For decades, Ecuador faced severe electricity supply shortages, which became even more difficult after 2007 due to severe droughts. As electricity rationing and shortages  put the country’s energy deficit at the centre of public debate, the government of Rafael Correa (in office 2007–17) developed an ambitious energy transition agenda characterised by the construction of large hydroelectric dams. The Coca Codo Sinclair Hydroelectric Project (CCSHP) was promoted as the centrepiece of this plan.

In October 2009, the state-owned Cocasinclair EP signed an engineering, procurement, and construction (EPC) turnkey contract worth 1.9 billion USD with Sinohydro Corporation—one of the key subsidiaries of the Power Construction Corporation of China (PowerChina). The beginning of construction was conditional on the closure of the financing and the bank’s first disbursement. Almost a year later, in June 2010, the credit agreement was signed when China Eximbank provided a loan of 1.7 billion USD to cover 85% of the total cost  estimated in the EPC contract. Construction started in July 2010 and the dam was inaugurated on 18 November 2016—some 10 months later than the deadline set out in the contract.

Project Impacts

• Employment and Labour Rights: According to official data from Cocasinclair’s parent company, the Electric Corporation of Ecuador (CELEC), during the construction phase, CCSHP generated 6,000 direct jobs and 15,000 indirect jobs. Social conflicts emerged related to noncompliance with labour rights regulations on health and safety and wage issues, as well as issues of discrimination and mistreatment. The breaking point came in December 2014 when the collapse of a pressure well claimed 13 lives.
• Environment: Since the plant became operational, irreversible environmental effects have been observed in the river basin, including changes in ecological water flows, the disappearance of the San Rafael Waterfall, and regressive erosion processes that are now threatening the sustainability of the plant. On the other hand, as a run-of-the-river project, the CCSHP does not include a massive reservoir and thus is not comparable in terms of carbon emissions with typical mega-hydropower projects, where large reservoirs cause deforestation and decomposing matter releases methane. In fact, there is evidence the dam has led to Ecuador decreasing thermoelectric production and electricity imports from neighbouring countries, resulting in a considerable reduction in carbon dioxide emissions. However, scientists warn that hydroelectric plants such as CCSHP are vulnerable to climate change.
• Local Community: No displacement of people or violations of indigenous rights have been reported in relation to this project—unlike many other mega-dam projects in the region. However, local communities have suffered loss of livelihoods, declines in agricultural production for local consumption, and livestock and fishing activities. Although the construction of the project generated employment and boosted the local economy, since the plant became operational, there has been a slowdown in the local economy and an increase in unemployment. Local inhabitants have been unable to resume the traditional work that ensured their subsistence.
• Governance: Social participation in CCSHP has been deficient in terms of both quantity and quality. There is a lack of transparency and access to information. The project has also been tainted by cases of corruption, bribery, and cost overruns.