Controversy Churning Over Massive Argentine Dam : Latin America: The joint project with Paraguay is more than 12 years behind schedule. The $10.5-billion cost is seven times the original estimate.

President Carlos Saul Menem describes it as a “monument to corruption.” Its builders call it the powerhouse for Argentina’s economic takeoff.

The Yacyreta hydroelectric complex spanning the muddy waters of the Parana River between Paraguay and Argentina is not only the longest dam in the world but also one of the most controversial.

Dogged by massive cost overruns, profligate spending and accusations of bribes from companies seeking lucrative contracts, the joint Argentine-Paraguayan project is more than 12 years behind schedule and bears a price tag of $10.5 billion--seven times the original estimate--of which more than half is financing charges.

Jose Abraham, appointed in January to head the Argentine management team, has ordered an investigation to pinpoint where the $3 billion spent has gone.

However, he prefers to stress the complex’s importance to the country’s future rather than dwell on the past, which among Argentines has made Yacyreta synonymous with corruption.

“What is important is the magnitude of these works for the benefit of the country. Yacyreta is essential for the ‘Productive Revolution’ which President Menem has promised Argentina. My commitment is to make sure things are done--and done correctly,” he said in an interview.

“At the moment there is no estimate as to the extent of corruption. We have to evaluate it. All I can say is that by 1981, $500 million had been spent and not one sack of cement used.”

At the resettlement project for some of the 7,700 families whose homes will be flooded by a 400-square-mile lake the dam will create, architects said that not only were early house designs unsuitable for the inhabitants but the $13,000 spent to build each unit was nearly double their real worth.

The World Bank, which is funding the program, has demanded that future homes cost no more than $6,500 each.

Abraham hopes that the banks will come up with more than $1 billion in soft financing, which should be enough to complete the first stage of the project.

To put things in order, Abraham has ordered a number of cutbacks. He is slashing the number of administration departments to five from 12, reducing the company car fleet and giving up five of the seven floors that house head office management in one of Buenos Aires’ most prestigious office buildings. Head office staff will be cut to 70 from 280.

However, despite the money problems and labor disputes that stretched the completion date to the mid-1990s from the early 1980s, Yacyreta is slowly moving forward and nearly 70% of the basic construction is finished.

The first turbine should start turning in January, 1994, and the other 19 are to be phased in at 72-day intervals. Yacyreta’s full 2.7-megawatt generating capacity will save the country $650 million annually in oil imports, Abraham said during an interview at the complex.

In late May bulldozers pushed the last few tons of boulders into the Parana’s waters to complete the 40-mile barrier diverting the fast-flowing river from its natural course to the dam’s sluice gates.

When the gates close, the waters will begin to cover an area 10 times the size of Buenos Aires.

The 37,000 affected inhabitants--many of whom make bricks by hand from the bright red soil as a main source of income--will either receive compensation or be housed in settlement projects on both sides of the river.

The fate of the thousands of wildlife species, including monkeys, deer and anteaters, which abound in the subtropical forest and marshland, is less clear.

Ecologists point out that rescue operations could save only a small portion of animals from the rising waters and there is no guarantee that those taken to other areas would survive in a new habitat.

“The history of dams in Argentina has represented a hard blow against nature,” said Claudio Bertonatti of the Argentine Wildlife Foundation.

Even more uncertain is the effect that damming of the river will have on fish that migrate through these stretches of the Parana.

Sport fishermen come from around the world to test the spectacular fighting skills of the golden dorado, which leaps several feet into the air when hooked, or the driving runs of the surubi, a species of fast-water catfish that can top 100 pounds in weight.

Sport anglers, native fishermen and ecologists are concerned that Yacyreta’s proposed fish ladder--a complicated system of catchment pools and elevation tanks that is still to be completed--will be inadequate to preserve the migratory cycle and thus the survival of these and other fish species.