needed, in accordance with the sustainable development proposal to be established for the region. 

Mitigating and compensatory efforts related to the indigenous population are part of the PBA. These include protection of territories and the condition required to survive physically and culturally, as well as the well-being of the indigenous communities. This includes the surrounding area and the external activities that can foster positive impacts on the population’s standards of living.

One of the efforts, the Medio Xingu Program, has environmental compensatory programs, with investments in areas, such as health, education, production activities, infrastructure and cultural heritage to benefit and strengthen the indigenous communities.
These programs will be carried out by Norte Energia in partnership with the federal government.

Funai presented a technical report stating that the undertaking was feasible and that claims made by the indigenous communities located in the plant’s surrounding areas had been taken into account in the project.

With regards to reducing the flow in the specific part of the Xingu River due to deviation of a part of the water, Norte Energia and Ibama agreed that this part of the river will only have minimal obligatory deviations due to the importance of flora and fauna.

Environmental licensing has established that the hydrological characteristics should be tested and monitored over a six-year period as of the date the plant becomes operational, to identify the resulting impacts.