LONDON (CP) _ A dam in Belize backed by a Canadian company is fundamental to the country's economic development, Belize's attorney general said Thursday as he warned of dire consequences if the project is delayed by Britain's Privy Council.

As a poor country, Belize relies on foreign investment to build public projects, but Godfrey Smith fears that money would evaporate if the Privy Council orders the dam to undergo a second environmental assessment, possibly postponing its construction for years or even causing it to be abandoned.

"Belize simply cannot afford for the world financial community to know that there is this kind of indecisiveness,'' he told a five-man judicial committee hearing an appeal of the case brought by a coalition of environmental groups.

The Chalillo Dam on the Macal River has been approved by local environmental protection agencies, but the Belize Association of Non-Governmental Organizations (BACONGO) believes plans for the hydroelectric project
are flawed.

BACONGO says the dam's approval was granted on plans that showed
it would be built on granite, but geological surveys indicate the site chosen
for the dam consists of sandstone and shale, raising questions about its safety.

The group wants the Privy Council to order a new environmental
assessment.
 

Construction on the project, which is upstream from the town of San Ignacio, began earlier this year.

The Belize Electric Co. Ltd., or BECOL, a subsidiary of Newfoundland-based Fortis Inc., concedes that bedrock was originally misidentified as granite, but it says the sandstone at the site can safely support the dam.

The environmental groups also argue the $30-million US project will damage surrounding rainforest that has been left untouched by human beings for 500 years and destroy the habitat of threatened species, including jaguars, tapirs and scarlet macaws.

The Privy Council _ which serves as the final court of appeal for Belize _ reserved judgment on the case Thursday. It could be weeks before a judgment is issued.

Smith said the dam has public support in Belize, arguing that the project was part of the governing party's manifesto on economic development in elections held last March, which resulted in a majority government.

Because Belize doesn't have the financial resources to build the dam, Smith said it had to look for outside help.

Fortis is a holding company that operates seven electric companies in Newfoundland, Prince Edward Island, Ontario, the Cayman Islands and New York.

Its wholly owned subsidiary, Fortis Properties, owns hotels, office buildings and malls throughout Atlantic Canada.

Under terms of the deal it negotiated to build the dam, Belize Electricity Ltd. (BEL) _ a company partly owned by Fortis that distributes electricity _ is required to purchase all the power generated by the dam, even if it can buy it cheaper elsewhere.

BECOL and BEL have also been granted generous indemnities on the project.

Smith defended the deal, saying foreign companies had to be assured of a return on their investment in order to attract them to Belize.

"If the government of Belize had the financial wherewithal to build the dam ourselves, we would have done so,'' he said.

Belize currently gets about half of its electricity from neighbouring Mexico.

Smith said while the dam will not necessarily provide cheaper power to the people of Belize, it will stabilize prices in the long term by making the country less reliant on imported power.

"It is not in our national security interests to rely on a
foreign country for half of our electricity needs,'' he said.
 

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