VZCZCXRO6849
RR RUEHRG
DE RUEHBR #1234 2821423
ZNY CCCCC ZZH
R 091423Z OCT 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 5204
INFO RUEHGE/AMEMBASSY GEORGETOWN 1704
RUEHCV/AMEMBASSY CARACAS 4428
RUEHPO/AMEMBASSY PARAMARIBO 1831
RUEHRG/AMCONSUL RECIFE 0010
RUEHRI/AMCONSUL RIO DE JANEIRO 8271
RUEHSO/AMCONSUL SAO PAULO 4637
RUEAIIA/CIA WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHDC

C O N F I D E N T I A L BRASILIA 001234 
 
SIPDIS 
 
E.O. 12958: DECL: 07/28/2019 
TAGS: ENRG ECON PREL BR GY VZ
SUBJECT: BRAZIL HELPING GUYANA WITH ENERGY IN VENEZUELA BORDER 
DISPUTE AREA 
 
Classified By: Charge d'Affaires Lisa Kubiske, Reasons 1.4 (b) and 
(d). 
 
¶1. (C) SUMMARY:  Brazil is in talks with Guyana to build a 
hydroelectric plant on the border region of the two countries, in the 
territory disputed between Venezuela and Guyana.  International 
Advisor to Brazil's Minister for Mines and Energy Edison Lobao, 
Ambassador Rubem Barbosa told Econoff on October 5 that in addition 
to augmenting the energy capacity for both countries, and bringing 
Guyana closer politically to its South American neighbors, the 
project would have the effect of allowing Guyana to establish 
government infrastructure in the disputed territory.  END SUMMARY. 
 
¶2.  (C) The idea to build a binational hydro plant in Guyana's border 
region, near the Brazilian state of Roraima, stems from a meeting 
between Brazil's President Lula and Guyanese President Jagdeo on 
September 14 when the two inaugurated a new bridge that will be part 
of the highway linking Brazil to the sea through Guyana.  At that 
time, Jagdeo, apparently aware of similar Brazilian projects, 
including the Itaipu Dam with Paraguay and plans for five new dams 
being constructed with Peru, asked Lula for assistance in meeting 
Guyana's energy needs.  Two weeks later, Lula sent a delegation to 
meet with Jagdeo, led by Energy Minister Lobao who was accompanied by 
Barbosa.  The group included representatives of Brazilian National 
Development Bank and likely project financier BNDES, and the 
Brazilian state-owned electricity company, Eletrobras, which has been 
charged by Lula to pursue foreign operations with a goal of 
increasing energy integration throughout the continent.  Barbosa 
cautioned that talks are still in the initial stages, with 
Electrobras undertaking an assessment of the area to determine the 
potential for such a project. 
 
¶3.  (C) As currently envisioned, the hydro powerplant would generate 
800 megawatts (MWs) of electricity, with 200MWs going to Guyana and 
the rest returned to Brazil.  Brazil would build additional 
transmission lines to channel the excess electricity to the Amazonian 
region of Manaus.  Despite some press reports that the project could 
be completed by 2015, Barbosa felt that not only were such 
projections likely inaccurate, but also premature given the very 
early stage of discussions.  He felt a ten year timeframe was more 
realistic. 
 
¶4.  (C) While helping to meet the pressing energy needs of Guyana and 
the undersupplied areas of Brazil would be the primary reason for 
undertaking such a project, Barbosa confided that the political 
reasons for doing so were also compelling.  Given that the proposed 
hydroplant would be built in the section of Guyanese territory that 
is disputed with Venezuela, Jagdeo, according to Barbosa, sees this 
as an important effort to consolidate Guyana's claim to the area. 
Asked if this wasn't a problematic element of the plan from the 
Brazilian perspective, Barbosa responded that Jagdeo had observed 
that Venezuelan President Chavez had not involved himself in the 
question of the disputed land.  This fact, combined with the ruling 
by a third party arbiteur that the area in question was Guyanese 
land, in Barbosa's estimation provided sufficient comfort for Lula to 
proceed. 
 
¶5.  (C) According to Barbosa, Jadgeo said he is also interested in 
the project as a means of integrating Guyana more into the South 
American community, noting that Guyana's future lies with the region, 
rather than with European allies that Guyana has traditionally relied 
on. Barbosa said that Lula shares this interest and would like to see 
Guyana and Surinam involved in the South American organization 
UNASUL. 
 
¶6.  (C) COMMENT: This type of binational energy project is of growing 
interest to the GOB, despite recent troubles with the Paraguayan 
insistence on receiving higher rates from Brazil for energy from the 
Itaipu dam, to which Brazil ultimately agreed. (Note: According to 
Barbosa, the Itaipu matter is nearing its conclusion but the 
resolution is currently awaiting approval from the Finance Ministry 
which Barbosa said could take a while.  Once obtained, the agreement 
will require Congressional approval, which Barbosa judged to be a 
foregone conclusion.  End note.)  Not only is Brazil looking to 
expand its energy generation capacity, the political efforts are also 
in keeping with Lula's philosophy of building bonds with neighboring 
countries through interdependence for energy security and building a 
South American political bloc, through which Brazil can conduct 
harmonious regional relations while building a base of support for 
its larger international ambitions.   END COMMENT. 
 
KUBISKE