Belo Monte
Autor: Conservação na rede | Publicado: 2011-11-08T04:15:00-08:00

Belo Monte Dam Does Not Meet Sustainability Criteria of World's Private Banks, Say Rights Groups

The  controversial Belo Monte Dam, slated for construction in Brazil's Amazon  region, does not meet the standards of an international framework used  by the world's largest private banks to evaluate sustainability, say  human rights groups in Brazil.
In  a letter sent to Itaú, Banco do Brasil, Bradesco, Santander, and Caixa  Econômica Federal, 150 Brazilian social and environmental organizations  warned that Belo Monte developer Norte Energia, S.A. (NESA) has not  complied with the Equator Principles, a set of voluntary standards  created in 2003 that aid private financiers in assessing and managing  social and environmental risk in project finance.  As signatories of the  Equator Principles, the five banks commit to not providing loans to  projects where the borrower will not or is unable to comply with the  Principles' respective social and environmental policies and procedures.
The  five banks have been mentioned by the Brazilian government as possible  co-financiers of the Belo Monte Dam, and at least one, Banco do Brasil,  has been mentioned as the top-runner to co-finance nearly $20 billion reais that  would be disbursed by the Brazilian National Development Bank (BNDES)  to NESA.  The Brazilian civil society groups argue that BNDES is using  tax-payer funds to finance what is ultimately a costly boondoggle.  In  October, Credit Suisse reduced its outlook for Cemig and Light, two  Brazilian electric utilities that joined NESA, stating that the  project's rate of return is far below government estimates.  
“The  legal violations that have accumulated throughout the planning process  of the Belo Monte Dam clearly illustrate that the project does not live  up to the standards of the Equator Principles.  We recommend that  Equator Principles banks stay away from co-financing Belo Monte, because  the reputational risks associated with the project are very large,”  said Zachary Hurwitz, Policy Coordinator at International Rivers, which  published a risk report with Amigos da Terra-Amazônia Brasileira in  early 2011 detailing the project's history.
In order for any of the five private banks to co-finance  a loan for the Belo Monte Dam, they would have to illustrate that NESA  has complied with the guidelines' ten principles.  For example,  Principle 5 requires borrowers to “consult with project affected  communities in a structured and culturally appropriate manner,” and to  “ensure their free, prior and informed consultation and facilitate their  informed participation as a means to establish whether a project has  adequately incorporated affected communities’ concerns.”
However,  recent evidence suggests that NESA, a project consortium composed of  nearly 75% state-owned enterprises, did not hold free, prior, and  informed consultations with affected indigenous communities.
In  a hearing of Brazil's Regional Federal Tribunal, judge Selene Maria de  Almeida decided that three tribes who live on a 100km stretch of the  Xingu River that would be dried out because of the dam—  the Juruna, the  Arara, and the Xikrín Kayapó— had not been properly consulted.   Environmental agency IBAMA and state electric utility Eletrobras, the  largest holder in NESA, only began studying the project's impacts on  tribes in 2008, three years after the Brazilian Congress had approved  the project.  The Brazilian Constitution mandates that developers must  hold proper consultations before a development project that impacts  indigenous people is approved by the Brazilian Congress.&nbsp; If de  Almeida's decision is upheld in court, Belo Monte would be suspended  until proper consultations were held.&nbsp;
The  warning letter also argues that the developer has not complied with  Principle 4 of the Equator Principles, which requires the borrower to  create an Action Plan that “implements mitigation measures, corrective  actions and monitoring measures to manage the impacts and risks” in  compliance with host country social and environmental regulations.  An  injunction brought by Carlos Castro Martins at the end of  September barred NESA from beginning any work that would interfere with  the natural flow of the Xingu river, after it was found that the  developer had not properly assessed the risks to local fish stocks, nor  planned a program to mitigate the impacts on families who make a living  from fishing.
The  warning letter also argues that NESA has not complied with Principle 6,  which requires the borrower to create a grievance mechanism as a  condition of managing the risk of Category A and B projects.  The  Equator Principles consider Category A projects to have significant  risk, while Category B are considered to have limited risk.
The  Equator Principles, last revised in 2006, are directly based on the  Performance Standards of the International Finance Corporation (IFC),  which were revised and strengthened in 2011.  The new version of the  Performance Standards includes language that protects indigenous  peoples' right to informed consultation and participation, and, in  certain cases, upholds their right to free, prior, and informed consent.   The Equator Principles will also be updated in 2012, and are likely to  adopt the stronger language.
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For more information:
International Rivers
Amigos da Terra - Amazônia Brasileira (Portuguese)Movimento Xingu Vivo Para Sempre (Portuguese) 





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