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GUATEMALA
Hydroelectric projects relaunched
Rebeca Botello
6/23/2005
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Plans for small electric plants advanced to offset dam´s environmental risks.

The residents of Copala, a small community near the banks of the Chixoy River, in the western part of Guatemala between the departments of Alta Verapaz and Quiche, warily watch the arrival of various technicians who are visiting the site where the construction of the Xalala dam began 25 years ago.

The 60 riverside communities here share in the fear that they could be displaced by the dam’s security zone. Equally unsettling is the fact that the river’s water level will decrease. Their fear is well founded.

In April, Guatemala’s National Institute of Electrification (INDE) – a state company that was partially privatized in 1996 – announced the relaunching of three major hydroelectric projects. Xalala and Serchil would be built along the Negro or Chixoy River. The controversial Chixoy dam underwent construction in the 1980s and now accounts for 20 percent of the country’s electrical power. The Chulac dam would be constructed in the Cahabon River, also in western Guatemala on the border between the departments of Izabal and Alta Verapaz. The Chixoy dam’s construction led to the massacre of about 500 natives that opposed the work and the displacement of thousands more.

The projections are based on studies from the 1970s. In fact, Xalalá and Serchil’s construction began the following decade, but have not yet been completed because of technical problems and the internal conflict.

According to Carlos Colom, INDE’s manager, one of the plants could begin construction at the end of 2006, and he predicts that the three plants could be operative between 2010 and 2011.

By the end of August this year, Colom said that technical and financial as well as social and environmental studies will be publicly presented, although there are no plans in place for a consultation, which is required for the ratification of the International Labour Organization’s Convention 169 concerning indigenous people’s rights.

The community of Copala, home to the first generation of displaced persons who returned from Mexico in 1993 to settle in this village, expressed their uncertainties about the situation.

"We built all of this with our bare hands over the past 12 years. And now, what are we going to do? Leave again?" said a community leader who preferred to remain anonymous.

In relation to the financial viability of the projects, Colom confirmed strong interest from both Guatemalan and international investors. Even INDE itself could invest in the project.

According to experts, the Spanish energy company Unión Fenosa, which holds 85 percent of INDE’s shares, could benefit from entering into this new area of electricity generation.

"The purpose of these projects is not to cover an energy deficit because there is already a surplus," Colom says. "At the moment, with 7,000 gigawatts/hour annually (and 1,550 megawatts of real power installed), we surpass the demand. In fact, we are selling energy to El Salvador."

"But it is necessary to keep in mind that demand grows by a rate of 100 to 120 gigawatts/hour each year," he added.

According to Colom, the aim of these new works — which will mean 700 megawatts of power and the production of roughly 3,000 gigawatts/hour more annually — is to stabilize the electricity rates in Guatemala as well as alleviate the country’s dependence on hydrocarbons for the electric generation, which currently generate 65 percent of the domestic electricity.

Colom said that this surplus will be exported throughout the isthmus.

Although INDE points out that at the moment the model of the electric microplants has been rejected, Rafael Maldonado of the Legal, Environmental and Social Action Center (CALAS) considers it one of the least aggressive options, both environmentally and socially.

"This is an opportunity for the communities to take control of their own development", Maldonado said.

According to figures from the Institute of Municipal Development (INFOM), a plant with these characteristics could be self-sustaining in short a short time. An electric microplant of 2 megawatts of power would generate 10 annual gigawatts/hour anually, enough to supply 8,000 homes, each consuming an average of 1,200 kilowatts a year.

The initial investment of US$140,000 could be redeemed in one year if the energy is sold at the current average price of $0.20 per kilowatt. Keeping in mind that the average production cost per kilowatt is $0.07, the municipalities would have a $0.13 profit for each kilowatt, meaning roughly $130,000 annually for local governments.

But according to some experts, there are still some legal obstacles to overcome in order to accelerate this process. Roberto Letona, of the INFOM, says that the law grants price control and distribution conditions to a private entity: the Wholesale Electricity Market’s Management Body.

The generation and distribution companies set the long-term contracts in their own terms. Thus, a small company would then be at the mercy of the conditions imposed by a big distribution company.

"What will a municipality do with the energy it generates? The distributor will still be Unión Fenosa and will absorb the potential municipal earnings", Letona points out.

Letona proposes reforms to the law that advocate for clean energy and seek an agreement with distribution companies. Both Letona and CALAS, hope for a rural development bill that will feature an association of municipalities for hydroelectric management.

"Even this way — Maldonado says — it will be a slow process because it will first be necessary to transform the municipalities into business-minded municipalities, and then into social business-minded municipalities."


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Tunnel supports for the Xalalá dam. (Photo: Rebeca Botello)
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