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Victor Paranhos, President, Energia Sustentavel do Brasil (ESBR)

Victor Paranhos, President of Energia Sustentavel do Brasil (ESBR), talks about Brazil’s continuous efforts to build eco-friendly, renewable energy sources, and how more and more companies are relying on local talent and expertise, increasing employment opportunities for the local population. 

ESBR won the concession for Jirau in 2008 and you were appointed to take on this magnificent project, which is planning to see its 50 turbines running by June 2015. Could you give an insight into the scope of this project and what has been on your agenda to meet the deadlines?

Energia Sustentável do Brasil is responsible for the construction of Jirau Hydro Power Plant on the Madeira River, in the state of Rondonia. This project pursues Brazil’s vision of clean and renewable energies and provides the essential energy for the country to grow. Moreover, at Jirau we are promoting local sustainable development schemes and limiting GHG, Green House Gas emissions.

Jirau is composed of two large powerhouses and a new asphalt core dam. The first powerhouse holds 12 Chinese power turbines and another 10 will be installed before the conclusion of the project. The second powerhouse incorporates 28 turbines with the main equipment providers consisting of ABB, Alstom, Siemens, Voith and Andritz. Jirau’s hydropower dam is today 89 percent accomplished. All the civil construction work has been concluded and the first 75 MW turbine was commissioned for commercial operation on September 5th. In November, five turbines will be commissioned at the same time. Full commissioning of all 50 generation units is expected to be reached by 2015.

This project is a true challenge, as a plant of this magnitude with so many turbines has never been done.

With government priority set on renewable energy sources, how will the country manage to fulfill its thirst for energy—around 6000 MW to be added every year to the grid?

All energy sources need to increase in order to meet the growing energy demand of the country. Of course, hydro will continue to represent our main source and considering the potential located in the Amazon region, we should be taking advantage of these natural resources. The biggest challenge in this region is to obtain the environmental and installation license. Hence, during the wet season, it is technically impossible to undertake construction works in the region, which restricts project development. Besides the construction side, the logistic conundrum brings greater challenges as bringing equipment from as far afield as China demands good connectivity and robust means of transportation.

Brazil’s PAC (Accelerated Growth Program) and PAC 2 were engaged to reinforce Brazil’s SIN, National Interconnected System, and ensure the sustainability of energy throughout the country for the future. What are your views of this program’s benefits for the country and what needs to be improved?

The PAC programs have been of great support to the hydro sector, as well as to wider energy infrastructure projects spread across the country. In this sense, PAC has helped reduce federal taxes such as PIS and COFINS on the equipment needed in the construction process. These federal taxes in combination with state taxes such as ICMS represent 50 percent of the cost of Jirau’s energy.

Whereas, we need to implement stable and fixed rules from the beginning of the project and avoid changing existing measures which causes significant increases in a project’s cost. For example, Jirau experienced a new problem when the state government decided to change ICMS’ tax rate, which increased our cost by USD 200 million. Our investors in Brazil must have a clear vision of what will be their future costs.

Finally I think the environmental licensing should be simplified. A project like Jirau for instance, demands over 20 environmental licenses, which need to be annually renewed. In Germany, only three licenses are needed for a hydro project. I believe we can keep the same amount of environmental and social protection without requiring so many licenses.

Hydro projects are featured as affecting the environment and its communities, yet the reality is that such projects bring development, wealth, infrastructure and human dignity to these areas. Explain how this is true of hydro and Jirau in Brazil.

Jirau constructed a new city named Nova Mutum Parana, complete with 2,000 private homes, three schools, nine churches, a bank, entertainment facilities, a shopping center, supermarkets, food courts, and a hospital, all covered by a water supply and sewage system. This represents our engagement with the local communities; we are investing to foster better living standards. Ultimately a hydro project brings a positive outcome to neighboring communities and we want to make sure that everyone gets some benefit from of Jirau.

At the construction site, most of the workforce was hired locally and received a high level of training. Around 30,000 people are being trained in Jirau, from civil construction to operating and maintaining electrical and mechanical equipment.

Jirau has 34 social and environmental programs, which include protecting biodiversity, communicating with stakeholders, maximizing positive socioeconomic impacts, public health, educational system and sustainability certificates.

Protecting biodiversity is fundamental and we embrace conservation of fauna and flora programs as well as individual animal protection programs.

In total USD 17 million were invested in the protection of Mapinguari National Park, bordering Madeira River where Jirau is implanted, focusing on land regularization and protecting the area from deforestation.

Communicating with stakeholders is vital as our projects bring substantial changes to the area. A Sustainability Committee has been created to address issues relating to environmental programs in a transparent and participatory manner with the Jirau area community at the heart of proceedings in the area. Quarterly meetings are organized with the committee including groups of indigenous persons, and covers fishing activity, culture, leisure, tourism, epidemiology, mining activities and others.

In the attempt to maximize socioeconomic benefits, USD 104 million were invested in partnership with the Rondonia and Porto Velho governments to improve the area’s infrastructure, education, health, tourism and security.

Due to our investments, the region’s public health system has greatly improved, and today Porto Velho is no longer considered a municipality of high transmission Risk of Malaria.

Many social projects have also been brought forward in cooperation with farm producers, assisting them with the commercialization of agricultural products, providing new farming equipment, enabling seed collection for replanting of plants, developing fish farming and organic agriculture.

Mainly, the future of this region lies in the hands of its young ones. For this reason, in 2011 we started a new preventive program, facilitating health, education, and social responsibility initiatives aimed at younger generations. This project alone named INMED reaches over 2,000 children and we are currently waiting the approval to develop this program in four indigenous communities (Kaxarari, Igarapé Lage, Igarapé Ribeirão and Uru-Eu-Wau-Wau). Though these communities are distant and not directly affected we want to make sure that they benefit and that their culture and health is strengthened.

Jirau has been assessed by independent auditors, according to the Hydropower Sustainability Assessment Protocol which, has been developed by an international multi-stakeholder group with NGOs such as WWF and Oxfam, to evaluate the sustainability of hydropower projects and to seek a better communication with stakeholders. This resulted in 20 topics being defined including integrated water resource management, transparency, climate change and human rights amongst many others. What stood out of this assessment program was that Jirau performed highly on almost all criteria.

In addition to this contribution to local environment and society, the project also contributes to the mitigation of global climate change. In this respect it is important to mention that the United Nations Framework Convention on Climate Change (UNFCCC) registered the Jirau HPP on May 17, 2013 under the Clean Development Mechanism (CDM). The renewable energy produced by Jirau will allow a reduction of up to six million tons of CO2 emissions annually as it will reduce the need to dispatch (or build new) fossil fueled power plants. Jirau is the largest renewable energy plant ever registered and it demonstrates the sustainability of the project.

If we were to come back in five years’ time, how would you like us to see ESBR in Brazil?

I hope that the city we have been constructing, Nova Mutum Parana, will attract foreign investors in this area who will be willing to hire local citizens and thus value the education and skills they acquired during the Jirau development for further employment opportunities. My role as the president of this company is to first make sure that operations run smoothly but it is also to make sure that our actions offer better life standards for the local communities.

Jirau, as other hydro projects do, offers great opportunities to Brazil, especially since hydro is the cleanest and most reliable and sustainable source of energy. Although this energy is abundant in our country, there are still obstacles in our way to grasp its full potential. I want to highlight to the world how Jirau will transform this region into an attractive place to live, contributing to the protection of the Amazon and that Jirau exemplifies the reasons we need to keep investing in similar projects. If I achieve this, my purpose will be fulfilled.

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