Chalillo dam proposal in Belize

Economics: Chalillo Dam is a poor investment for Belize

The Chalillo dam project is a lose-lose plan for Belize.

A study by John Reid, economist at the Conservation Strategy Fund concludes: "The Chalillo dam proposal is not economically viable. The economic cost of $20.4 million would exceed benefits by approximately $5.4 million."{1}

Current estimates of the dam's cost have already increased to $30 million US, meaning that losses from the project are even greater than previously estimated.

Belizeans energy rates are the highest of neighboring Central American countries; the high rates are in large part due to the construction costs of the existing Mollejon dam.

Even consultants for the project proponents could not justify the Chalillo project's economics.

According to a feasibility study by consultants for Fortis and the Belize government, "The benefits of the Chalillo dam project are significantly lower than the costs and the project is not economically attractive with the present Mexican prices. The Mexican prices would have to increase by approximately 70% from their current levels before the project comprising the dam only becomes viable." {2}

Less costly alternatives are available.

Other sources of energy, including Biomass produced from Belize's sugar cane industry, can be developed within Belize. Energy from Mexico, imported through the recently completed transmission line is far less expensive than hydro-power.

A conference on energy alternatives was held in February, 2000 by the Belize Alliance of Conservation NGOs (BACONGO). This conference urged Belize to create a comprehensive energy policy, and review all energy generation options.

Belize's monopoly electricity company Belize Electricity Limited (BEL) is now owned by Fortis, Inc, based in St. John's, Newfoundland, Canada. Belizean law requires regulation of energy rates and production options by a "Public Utilities Commission". This Commission could investigate alternatives, but it has not had a public meeting in years.

A better solution to Chalillo: Bagasse

The Belizean Sugar Cane Industry has proposed the production of energy from a fermentation process to produce a flammable gas known as "Bagasse".

Bagasse is a relatively clean-burning fuel, and could produce approximately twice the energy expected from the Chalillo dam.

In addition, Bagasse production would help support a native Belizean industry which employs nearly 8,000 workers.

In contrast, the dam is likely to create fewer than 50 permanent positions. The majority of workers who built the Mollejon dam in Belize were from China.

All publicly available economic studies have reached the same conclusion: the Chalillo dam is a poor economic investment for Belize.


{1} Web site

{2} Agra-CI consultants report, 1998