Ecuador drops the conflict concerning hydroelectric energy production with China.
The South American nation of Ecuador has reached an agreement with PowerChina, the parent company of Sinohydro, for the Chinese conglomerate to assume operation of the Coca Codo Sinclair hydroelectric plant. This move comes as the country grapples with a severe drought, power cuts, and the plant's intermittent operation due to its river-based design.
The Coca Codo hydroelectric megaproject, initiated in 2006 and partially inaugurated in November 2016, spans the terms of four presidents. The plant, located in a high seismic activity zone and a valley prone to natural disasters, was backed by a loan of 1.7 billion dollars from the China Export-Import (Exim) Bank. The agreement with PowerChina is not seen as a concession or privatization but a temporary management model to ensure the technical functioning of the system.
The plant, designed to provide 8,700 gigawatt-hours of energy per year, has faced power outages in Ecuador, running at only a third of its capacity during a period of up to 14 hours of power cuts per day in 2024. Over 17,000 cracks, faulty valves, and improperly installed components have been detected since operations began. Last winter's conditions in the Amazon increased the Coca River's flow, destroyed containment works, and deepened the riverbed, exacerbating the risk to infrastructure.
The regressive erosion of the Coca River has destroyed nearby infrastructures and is approaching the hydroelectric plant's water intake. As part of the agreement, PowerChina will disburse 400 million dollars in compensation to Ecuador. From 2020 to the present, Celec, Ecuador's state-owned electric company, has allocated more than 150 million dollars in studies, design, consulting, and engineering works related to the erosion of the Coca River.
The decision to hand over the operation of the plant to PowerChina has been criticized by political figures outside the government. However, Inty Grønneberg, an Ecuadorian mechanical engineer and scientist, believes that PowerChina taking charge of the plant is the best solution. PowerChina, a company specializing in the construction and operation of hydroelectric plants, has a proven track record of similar projects worldwide.
In exchange for PowerChina's management, Ecuador will put an end to the international arbitration it initiated in 2021 to claim 580 million dollars in damages due to structural defects in the hydroelectric plant. Almost a third of Ecuador's electricity during the 2024 drought came from the partially functioning Coca Codo hydroelectric plant.
As the country faces a severe drought and the threat of power cuts, the agreement with PowerChina offers a glimmer of hope for Ecuador's energy security. For the latest updates and specific details about this project, it is advisable to consult the latest press releases or official statements from the involved parties.
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