Panama’s federal government has said that it will work with project financiers to replace Generadora del Istmo S.A. (Genisa) as developer of the 29-MW Barro Blanco hydropower project due to repeated environmental and social concerns.

Construction of the run-of-river plant was halted by the Authoridad Nacional del Ambiente (Anam) in February due to environmental impact study non-compliance and disputes with indigenous groups in the Ngabe-Bugle region.

“During the Barro Blanco dialogue process and based on input from the indigenous commission, as well as that from the government technical team, recurring administrative faults and inadequate development were found,” a government statement said.

A panel including government and indigenous representation will be established later this month, the government said, to review the economic, legal and social impacts associated with Barro Blanco as the project moves forward.

A Genisa statement said the company had not been notified of the government’s decision, but that the company is hopeful it can “still reach some type of conciliation.”

Work on the project’s infrastructure is about 90% complete.

Barro Blanco is located on the Tabasara River within Panama’s Chiriqui province. Genisa was awarded a concession for the project’s development in 2007 by power regulator Autoridad Nacional de los Servicios Publicos (Asep) after bidding US$750,000 for the project.

Financing for the US$78 million project is reported as coming from the German Investment Corporation, Netherlands Development Finance Company and Central American Bank for Economic Integration.

Impact of Decisions on Barro Blanco

The decision of the government of Panama to stop execution of the Barro Blanco hydroelectric project with the original concessionaire Generadora del Istmo S.A. (Genisa), which has completed more than 90% of the work, was based on “… recurring administrative failures and inadequate management of hydropower development in that project …” according to “… information provided by the Indigenous Commission as well as the technical staff of the Government. ”

Genisa disputes the allegations pointing to the continuous inspections that the project has submitted to by the international bodies funding the work: the Central American Bank for Economic Integration, FMO and KFW.

The three multilateral development agencies “… considered the suspension measure as extreme, therefore they are requesting that Genisa be authorized to resume work.” … “… this throws into doubt even the arguments made ??by the ANAM to stop the project because … a group of experts monitoring the project’s compliance with social, environmental and engineering standards, did not find that Genisa was in breach of established norms, as indicated by the ANAM when it suspended the work. ” See article on Laestrella.com.pa

Panamanian representatives from business associations have also expressed their concern about the matter: Dagmar Alvarez, president of the Panamanian Association of Business Executives (APEDA), explained that “… The Suspension or transfer of the project could result in a law suit for the State, which would impact all Panamanians directly. “If the company proves that they met all the requirements, it can sue the state, which would harm Panamanians, who ultimately will have to pay through their taxes” … “This conflict will bring uncertainty in the investment sector.”

José Luis Ford, president of the Chamber of Commerce, Industries and Agriculture of Panama (CCIAP), said “… If this is the State’s proposal, then the problem was not with the project, but with the company. Changing the project developer involves compensation from the state to the company that started construction, which will have to be financed by all Panamanians “just because they want to rename the building,” Ford said. See article on Panamaamerica.com.pa

Source: Prensa.com