Category: Chapter 4

Nicaraguan Energy Distribution Returns to State Ownership

Chapter 4 / The energy deficit and privatisation

January 14th, 2021

Chapter 4 of the book ‘The Violence of Development’ and this accompanying website covered the privatisation of the energy production and distribution markets in Nicaragua, and elsewhere in Central America. Given that this website allows for the updating of the issues covered in the book, news of the recent nationalisation of the energy distribution market in Nicaragua should certainly be included here.

The source for this news is the Nicaragua Network of the Alliance for Global Justice, which in turn took its information from Informe Pastrán on the 21st and 29th December 2020. Informe Pastrán serves as a regular daily mouthpiece for the Sandinista government of Nicaragua. Its information is often questioned by opposition figures and movements and by the two major daily newspapers in Nicaragua whose own information is frequently even more like unbelievable baseless propaganda than that of the government.

Key words: Privatisation; nationalisation; electricity distribution; electricity coverage; climate change; liquefied natural gas (LNG).

 

Nationalisation of energy distribution in Nicaragua

On Dec. 21 [2020] the Nicaraguan National Assembly approved the “Law of Sovereign Assurance and Guarantee of the Supply of Electrical Energy to the Nicaraguan Population,” through which electricity distribution is once again in the hands of the State, ending the privatization of this strategic area that was carried out under the government of Arnoldo Aleman [1997 – 2002]. The distributor companies DISNORTE and DISSUR, created in 1999 with the objective of distributing and commercializing electrical energy, received this right of exploitation for 30 years. But, with this law, electricity distribution is now again in the hands of the State, including all the shares owned by TMI S.A. in DISNORTE and DISSUR thus guaranteeing coverage and quality. It is established that “by virtue of this law, … in order to guarantee the continuity of the electric energy service to the Nicaraguan population, the companies DISNORTE and DISSUR will be operated and administered by the institution(s) and/or companies that the State, through that the Ministry of Energy and Mines authorizes or delegates for such purpose.”

When the distribution was privatized several state-owned generators were sold to private corporations at a cheap price. The companies didn’t invest in the sector, and this led to the collapse of the system under President Enrique Bolaños with regular electricity blackouts of 8 to 12 hours a day. At the time, distribution was in the hands of the Spanish company Union Fenosa. The electricity cuts were overcome with the return to government of the FSLN in 2007 and the emergency installation of a 60 MW diesel-based generation plant facilitated by the president of Venezuela, Hugo Chávez. Union Fenosa decided to sell its shares to the Spanish company Gas Natural, which in turn sold to TMI S.A..

Good News for Electricity Sector in 2020 and for 2021

Beginning January 1, 2021, families will benefit from a 12.5% average reduction in electricity rates. The government achieved 98.5% electricity coverage nationwide in 2020; energy was brought to 12,223 new homes and the supply was improved in 6,049 homes, which entailed an investment of US$27.7 million. In public lighting, the goal was surpassed, with 30,046 street lights installed nationwide. This month the Central American Bank for Economic Integration approved US$143 million to strengthen the electricity sector to help achieve the goal of 99. 9% national coverage. Projects will be carried out in the period 2022-2025 to meet that target. US$87 million will be allocated to electrification, which translates into 35,000 illuminated households for which more than 2,000 km of distribution networks will be built.

 

US Energy Company and Nicaragua Sign Deal

The US company New Fortress Energy Inc. announced Dec. 21 that it has signed two long-term liquefied natural gas supply agreements to support its natural gas and electricity businesses in Puerto Rico, Mexico and Nicaragua. “As a company, our goal is to match our LNG purchases as closely as possible to our customers’ volumes, thereby reducing our exposure to changes in the market price of LNG in our portfolio,” said New Fortress President and CEO Wes Edens.

Informe Pastrán noted that Nicaragua could become the new rising star of natural gas in Latin America with the signing of a power purchase agreement between the Nicaraguan energy company and the US company and with the beginning of activities for the construction of a natural gas based plant, which will be located in Puerto Sandino. The plant will be connected to the national grid through the Sandino Substation and its annual contribution will be 2,233 GWh-year. [Note: This power will support Nicaragua’s wind and other renewable energy sources which now provide over 70% of the country’s energy.]

 

Note by Martin Mowforth:

The achievements in the broadening of electricity distribution by the Nicaraguan government since 2007 have been impressive. Similarly, its re-composition of the country’s electrical energy base from one based almost exclusively on fossil fuels to one that is now largely based on the recyclables of wind, solar and geothermal has also been effective, appropriate and economically and environmentally justifiable. Natural gas, however, is a contributor to global warming and should not be seen as part of the country’s drive towards sustainable energy sources. The growth in LNG is incompatible with efforts to address the climate crisis and Nicaragua’s role as “the new rising star of natural gas in Latin America” may not be compatible with its drive towards sustainable energy production and distribution

The Jilamito Hydroelectric Project in Honduras

Chapter 4 / Hydro-electric power

Key words: School Of The Americas Watch (SOAW); Broad Movement for Dignity and Justice (MADJ, Honduras); Jilamito Hydroelectric Project; community opposition; US Development Finance Corporation; IDB Invest; privatisation of natural resources.

The SOAW is the School Of The Americas Watch, a US  advocacy organisation founded in 1990 to protest the training of mainly Latin American military officers by the United States Department of Defence at the School of the Americas (SOA). Since 2000 the SOA has been called the Western Hemispheric Institute for Security Cooperation (WHINSEC). Prior to that time the School Of The Americas had become popularly renamed the School Of Assassins. Most of the Latin American military human rights abusers spent some of their training time in the SOA. In April 2021, along with the Witness for Peace Solidarity Collective, the Broad Movement for Dignity and Justice in Honduras (MADJ) and 60 other US and Honduran organisations, the SOAW sent a letter to US Treasury Secretary Janet Yellen urging the US to oppose financing for the Jilamito Hydroelectric Project in Honduras.

For years, members of local communities, organised in MADJ, have maintained an encampment defending the Jilamito River from this project. They have faced death threats, violence, and criminalisation. The local mayor and other local leaders face criminal charges for defending the river. One month after they were indicted, Carlos Hernandez, the mayor’s defence lawyer, was murdered.

The US Development Finance Corporation (DFC) has publicly stated it will finance the project as part of investing $1 billion in the private sector in Honduras. MADJ has repeatedly denounced threats, human rights violations, and allegations of corruption related to the project. Despite this, IDB Invest, the private sector arm of the Inter-American Development Bank, has approved a $20.25 million loan for the project. The US is by far the largest shareholder of the IDB.

The letter to the US Treasury Secretary noted that there are numerous parallels between the Jilamito Hydroelectric Project and the Agua Zarca Hydroelectric Project, for opposing which Berta Cáceres was murdered. In addition to the violence, criminalisation, and threats faced by project opponents, both projects were approved in the period after the 2009 military coup in Honduras when natural resources were rapidly handed over to Honduras’ elite. MADJ has denounced corruption and irregularities related to the concession process, as well as environmental damages, but unsurprisingly the Honduran judicial system has yet to resolve their complaints.

The US justifies support for projects such as the Jilamito Hydroelectric Project – via so-called ‘development’ banks – by claiming such ‘development’ will prevent migration. On the contrary, the violent, militarised imposition of the US neoliberal economic model – which includes the privatisation of natural resources – is itself a root cause of migration from Central America. This is not ‘development’ – it serves to privatise and concentrate natural resources in the hands of the elite – and is frequently imposed through US-backed militarisation and repression of the communities and organisations who defend their water, land, and rights.

SOAW:  https://soaw.org

A few energy developments in Central America

Chapter 4 / Energy developments in Central America

Compiled by Martin Mowforth for The Violence of Development website.

Photovoltaic panels in Panama

Panama is planning the construction of an electrical energy production plant using photovoltaic panels.

In April, Italy’s Enel SpA company began construction of a 31 MW solar park in Panama’s Chiriqui province. The Madre Vieja photovoltaic (PV) plant is expected to begin feeding power into the local grid in December this year (2021) and commercial operations are planned to start in February 2022.

Madre Vieja will consist of over 68,000 solar panels and should be able to generate nearly 50 Gigawatt hours of electricity per year. That is calculated as enough to offset over 12,500 tonnes of CO2 emissions annually.

 

Solar energy in Guatemala

A solar energy generation park is to be built in the department of Jutiapa, Guatemala. The construction phase is expected to last almost two years and the plant will have approximately 274,000 panels and will be located on a 127 hectare plot of land.

The energy generated in the project will be transmitted through the electrical transmission system to the Jalpatagua sub-station whence it will be delivered to the National Interconnected System (SNI).

 

Promotion of geothermal energy in Central America

The German Federal Ministry of Economic Cooperation and Development (BMZ) commissioned a programme to promote geothermal development in Central America between 2016 and 2020. The Agency in charge of the programme in the region was the Central American Integration System (SICA).

The programme involved particularly the improvement of the perception of geothermal energy as a stable and viable energy source, the clarification of the legal regulatory framework for the development of geothermal energy and support for companies aiming to develop geothermal energy potential.

 

First wind farm in El Salvador

El Salvador’s first wind farm has been commissioned. It is expected to produce 54 MW of electrical energy and is located in the municipality of Metapán in the Santa Ana department.

It will significantly add to El Salvador’s capacity for renewable energy generation and prevent the emission of approximately 200,000 tonnes of CO2 per year. Additionally, it will also help to reduce the country’s dependence on imported fossil fuels and diversify the national energy power grid.

Sources:

  • Central America Data, 18 November 2021, various reported items.
  • renews,14 July 2021, ‘El Salvador commissions first wind farm’, https://renews.biz/70976/el-salvadors-first-wind-farm-commissioned/
  • Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) website (undated), ‘Promotion of geothermal energy in Central America’, https://www.giz.de/en/worldwide/78071.html

 

 

 

BID retira el financiamiento a dos hidroeléctricas en Guatemala

Chapter 4 / Hydro-electric power

Por EFE .  7 de Junio de 2022 – 10:30 HS   El Economista

Palabras claves: Guatemala; Banco Interamericano de Desarrollo (BID); hidroeléctricas; comunidades Indígenas; consulta.

Varias organizaciones no gubernamentales guatemaltecas expresaron su satisfacción por el retiro del financiamiento del Banco Interamericano de Desarrollo (BID) a dos hidroeléctricas ubicadas en el noroeste del territorio.

Las hidroeléctricas funcionaban en el departamento (provincia) de Huehuetenango, situadas unos 300 kilómetros al noroeste de Ciudad de Guatemala, y perdieron el financiamiento del BID desde 2021, según confirmaron las organizaciones en rueda de prensa.

La decisión de retirar el financiamiento por parte del Banco Interamericano de Desarrollo obedece a un informe interno de la misma entidad divulgado en septiembre de 2021, tras investigar la manera en que ambas hidroeléctricas se instalaron en Huehuetenango.

Las hidroeléctricas son San Mateo y San Andrés, ambas pertenecientes a la compañía privada Energía y Renovación S. A. y ubicadas en el municipio de San Mateo Ixtatán ,en Huehuetenango, desde su construcción en 2013.

La colombiana Rosa Peña, representante de la Asociación Interamericana para la Defensa del Ambiente (Aida), dijo durante la rueda de prensa este lunes, en el centro de la Ciudad de Guatemala, que la decisión producida por el informe interno “es un reconocimiento” para las denuncias de las comunidades aledañas sobre las hidroeléctricas.

Peña detalló que la entidad que representa, junto a las organizaciones Plataforma Internacional contra la Impunidad y Gobierno Ancestral Plurinacional de las Naciones Originarias Akateko, Chuj, Popti’, Q’anjob’al, han “venido acompañando” a las comunidades indígenas aledañas en la denuncia contra las hidroeléctricas, planteada oficialmente ante el BID en 2018.

De acuerdo con Peña, el informe interno de la misma entidad y sus recomendaciones “deben servir al grupo BID para aprender lecciones y contribuir a la no repetición de los errores del pasado y que dieron origen a la queja”.

El financiamiento a las hidroeléctricas por parte del Banco Interamericano de Desarrollo fue de 13 millones de dólares y será cancelado debido a que el informe interno señala que se violaron normas de la misma entidad económica regional.

“Lo que nosotros estamos resaltando en este caso es que es el mismo banco el que está reconociendo que ha incurrido en faltas a sus propias normas”, añadió Rigoberto Juárez durante la rueda de prensa, en representación del Gobierno Ancestral Plurinacional de las Naciones Originarias Akateko, Chuj, Popti’, Q’anjob’al.

Las denuncias de las comunidades indígenas aledañas a las hidroeléctricas empezaron desde antes de la instalación de las hidroeléctricas, por falta de consulta popular, y continuaron por el abuso en los recursos naturales, especialmente en dos ríos locales, lo que a su vez se tradujo en violencia contra los pobladores, según medios locales.

IDB withdraws financing for two HEP schemes in Guatemala

Chapter 4 / Hydro-electric power

In June this year, El Economista reported on the withdrawal by the Inter-American Development Bank of funding for two Guatemalan hydroelectric projects (HEPs).

Translated and summarised by Martin Mowforth

Key words: Guatemala; Inter-American Development Bank IDB); hydroelectric projects (HEPs); Indigenous communities; consultation.

 

A number of Guatemalan non-governmental organisations (NGOs) expressed their pleasure that two HEP projects in the north-west of the country had lost their funding from the Inter-American Development Bank (IDB).

The two schemes are the San Mateo and San Andrés HEP projects and both are run by the same private company, Energía y Renovación S.A.. They are both located in the municipality of San Mateo Ixtatán and both were begun in 2013.

The IDB’s decision to withdraw funding followed a Bank internal report produced in September 2021 and based on an investigation of the way in which the two schemes were being installed in the department of Huehuetenango.

In a press conference in Guatemala City, Rosa Peña, a representative of the Inter-American Association for the Defence of the Environment (AIDA), stated that the decision by the IDB “is a recognition of the denunciations made by communities surrounding the projects.” Peña explained that AIDA and other Indigenous and environmental organisations had accompanied the communities and had officially submitted the denunciations to the IDB in 2018.

According to Peña, the IDB’s internal report and its recommendations “must prompt the IDB to learn lessons and must not repeat the same errors from the past.” The IDB’s funding of the projects amounted to 13 million US dollars and will be cancelled due to the internal report’s indication that the two projects violate the bank’s economic norms.

“What we are seeing in this case is that it is the same bank that is recognising that it has broken its own norms”, added Rigoberto Juárez – Juárez represents the Plurinational Ancestral Government of the Akateko, Chuj, Popti’ and Q’anjob’al Original Peoples – during the press conference.

The denunciations of the Indigenous communities neighbouring the HEP schemes began before the installations were producing due to the lack of a consultation of the people, and the abuse of natural resources continued, especially in the location of these two rivers, and the abuse was translated into violence against the local people, according to the local media.

A second crack discovered in Costa Rican HEP dam

Chapter 4 / Hydro-electric power

By Martin Mowforth

In September the Costa Rica Electricity Institution (ICE) announced that a second crack had been discovered in the Reventazón Hydroelectric Dam. ICE officials reported that the crack has appeared in one of the tunnels that links with the reservoir behind the dam and that it could cause a total collapse of the tunnel which would affect the dam’s functioning during repairs.

The first crack was discovered on the reservoir side a few months before the $1.5 billion project was opened in 2016. The dam is an important source of Costa Rica’s energy supply and is often touted as ‘clean’ energy despite the human displacements and ecosystem alterations that such schemes usually cause. Although the ICE boasts about the Reventazón Dam’s productive capacity, it has never lived up to the energy generation levels that were originally projected for it.

The state-owned Costa Rica Electricity Institute (ICE) that operates the facility has been told that the situation requires “urgent and indispensable” action. In December this year [2022] it was reported that international experts were being sought to advise on the issue with the Reventazón dam.

The weekly online paper Tico Times reported that the ICE blames the problems on complex geological problems but also that ICE engineers had acknowledged that they did not understand the nature of these geological problems. When the daily Costa Rican newspaper La Nación asked if the current situation constituted a state of emergency, ICE responded that the situation was “unforeseeable”.

G20 help for Honduras?: Solar power project to combat climate change in Honduras

Chapter 4 / Solar power

A comment

At the 2022 G20 Summit in Bali, Indonesia, President Biden, Indonesian President Widodo, and European Commission President Von der Leyen co-hosted a group of G20 leaders to demonstrate their shared commitment to deepen engagement under the Partnership for Global Infrastructure and Investment (PGII) to accelerate investment in quality infrastructure in low- and middle-income countries around the world and strengthen the global economy.

In line with the G20 theme for 2022, “Recover Together, Recover Stronger,” PGII investments aim to create lasting positive impacts for partner countries, strengthen the resilience of communities, and support inclusive, sustainable development, as well as benefit partners’ economic security and global supply chains. 

Sounds good, doesn’t it? Read on. 

A Solar Development project in Honduras will be funded as a part of the PGII.The Export-Import Bank of the United States (EXIM) is providing a $52 million loan guarantee to J.P. Morgan, who is financing Banco Atlantida’s purchase of $31 million of U.S. equipment for a 53.4 MW solar power project in Honduras. The transaction is the largest-ever solar project EXIM has financed in the Americas. The project will utilize American-made equipment from First Solar Nextracker, Shoals Technologies Group, and Cambria County Association for the Blind and Handicapped.

Apart from the obvious point that the major beneficiaries of the project are US companies rather than Honduran companies – although there will be some small-scale spin-off benefits to local people and companies – this project finance represents another example of mixing public and private finances to promote neoliberal development, in this case in the name of climate change.

Despite the fact that this project promotes solar power, it also promotes a form of economic development that has, arguably, been the single most basic cause of climate change. Using neoliberal financing measures to combat climate change is already a failed strategy and will perpetuate the widening of differences between the rich and the poor of the world.

Offshore oil operations in Belize?

Chapter 4 / Fossil fuels

Martin Mowforth

December 2022

Oceana is an international organisation founded in 2001. It is the largest international advocacy organisation focussed solely on ocean conservation. It campaigns against offshore oil operations, plastics pollution of the oceans, and the use of gillnets and bottom trawling by the fishing industry.

The organisation has an office in Belize and in 2015 it was instrumental in persuading the government of Belize to provide protections for its barrier reef and World Heritage Sites from oil exploration. This was reaffirmed in 2017 when the government passed the Petroleum Operations (Offshore Zone Moratorium) Bill, placing an indefinite moratorium on offshore oil in the country’s marine territory. The Bill is often referred to as a Blue Bond Agreement.

The moratorium is still valid but can be reversed at any time as the language used in the Bill does not explicitly rule out oil exploration. In November [2022] Oceana called a press conference to alert the country to the wish of Prime Minister John Briceño to allow seismic testing which is generally seen as the first step in the process towards offshore oil exploration.

At the press conference, Janelle Chanona, Vice President of Oceana Belize, explained that in a meeting two months earlier Briceño had stated that he wished to proceed with seismic testing. Despite the global praise that Belize had gained for its signing up to the Blue Bond Agreement and its fight against climate change, Chanona pointed out the hypocrisy of now wanting to approve seismic testing.

“We can’t fight climate change and then turn around in the other breath and say but we want to contribute to it by engaging in offshore oil development,” said Chanona. Because of the alarm created by this current governmental position Oceana announced at its press conference that it was launching a petition in order to trigger a referendum on the issue. A petition of ten per cent of the population is required to trigger a referendum in Belize.

The government responded to the Oceana press conference with a statement that included the following: “the government of Belize hereby clarifies that it has not entered into any agreements for seismic studies nor for oil exploration in offshore areas.” In early December Prime Minister Briceño wrote to Oceana Belize reiterating the government’s position and support for the prohibition of offshore oil operations. He also declared the Oceana inspired referendum to be unnecessary and requested that the organisation re-engage with the government to tackle the “many marine conservation challenges that require collaborative action now.”

New solar power deal in Belize

Chapter 4 / Solar power

A Government of Belize (GOB) press release on 4 August this year [2023] announced that the GOB had signed a US$77 million loan agreement with the Saudi Fund for Development (SFD) for the construction of a 60 Mw solar energy plant in Belize.

The agreement will facilitate the construction of the plant along with investment in battery energy storage and the supply and installation of solar panels to reduce carbon emissions from the energy sector of Belize.

Construction of the facility is also expected to result in many benefits іnсludіng lоwеr роwеr соѕts, іnсrеаѕеd ассеѕѕ tо еlесtrісіtу аnd the creation of many јоbѕ.

“Тhе Gоvеrnmеnt оf Веlіzе tоdау mаdе rеnеwаblе еnеrgу hіѕtоrу wіth thе ѕіgnіng оf а UЅ$77 mіllіоn lоаn аgrееmеnt wіth thе Ѕаudі Fund fоr Dеvеlорmеnt, fоr thе соnѕtruсtіоn оf а 60 mеgаwаtt Ѕоlаr Еnеrgу Рlаnt іn Веlіzе,” а gоvеrnmеnt rеlеаѕе ѕtаtеd.

The release also noted that the 60Мw ѕоlаr еnеrgу рlаnt wіll ѕtаbіlіzе thе nаtіоn’ѕ еnеrgу ѕuррlу, rеduсе dереndеnсе оn fоѕѕіl fuеlѕ, аnd рrоmоtе а сlеаnеr аnd mоrе ѕuѕtаіnаblе еnеrgу ѕоurсе whіlе рrоvіdіng соѕt ѕаvіngѕ, еnvіrоnmеntаl ѕuѕtаіnаbіlіtу, јоb сrеаtіоn, аnd іmрrоvеd ассеѕѕ tо еlесtrісіtу tо rurаl соmmunіtіеѕ.

The Saudi Fund for Development (SFD) is a Saudi Arabian government agency that provides development assistance to developing countries. It provides soft loans and grants to finance development projects that enhance economic and social growth and it aims particularly to improve the living standards of disadvantaged communities and to support countries most in need.

The SFD also signed an agreement with the GOB to provide a US$45 million loan for the construction of a tertiary hospital in Belmopan, the country’s capital city.

These agreements and the SFD’s stated aims (as given above) rather contradict the widely accepted public image of Saudi Arabia as an extremely repressive autocracy. The Violence of Development editors make no pronouncements regarding these contradictions. The information is offered here simply because it covers an issue that has the potential to affect the development of Belize.

Sources:

 

Wind energy and power privatisation in Nicaragua

Chapter 4 / The energy deficit and privatisation

In September 2000 plans to bring wind power to Nicaragua were scuppered by the Inter-American Development Bank (IDB) which blocked the Spanish company IBERDROLA from providing this renewable resource.[1] The reason was that the value of the soon-to-be privatised national power company ENEL, would be significantly lowered, since the Spanish company would be able to provide substantially cheaper rates of power than ENEL. The foreign companies bidding to buy ENEL would therefore be allowed to continue to generate power, and pollution, from oil in old facilities which are constantly at risk of breakdown.

IDB officials threatened the Nicaraguan government with the stoppage of all IDB support should they proceed with the IBERDROLA deal. This was almost universally seen as a direct violation of Nicaraguan sovereignty. Despite strong opposition, however, the Nicaraguan government continued to privatise ENEL and agreed that a contract with the Spanish energy company would have negative impacts on the privatisation.

Outwardly, there were powerful interests which did not wish to see the conversion of an energy source that would liberate a country like Nicaragua from spending its scarce foreign exchange resources on importing petroleum to burn in inefficient and pollution-causing power stations.[2]

[1] Environmental Network for Central America (ENCA) (February 2001) ‘IDB blocks wind power in Nicaragua’, ENCA Newsletter No.28, pp.6-7.
[2] Nicaragua Solidarity Campaign (NSC) (Sept 2000) Eco-Alert correspondence, ‘Inter-American Development Bank Blocks Wind-Power in Nicaragua’, nsc@nicaraguasc.org.uk.

Oil exploration in Belize

Chapter 4 / Fossil fuels

In 2005 Belize also became an oil producing nation and Belize Natural Energy Ltd (a US company) was formed to exploit it. Despite the fact that it has no refining capacity and therefore has to continue importing all its oil requirements, for a small country like Belize the chance to provide all its own energy from sources within the country is obviously enticing; and as usual the websites of the oil companies involved all display their commitment to environmental responsibility. There is no difficulty, however, in finding Belizeans who oppose oil drilling and who believe that their country can still provide all its energy requirements from within its borders without oil. APAMO (Association of Protected Areas Management Organisations), for instance, is an umbrella group of NGOs involved in managing Belizean protected areas and has called for a total ban on offshore oil exploration after a map showing oil concession areas was leaked to the press. SATIIM (Sarstoon Temash Institute for Indigenous Management) also expressed their concern to the government about oil development and are calling for a referendum on the issue.

Case study: HEP projects in Panama’s Changuinola-Teribe hydrographic basin

Chapter 4 / Hydro-electric power

Extracted from original text of Chapter 4.

The problems mentioned there by Alida Spadafora [interview] are suitably illustrated in here giving an introduction to a series of HEP schemes currently under construction in the Bocas del Toro province in north-west Panamá. A 2006 report[i] presented a cost-benefit analysis of the four hydroelectric projects. The four dams (Chan 75, Chan 140, Chan 220 and Bonyic) are located in the Changuinola-Teribe hydrographic basin, three projects on the Changuinola River, and one on the Bonyic River. The rivers start in the Amistad National Park and the dams themselves are situated within the Palo Seco Protected Forest.

The required investment for the dams would exceed $538 million, and would result in a combined installed capacity of 446 megawatts. The analysis estimated that the company executing the projects would earn approximately $87 million in yearly profits, which translated into an economic ‘net present value’ of $92 million, representing overall net benefits for Panama. The report concludes that “the projects would most likely be both economically and financially feasible. Nonetheless, they would cause environmental damage in an area of global conservation interest and impose serious hardship on indigenous communities living along these rivers.”[ii] Crucially, they note that these monetary values obscure the environmental and social impacts and costs that the projects would have.

The specific case of one of these four dams, the Chan-75 HEP project, is worthy of further attention as it highlights the collusion of government and private companies and the gangster-like attitude adopted towards affected communities. Perhaps the body count resulting from this case of gangsterism is rather less than in many other case studies given in this book, but the arrogance and the willingness to ride roughshod over local people is as strong as ever. Here we present a few of the benefits and advantages of the scheme as predicted largely by the website of AES Changuinola, the company managing the project. Here we present a few of the social and environmental problems already caused and predicted to occur as a result of the scheme. The latter also lists several articles to which readers are referred for a more in-depth treatment that this case deserves. Several of these articles document the human rights abuses that have been committed against the Ngöbe and the Naso peoples in considerable detail, and in this regard the reader is referred specifically to Cultural Survival’s ‘Dam Nation’ article. These abuses are also considered again in Chapter 8 of this book and reference forward specifically to this website’s items entitled ‘The Ngöbe-Bugle and dam projects on the Río Changuinola‘ and ‘Testimony from the Naso‘ provides further evidence of the gangster attitudes of the Panamanian government and of the companies involved in the development towards the people affected.

Application to the Clean Development Mechanism of the United Nations has been made for subsidies to support the Chan-75 project on account of the savings in greenhouse gases estimated for the project. The application made by AES Changuinola failed to mention the social and environmental impacts or the social opposition to the scheme. In fact it cited “ample support” from local populations, but when the UN Special Rapporteur on indigenous rights visited the project area he found “significant discontent”.[iii] Osvaldo Jordan goes further in his critique of the development: “The Chan 75 hydroelectric project … revealed the monstrosity of the neo-liberal multicultural citizenship regime that had been adopted by the Panamanian state in the 1990s.”[iv] In similar vein, Finley-Brook and Thomas assert that the case demonstrates “hybrid neo-liberalisation as private and state institutions sell formerly collective resources to feed urban electrification and foreign carbon markets.”[v]

Oscar Reyes from Carbon Trade Watch considers the Chan-75 project to be another example that proves the UN’s Clean Development Mechanism is being treated as “a subsidy stream for environmentally destructive projects.” He states that “it risks a lose-lose scenario, where the people and environment of Panama are threatened by a project that would allow industries elsewhere to continue polluting.”[vi]

The issue of the Clean Development Mechanism and the issuing of carbon credits to dam projects is taken up again in greater detail in Chapter 10. 

[i]   Cordero, S., Montenegro, R., Mafla, M., Burgués, I., and Reid, J. (2006) ‘Análisis de costo beneficio de cuatro proyectos hidroeléctricos en la cuenca Changuinola-Teribe’, INCAE Business School, Alianza para la Cooperación y el Desarrollo, Asociación ANAI, and the Conservation Strategy Fund (July).
[ii]   Ibid., p.10
[iii]   James Anaya (7 September 2009) Informe del Relator Especial sobre la situación de los derechos humanos y las libertades fundamentales de los indígenas: Observaciones sobre la situación de la comunidad Charco la Pava y otras comunidades afectadas por el proyecto hidroeléctrico Chan 75 (Panamá), Report presented to the Human Rights Council at the UN General Assembly.
[iv]   Osvaldo Jordán (2008) ‘“I entered during the day, and came out during the night”: power, environment and indigenous peoples in a globalising Panama’, Tennessee Journal of Law and Policy 4 (2) 467-505. [Quote from P.500]
[v]  Op.cit. (Finley-Brook and Thomas, p. 269.
[vi]  Osvaldo Jordan and Oscar Reyes (2008) UN ‘clean development’ money sought for dam that threatens World Heritage Site in Panama, La Alianza para La Conservacion y El Desarrollo and Carbon Trade Watch /Transnational Institute, http://www.tni.org/article/un-%E2%80%98clean-development%E2%80%99-money-sought-dam-threatens-world-heritage-site-panama (Accessed 23/09/2010)