Brazil’s planned 11.3GW Belo Monte hydro project is under threat after a major consortium formed by local construction companies Camargo Corrêa and Odebrecht dropped out of the process to bid for the plant, Adriano Pires, director of consultancy Centro Brasileiro de Infraestrutura (CBIE), told BNamericas.

“This is a very bad sign. Camargo Corrêa and Odebrecht are the companies that best understand the construction of hydro plants in Brazil,” Pires said. “Camargo Corrêa spent 10 years analyzing the Belo Monte project, and if now they are abandoning it, then that is a serious issue.”

Camargo Corrêa and Odebrecht determined that the project did not make financial sense after assessing the guidelines for the bid, according to a joint statement.

Brazil’s federal audit court (TCU) had already increased the price ceiling for Belo Monte to 83 reais/MWh (US$46.68/MWh) from 68 reais/MWh, BNamericas previously reported.

The auditing body revised investment calculations for the hydro plant, increasing the estimated cost to 19bn reais (US$10.7bn) from the 16bn reais stated by the mines and energy ministry last year.

“The costs are underestimated. For the 3.3GW Jirau hydro project, the ceiling is at 91 reais/MWh. You cannot set a lower price for a plant nearly four times bigger,” Pires continued. “The government will probably have to reassess the whole project and set more realistic costs or it will end up losing all participants involved in the bid.”

The Belo Monte plant will be built on the Xingu river in the Amazonian state of Pará. It is the main project of Brazil’s federal infrastructure program known as PAC.

According to Pires, the hydro project is facing serious challenges from growing environmental opposition and political disputes. “Belo Monte, as it is currently planned, will not be feasible to anybody,” he added.

Pará state prosecutor’s office is currently planning to file a complaint against the project.

“The Belo Monte project must respect the law and take into consideration local concerns discussed in public hearings,” a spokesperson for the prosecutor’s office said earlier in the week.

The prosecutor’s office also said the project has failed to meet the conditions of article 176 of the Brazilian constitution, which stipulates the government can allow the use of water resources that impact indigenous lands only by passing a specific law.

According to local reports, more than 100 organizations have submitted formal complaints against the project to the United Nations.

The Belo Monte tender is expected to take place on April 20.

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