Thursday, January 24, 2013

Chinese hydropower plan sparks tension in Honduras

Chinese hydropower plan sparks tension in Honduras

16 January 2013, IHS Global Insight Daily Analysis. By Laurence Allan.

Hondurans resident in the central eastern department (province) of
Olancho yesterday (15 January) demonstrated in support of demands for
the payment of compensation agreed between local landowners and the
owners of a major Chinese-funded hydroelectric scheme. The scheme,
Patuca III, was agreed in early 2011, and according to Miguel Navarro �
the president of the Land Owners Group of Patuca, the municipality in
which the hydro scheme is located � less than 40% of landowners have to
date been paid the compensation agreed with the government of President
Porfirio Lobo. This was part of an accord that was supposed to see a
total of USD 70 million paid to compensate landowners by October 2012.
The scheme will see the construction of three separate dams on the
Patuca river, generating up to 524 MW, according to the memorandum of
understanding signed between the Honduran government and the Chinese
operator Sinohydro.

The construction of the Patuca hydro scheme has been mooted by Honduran
governments over the past 15 years, and is seen as a significant step
forward in developing the Honduran energy matrix, which at present is
heavily dependent on imported oil. This is one reason why the Honduran
government has been keen to be re-admitted to the Venezuela-backed
regional Petrocaribe oil scheme, despite being of distinct political
style from the Venezuelan government. The hydro project is located in
the home department of President Lobo (and of deposed former president
Manuel Zelaya), which is likely to make the issue of compensation
payment to local residents especially salient to Lobo.


Hondurans demand pay for expropriated lands
AFP, January 15, 2013


Government expropriated properties from 400 landowners for the
construction of a hydroelectric plant in 2011, but paid only 40 percent
of the agreed amount.

TEGUCIGALPA � More than 100 Hondurans on Tuesday demanded the government
of Porfirio Lobo pay some $70 million in compensation for the
expropriation of 10,000 hectares in the department of Olancho, where a
hydroelectric plant project is being developed by a Chinese company.

"You want the Patuca III project? Then pay," read some banners carried
by residents of Patuca, a town located 220 miles east of Tegucigalpa,
where the project is been built.
The government signed an agreement on Feb. 2, 2011, to pay compensation
by last October, but landowners have received only 40 percent of the
agreed amount, according to Miguel Navarro, president of the board of

Navarro said the dam reservoir and infrastructure will cover some 10,000
hectares expropriated by the government from 400 owners, who he said are
still owed $70 million.

On April 16, 2011, the Honduran government signed a $50.5 million
contract with Chinese firm Sinohydro � one of the world's largest
hydroelectric companies � for the construction of the first stage of the
project, which began a month later, despite the lack of diplomatic
relations between the two countries.

The funds were invested in the construction of a tunnel to divert the
powerful flow of the Patuca River, as well as camps for workers and an
improvement in access roads to the mountainous areas.

A new $350 million contract for the second phase is expected to be
signed in coming months to build the dam that will form Lake Patuca, and
for the installation of turbines and engine rooms, so that the first
tests can be carried out in October.

The plant will generate 104 megawatts per hour in the first stage, later
expanding to 600 MW per hour.

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