May 25, 2011 / 12:45 PM / 9 years ago

Brazil's key dam project faces defections - report

* Three consortium members pulling out - Estado

* Pension funds, Eletrobras control Belo Monte plan

* Dam is key to meeting Brazil’s future electricity needs

SAO PAULO, May 25 (Reuters) - Three members of the consortium that will build Brazil’s Belo Monte dam in the Amazon are pulling out, unhappy with the growing state control of the project, the newspaper O Estado de S. Paulo reported on Wednesday.

Galvao Engenharia, Serveng and Cetenco, which were part of the original group that won the right to build the massive dam, have asked to exit the project, Estado reported, without saying how it obtained the information.

A fourth company, Contern, could follow suit in coming days, Estado said.

Belo Monte is one of nine hydroelectric dams being planned in the Amazon and is part of the largest development strategy for the region since the 1964-85 military dictatorship drove muddy roads through the world’s largest rain forest.

Belo Monte would be the world’s third-largest hydroelectric dam, according to government data.

Estado said the chief reason behind the companies’ withdrawals was the growing state stake in Belo Monte. State-controlled power holding company Eletrobras (ELET6.SA) has a 49.9 percent stake in the project, while state-run pension funds own about 18 percent.

With their stakes shrinking and financial liabilities growing, the companies decided to look for a buyer for their stakes, Estado reported.

Calls made to Galvao and Cetenco were not immediately answered. Efforts to reach spokesmen at Serveng and Contern were unsuccessful. (Reporting by Guillermo Parra-Bernal; editing by John Wallace)

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