Ecuador settles disagreement over dam construction with China, yet the venture continues to spark controversy
In a bid to address ongoing issues with the Coca Codo Sinclair hydroelectric plant, the Ecuadorian government has reached an agreement with PowerChina, the parent company of Sinohydro, the plant's original builder. The decision comes amidst concerns about energy sovereignty, transparency, and state capacity, as well as persistent technical issues and ecological challenges.
The hydroelectric plant, situated between the Amazonian provinces of Napo and Sucumbiós, was initially envisioned to transform Ecuador's energy mix and put an end to blackouts. However, since its completion over 19 years and at a cost of over USD 3.2 billion, the plant has largely failed to meet its 1,500-megawatt potential.
The agreement does not represent a concession or privatization of the plant, but a temporary management model to ensure the technical functioning of the system. PowerChina will take over the operational management, with the official handover of maintenance and operations scheduled to be completed by March 2023. As part of the agreement, PowerChina will pay USD 400 million in compensation to the Ecuadorian government.
The plant, operating as a run-of-river plant and dependent on the Coca River, has faced inconsistency in its operations. Moreover, its location in an area with high seismic activity and regressive erosion processes has made it prone to natural disasters. In October 2024, the plant operated at 39% of its capacity; in July 2025, it was temporarily suspended due to sediment accumulation; and in the first seven months of 2025, it was out of operation 19 times.
Efforts to address the erosion of the Coca River have been ongoing since 2020, with Celec, Ecuador's national electricity company, allocating more than USD 150 million to studies, design, consulting, and engineering works related to the issue. The conditions during the past winter in the Amazon increased the river's flow, destroyed containment works, deepened the riverbed, and exacerbated the risk to the infrastructure.
Some political figures outside the government have criticized the decision to hand over the operation of the plant to the same company responsible for its construction. However, Inty Grønneberg, a mechanical engineer and scientist from Ecuador, believes that PowerChina taking charge of the hydroelectric plant is the best solution to ensure electricity supply.
The future of Coca Codo Sinclair remains uncertain, with ecological factors continuing to pose challenges for the plant. The San Rafael waterfall stopped flowing in 2020, casting doubt on the impact of the plant on the erosion of the Coca River. Furthermore, a severe drought is forecast for this year, and power cuts are expected.
Despite these challenges, the Ecuadorian government has decided to end the international arbitration it initiated in 2021 to pursue USD 580 million in damages, due to structural defects in the hydroelectric plant. The government will instead focus on working with PowerChina to improve the plant's performance and ensure a stable energy supply for the country.
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