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Finnfund condemns the murder of an environmental activist. The criticised hydroelectric power plant is developed responsibly.


Berta Cáceres, leader of the Council of Indigenous Peoples of Honduras (COPINH) that opposes the Agua Zarca hydroelectric plant project, was murdered in Honduras on 3 March. The project is co-financed by Finnfund. This is a shocking crime strongly condemned by Finnfund.

Berta Cáceres, leader of the Council of Indigenous Peoples of Honduras (COPINH) that opposes the Agua Zarca hydroelectric plant project, was murdered in Honduras on 3 March. The project is co-financed by Finnfund. This is a shocking crime strongly condemned by Finnfund.

At the moment, the information spreading about the perpetrators and motives of the murder is conflicting. However, the internal political situation in Honduras is tense, and, unfortunately, the country has a strong culture of political violence. COPINH has been criticising the national government about the exploitation of natural resources and made claims that, for example, the rights of the ethnic Lenca minority have been violated. COPINH has also repeatedly criticised the Agua Zarca power plant project using these arguments. Demonstrations have been held against the project. Use of violence has occurred in connection with the demonstrations, but the parties concerned have presented very conflicting descriptions of the events. The co-financiers in the project, including Finnfund and the Netherlands Development Finance Company (FMO), have emphasised the importance of hearing all parties and settling any conflicts peacefully, striving to influence the matters accordingly. Guards and police forces that have protected the project during demonstrations and other such events have been advised to avoid use of force.

The Honduran company DESA (Desarollos Energéticos, S.A.), developing the Agua Zarca project, has already been publicly accused of Cáceres’ murder. However, based on currently available information, there is no confirmed information on the identity of the murderers. Finnfund expects that they will be brought to justice. Finnfund follows the development of the situation and will react accordingly.

As co-financiers, Finnfund and FMO have been able to significantly appease the situation between the project and its critics, and they have also been able to instigate other improvements in the management of project’s social and environmental responsibilities. The relationship between the project and the surrounding communities has improved significantly. A clear majority of the local villages and inhabitants support the project. The supporters for COPINH are primarily found in one village.

There is a lot of false information spreading about the project in the public. The power plant concerned is approximately 22-MW run-of-the-river power plant, with only one reservoir the size of about two football fields. Otherwise the water drawn from the main river bed runs underground (3 tunnels, totalling approximately 2 kilometres), in channels (4 channels, totalling approximately 2.7 kilometres) and in pipes. The water is not drawn to the power plant from the main channel in such volumes that it would pose a threat to the river ecosystem. The environmental and social impacts of the project have been carefully assessed and they have been found minor.

Unlike otherwise claimed in the public, the project does not involve any involuntary resettlement or loss of agricultural land. The land areas needed for the project have been bought through voluntary sale of land (willing buyer - willing seller), and the entitlement of the sellers to sell the land has been verified carefully. The villages and inhabitants in the region have been informed and consulted in a careful manner (free, prior and informed consent, FPIC) that is not usually used in projects of the size of Agua Zarca and with such minor environmental impacts. Finnfund and FMO have conducted detailed due diligence on these matters.

The publicly made claim that the Chinese construction company involved at the beginning of the project withdrew from it is not correct. In 2013 DESA and the Chinese contractor decided to discontinue their contract. Current contractor is COPRECA, a Costa Rican company, familiar with local culture and conduct.

Furthermore, contrary to what has been claimed in public, the dam structure has not been significantly scaled up from the original plans. Instead, the whole project was transferred from one side of the river (Rio Gualcarque) to the other to avoid conflicts with a group of villagers critical of the project. No communal land owned or used by indigenous peoples is acquired for the project, and access to natural resources will not be limited. The municipality of San Francisco de Ojuera, where the project now takes place, d, is not an indigenous territory and none of the communities on the left side of the river (where the project now takes place) identify themselves as indigenous.

From the very beginning, the key reason for the participation of Finnfund in the funding of Agua Zarca have been the major development impacts of the project:

  • Honduras is one of the poorest countries in Latin America, and in serious need of investments.
  • When completed, Agua Zarca is estimated to produce some 94 GWh of electric power per year, which corresponds with the power consumption of approximately 120,500 rural Honduran households, or some half a million people.
  • The project concerned is a renewable energy project that will reduce Honduran CO2 emissions. The projected average reduction in CO2 emissions is approximately 61,000 tonnes per year.
  • The area around the Gualcarque river is sparsely populated and mountainous rural area. The project is estimated to offer hundreds of jobs during the construction phase and some 40 jobs after completion.
  • The local population will also benefit through DESA's voluntary corporate responsibility programmes, which include road improvement, planning and co-funding of drinking water systems, donations to schools, and different training programmes. As part of DESA's voluntary programme, electricity has been provided for as many as 1,392 households so far.
  • Honduran power production is currently dependent on imported oil. The estimated positive impact of Agua Zarca on the balance of payments is expected to be significant. 

Finnfund would be happy to provide further information on its contribution to the project and meet, for example, representatives of organisations concerned about the events. The Ministry for Foreign Affairs, the ministry responsible for Finnfund's ownership steering, has been kept up to date on the events and the company's investment in Agua Zarca.

Jaakko Kangasniemi, CEO
jaakko.kangasniemi(at), tel. +358 40 577 7676

Tapio Wallenius, Director, Impact and Communications
tapio.wallenius(at), tel. +358 50 351 0753