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Questions on hydroelectric
power plants in the Peruvian
Amazon Region
16 June 2009

Regions

Negotiations are underway for the construction of six hydroelectric

power plants in the Peruvian Amazon Region in a joint initiative of
Alan Garcia and Lula da Silva. Serious inquires about the nature of
the intiative and its implications for the region are not resolved
which signals further problems.

Africa Asia
Europe/Central Asia
Latin America Middle
East and North Africa

Source: Articulation IIRSA

Institutions

By Marc Dourojeanni

AfDB CAF ADB Bank

of the South EBRD
IDB IFC IMF MIGA
World Bank

In the rapid occupation process of the Peruvian jungle,

characterized in the last decades by road infrastructure, petroleum
and mining exploitation in addition to usual agriculture, cattle
ranching and forestry activities, another determining element has
arisen. It is the exploitation of hydroelectric potential. Presidents
Alan Garca from Peru and Luis Ignacio Lula da Silva from Brazil
formally launched, on April 28th 2009, the race that will culminate
with the operation of an undetermined number of grand dams in the
high jungle rivers of Peru that are mainly aiming at supplying the
insatiable energy demand of the neighboring country.

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News of the signing of a memorandum of intent between Brazil and Stay Informed!
Peru, where amongst its six points has one referring to hydroelectric
possible plants was commented with far more detail in Brazil than Sign up for our ein Peru where it was done almost without anyone noticing despite newsletters.
its very serious geopolitical, economic, social and environmental
importance. In essence, the memorandum proposes allowing Brazil Your email
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to study, finance, build and operate up to six very large
hydroelectric power plants on Peruvian soil to supply its energy
requirements, purchasing a large part of the energy produced in
Peru. The hydroelectric plants chosen by Brazil are Inambari
(2,000 MW), Sumabeni (1,074 MW), Paquitzapango (2,000 MW),
Urubamba (940 MW), Vizcatan (750 MW) and Chuquipampa (800
MW) and, of course, the corresponding transmission lines which
will be integrated into the Brazilian system. The total cost of these
six undertakings will amount to the order of US$ 16 billion dollars
and the first project selected is on the Inambari River, at the
confluence of Madre de Dios, Cuzco and Puno departments at a cost
of US$ 4 billion dollars. Only to give an idea of what it entails
Inambari would, in terms of generation of energy, be the largest
dam in Peru and the fifth largest in Latin America flooding an area
of over 46,000 hectares.
On revising the information one discovers that the actions to be
taken in order to carry out this project were being implemented long
before the signature of the memorandum. According to the media,
two new companies are already working in Peru, the Empresa de
Generacion Electica Amazonas Sur SAC, made up mainly of
Engevix, the main consulting firm in Brazil and Inambari Geracao
de Energia, a consortium made up by Brazilian state-owned
Eletrobras and Furnas and the construction company OAS, also
Brazilian. They apparently already have a credit of US$ 2,5 billion

from the Banco Nacional de Desenvolvimiento Economico e Social

(BNDES). The studies, carried out by the first of the mentioned
corporations are already being carried out by the equally Brazilian
company PSR Consultant and sub-contractor, according to a
ministerial resolution of Energy and Mines given in June 2008, in
other words a year before the presidential meeting. It could be true
that this was not a state secret but it also undeniable that the
government made no effort to divulge this important event affecting
the nations future. In fact, the six dam projects are not new. They
were already proposed in the 70s based on a study made by a
specialized company (Lahmeyer-Salzgitter) with financing by the
German government (GTZ) and the World Bank. In this regard,
numerous possibilities were detected of the 14, which are priorities.
Brazilians chose 6 of these, which were most convenient.
At this point without major information, it is difficult to evaluate
whether the undergoing negotiations for Brazil to develop and
exploit Inambari and the other dams will represent a benefit for
Peru. What is evident is that the construction of large dams on the
Amazon rivers will have enormous economic repercussions in terms
of external debt and obviously, extreme environmental and social
impacts. There is countless information on those impacts especially
on Brazilian Amazon conditions and, truly, they require reflection
long before they embark on construction of them. Their direct
impacts include the important displacement of humans, economic
changes and social not always positive, flooding of scarce fertile
land, deforestation, elimination of fauna, alteration of the hydro
biologic system and of neighboring land ecosystems, especially
problems of contamination (generation of methane), etc. The
indirect ones are worse and they extend over enormous surfaces that
include invasion of protected areas and Indian territories, more
deforestation since the work will attract more people and energy
facilitates new speculations. All of these problems will be even
more serious in the sui generis conditions of the high jungle, since
the valleys are narrow and their biota elements are rare and many
are endemic.
The corporations involved have already announced some of the
results of the environmental impact study of Inambari. It,
predictably, says in essence, that there is no problem and if there
were any, they are easily resolved. This is highly unlikely when we
already know, for example, that the reservoir will flood all the
existing agriculture in the area, as well as the illegal gold mining
and various populated centers which, also, due to the characteristics
of the valley, will be unable to be reallocated appropriately. We also
know that it will flood between 90 km and 150 km (depending on

the final altitude of the dam) of the recently built Interoceanica

highway whose cost is very high and paid by Peruvians. The abrupt
slopes of the region are not stable and can affect the reservoir.
Worst of all is that it will also flood part of the buffer zone of the
Bahuaja-Sonene Park and that, in order to rebuild the road, this will
be very close to the Park itself gravely threatening its future. We
already know, through studies in the same Basin, that many of the
fish species including some rare ones will be drastically affected.
The impact of the other dams could be greater or smaller of than
that of Inambari, but they will not be spared and even worse their
effect will be accumulative. In Brazil, for example, the dams have
left a large part of the country without rivers to be exploited with
one or more construction works for energy purposes, with most
serious and documented social and environmental implications.
They have generated, for example, the important popular movement
called Movimento dos Afetados pelas Barragens (MAB) that calls
for a fair treatment of the victims of these construction works and in
order for it to be acknowledged invades and occupies installations
of the corporations.
The problem then is most important and before starting the work, as
seems to be the case, must be discussed on a national level and not
only exposed in a short manner at a local level in small meetings of
misinformed farmers where the supposed benefits at emphasized
and the problems are swindled. The questions Peruvian promoters
of the works must reply to be basically three:
1. Which is the present sate of the negotiation or the present level of
Perus commitment with corporations, and the Brazilian
government in the case of Inambari and of the other projects? Is
there still a possibility to discuss the subject or to find other
alternatives?
2. To what extent the advancement of the feasibility studies of
Inambari, without pre- feasibility studies, including social and
environmental aspects, does not show that the construction work
already decided, compromising the option of not carrying out the
work if its impacts are excessive, as the environmental legislation
indicates?
3. Which will be the benefits for Peru of a hydroelectric program
which, as informed, will be studied, financed, constructed and
operated by the neighboring country who will buy the vast majority
of the production? Do they not imagine the risk that entail waiting

for the hydroelectric power plants to be returned to Peru already

sedimented and obsolete despite the fact that Peru must continue
paying the gigantic loan embarked on?
Brazil and Paraguay are precisely now confronting a difficult
situation with regard to Itaipu that was constructed in similar
conditions to those proposed now for the six Peruvian dams. The
Brazilian argument is that the bi-national agreement signed in 1973
backs their attitude to not pay any more for the energy bought. But
the Paraguayan argument is that they cannot even pay the debt taken
on for the construction because Brazil pays a vile price for the
energy that they buy under exclusivity. It does not matter, in this
case, who is right, but Peru should study deeply this conflict before
embarking on similar long-term international agreements.
It is perfectly reasonable that Peru sells energy that it does not need
to neighbor countries like Brazil, like any country does with this or
any other resource. That is normal, desirable and is part of
continental integration. However before taking a decision,
economic, social and environmental studies must be carried out
which guarantee that the benefits will be greater than the damages,
in other words that it be profitable under those three terms. The
economic benefits must ensure, also, a minimum of social and
environmental damage or adequate compensation. What is more, in
this case a strategic socio-environmental assessment must be made
of the total hydroelectric program of the Amazon region must be
addressed, not only of Inambari. One thing is a dam in the high
jungle and another very different one are 6 to 14 hydroelectric
power plans on the main national rivers. Likewise, on reading the
Lahmeyer-Salzgitter study it reveals that, only in Inambari, there
could be five more dams to exploit the best potential. Each river
in the Amazon could, in effect, be converted into a succession of
artificial lakes, as is the case already on several Brazilian rivers.
The new Environment Minister of Peru must undertake an
independent assessment on this problem and to insist that financial
resources to do this task be allocated.
On the other hand, it is difficult to understand why the Peruvian
government, that is presently confronting a serious social conflict in
the Amazon region, precisely due to lack of information and
discussion of their activities, once again reverts to adopting the
same behavior as for the hydroelectric power plants that are
projected. The only way to legitimize this program is divulging and
discussing it seriously at national, regional and local levels and at
the political, academic and popular levels. We hope that the very
sad experience of the Interoceanica highway, which will be partially

destroyed by the Inambari dam, which was based on poor quality

socio-environmental assessments and useless, since the road was
already being built when these were finalized.

See also
BICECA Brazil Latin America Peru Accountability Energy &
Extractive Industries Environmental & Social Policies Infrastructure
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