The construction phase faced a two year delay due to multiple reasons including delays related to environmental permitting and associated conditions, adverse site conditions, tropical weather and protests. The majority of the delay was due to the environmental permitting taking significantly longer than expected. As a result of the delays, the revenue earning period was reduced since the contract period was fixed (subject to any successful economic and financial rebalancing claims).

Before the full entry into operations, the Project Company submitted a formal claim to the Procuring Authority for economic and financial rebalancing. The Project Company claimed a loss of BRL 418 million, which would have required an increase of 45% in the RAP to cover. The requested compensation and rebalancing was based on several claims, including in relation to: 19 months of delay to obtain environmental permits, additional construction costs caused by work stoppage due to tropical weather, compliance with additional environmental conditions, delays due to social protests and cost overruns on the erection of the towers crossing the Amazon river and interfacing issues with the Belo Monte power plant. In addition, the Project Company was also requesting a contract renegotiation with respect to the profit share mechanism on the PPP contract with respect to third party services and from the sale of carbon credits.

After reviewing the basis of the petition, the Procuring Authority concluded that responsibility for construction delays was with the Project Company as it had agreed to take on the construction risks when signing the PPP contract. The Procuring Authority also decided to continue with the requirement to share profits earned from third party services; however, it was agreed that the Project Company is not obligated to share its profits from carbon credit trading.

As the parties could not reach an agreement on all claims, the Project Company escalated the dispute to court in accordance with the dispute resolution mechanism defined in the contract. As of the writing of this case study, the dispute is still in court.