Cacu-Barra do Coqueiros fate in doubt

Power transmission costs could make the construction of the US$120mn, 155MW Cacu-Barra do Coqueiros hydro project uneconomical for the Brazilian division of Canadian aluminum maker Alcan, a company official told BNamericas. The company plans to begin work on the project next year, Alcan Brazil's energy department manager Claudio Campos said. "The problem is the cost of transporting energy. Without control of the cost of transporting energy from Cacu-Barra do Coqueiros [in central state of Goias] to our smelters [in Minas Gerais], the investment does not make sense. The cost of the toll charged to pass energy through [Minas Gerais state power company] Cemig's grid is very expensive," he said. Another issue disrupting construction is a lawsuit from an environmental group demanding an impact study be carried out before work is begun, Campos said. "How can [electric power regulator] Aneel auction off a concession without first completing the environmental study on the area? They should first complete the study before auctioning a concession," he said. The project is pivotal in increasing the company's self-generation capacity, which would reach 60% upon Cacu-Barra do Coqueiros completion in 2007. "Alcan's smelters are old, and to keep them competitive we have to increase self-generation," Campos said. This month Alcan is starting operations of the Furquim (6MW) and Caldeiroes (14MW) plants, he said, adding that by year-end its 50% owned 140MW Candonga project will be completed. Rio de Janeiro-based mining company CVRD owns the other 50% of Candonga. Campos criticized the new electric power model being drawn up by the federal government. "The government still has not been able to respond to a series of questions we have about how the new model will operate. Also the tax burden is very high and could increase, which will up the cost of electric power," he said.