Belo Monte $11 Billion Dam, Financing Are Halted by Brazil Federal Court

A Brazilian judge ordered a halt to construction of the $11 billion Belo Monte hydroelectric dam in the country’s rainforest and prohibited the state development bank from financing the project, a federal court said yesterday.

Construction should be frozen until all the environmental criteria are met, according to a statement on the website of Justicia Federal for the state of Para. Twenty-nine conditions weren’t met and four others were only partially completed, the statement said.

Belo Monte, criticized by “Avatar” director James Cameron last year because of its potential environmental damage, will flood 516 square kilometers (199 square miles) of rainforest and require relocation of about 1,000 Indians. The dam, set to be the world’s third biggest, is part of the government’s plan to boost energy supplies as Latin America’s biggest economy grows at the fastest pace in two decades.

A group led by state-owned Cia. Hidro Electrica do Sao Francisco, a unit of state-run Centrais Electricas Brasileiras SA, known as Eletrobras, won the rights to build and operate the dam last year.

Calls to Eletrobras’s press department outside of regular business hours weren’t returned.

Banco Nacional de Desenvolvimento Economico e Social, the state development bank, approved in December a 1.09 billion-real loan to Norte Energia SA, the holding company for the project.

The G1 website reported the court’s decision earlier.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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