Mexico
Communities in Oaxaca Reject the Cerro de Oro Hydroelectric Project Through the OPIC Office of Accountability Dispute Resolution Process
Accountability Counsel filed complaints on November 30, 2010 on behalf of the villages of Paso Canoa and Santa Ursula, and on January 17, 2011 on behalf of the neighboring indigenous community of Cerro de Oro. The complaints detail harm caused by the Overseas Private Investment Corporation (“OPIC”)-supported Cerro de Oro Hydroelectric Project. The complaints were filed with OPIC’s Office of Accountability, which convened a dialogue table as part of its dispute-resolution function.
On March 11, 2011 in Tuxtepec, Oaxaca, Mexico, the communities and the company reached an historic agreement at the dialogue table. The agreement halted project construction and placed the future of an alternate design for the project into the communities’ hands.
On November 14, 2011, at the final meeting of the OPIC Office of Accountability dialogue table, the villages of Paso Canoa, Santa Ursula, and Cerro de Oro delivered their joint decision rejecting the alternative design of the project to the company, OPIC, and local, state and federal Mexican officials. The Office of Accountability issued a final Problem-solving Report in early 2012. Accountability Counsel submitted a letter to the OA in December 2011 regarding problems of bias in the report, which remained unchanged in the final version.
Per the communities’ original request, and after a follow up request by the communities on November 14, 2011, the OPIC Office of Accountability has now initiated its second feature -- a compliance review -- to determine OPIC’s compliance with its own policies and procedures in the financing of the Cerro de Oro Hydroelectric Project. Accountability Counsel will continue to work with the communities through the compliance review process to ensure their right to a fair, transparent and effective review.
Background
The
OPIC complaint described that the communities did not receive information about the Project, were not consulted, impacts on indigenous groups were not considered, and there were insufficient plans to address and mitigate social and environmental impacts, including destruction of important waterways that communities depend on for household use, consumption and fishing. Complainants also note problems with land acquisition and the lack of a required, local grievance mechanism. The complainants are predominantly members of the Chinanteco indigenous group. In the 1980s, approximately 26,000 Chinanteco people were forcibly displaced to make way for the Cerro de Oro Dam. This Project builds on that legacy of harm where the affected people are some of the most vulnerable and marginalized in Mexico.
The Project entails converting the Cerro de Oro reservoir into a hydropower project through the construction of a water intake and conduction tunnel, powerhouse, voltage elevation substation, tailrace channel, and transmission lines. All of the energy generated by the project will be sold to private companies.
Project Sponsors and Operators
OPIC
is a U.S. federal agency that is financing the Project through a $60 million investment in U.S.-based Conduit Capital Partners, LLC. The Cerro de Oro Project is one of Conduit’s investments through its Latin Power III Fund. The Project operators are
Electricidad del Oriente and Corporacion Mexicana de Hidroelectricidad (“COMEXHIDRO”). The complaint is the fifth ever filed with the internal OPIC Office of Accountability, which U.S. Congress created in 2005 so that complaints like this one can be addressed in a fair and objective manner. The complaint seeks the Office’s assistance with resolving community concerns about the project through the problem-solving function, and seeks to hold OPIC accountable for its failures to uphold its own policies through the compliance function.
The Problem
The complaint alleges that the Project, which involves land acquisition, construction of tunnels and industrial facilities, installation of transmission lines, use of explosives, and diversion of waterways, is harming local people and their environment. While a “Third Party Environmental Compliance Review” was conducted, major environmental impacts were not addressed and mitigation measures for those impacts were therefore not proposed or adopted.
The villagers have not received full information about the Project and have not been consulted about the Project’s health, safety and environmental impacts and any planned mitigation measures.
The Project entails destruction villagers’ access to drinking water; destruction of fishing areas that people rely on for sources of income and protein, and removal of agricultural land relied on for livelihood support. The project is also causing contamination and destruction of ecosystems; land erosion and encroachment; disruption of local and indigenous infrastructure, housing and culture; gender impacts; and feared impacts on community health and safety. The complainants live next to the Dam curtain and they fear for their safety due to the use of explosives in Project construction.
Mostly farmers and laborers, the complainants are from Mexico’s poorest and most vulnerable region. They harvest fruits, rubber, sugarcane, and other natural products from the land and use fishing to supplement their incomes and diets. Project activities already are having harmful impacts: cement has leaked into drinking water, blasts from explosives have damaged homes, and land acquisition practices have disrupted local culture.
Project operators have attempted to silence dissent by requiring community members to sign statements affirming that they will not talk to organizations about the Project.
The Complaint
The communities’ complaint to the OPIC Office of Accountability requests that:
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1.the project be immediately suspended;
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2.an independent environmental impact assessment be conducted and mitigation plan be created;
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3.the Project cease alterations to the La Sal Creek;
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4.a complete record of Project documents be made available to the communities and presented in a manner that is easy to understand;
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5.the Project sponsors fully comply with promises made to the communities and bring the Project into compliance with OPIC policy;
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6.the Project sponsors provide documentation regarding the risks to health, created by the hydroelectric expansion and plans to avoid those risks; and that
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7.negotiated agreements between the Project sponsor and Complainants address all remaining issues, including those regarding land use, health, and the environmental and social impacts
of the Project.
Summary of the Process to Date
The Complaint was filed to OPIC’s Office of Accountability (“OA”) on November 30, 2010 and the Office registered the Complaint on December 6, 2010. A team from the Office visited the region and spoke with requesters and the company in early January 2011. The community of Cerro de Oro added their complaint on January 17, 2011.
Meanwhile,
the members of the Oaxacan Congress used the information in the communities’ OPIC OA complaint to launch their own investigation into the project. The Congress unanimously voted to form an 11-person Commission to tour the project area and on February 17, 2011, the Commission convened a meeting in Oaxaca City to discuss the results of their tour with the company and public. At the meeting, attended by community representatives, the company, local officials, academic institutions and the press, the community representatives demanded suspension of the Project.
In March 2011, the community of Los Reyes, at first too scared to come forward because of coercion from the company, joined the dialogue process when they witnessed the strength of the communities acting together and with support of members of their government.
Meetings of the dialogue table with the communities, the company, the OPIC Office of Accountability, mediator Juan Dumas and witnesses from the government took place on March 11, May 5, and July 20, 2011.
One
of the key demands of the communities was a study to determine whether the Cerro de Oro dam is safe. The communities viewed assurance of dam safety as a critical pre-cursor to any decisions about construction projects near the dam curtain, particularly project involving use of explosives. The dam safety expert hired through the OPIC Office of Accountability process presented information about types of risks to dams and issued a report to the communities. According to the expert in his presentation to the communities, among the risks to dam curtains that can cause failures are: (1) growth of vegetation in the dam curtain which can cause holes through “tubification”; (2) instability of the dam curtain or walls as seen through cracks along the top of the dam curtain; and (3) excessive
unanticipated sediment which can cause an overflow of water over the dam curtain if not dredged. All three of these risk factors are present, or potentially present but unknowable, in the Cerro de Oro dam: there is excessive sediment built up in the dam reservoir, there are trees growing out of the dam curtain, and there is vegetation nearly covering the crown of the dam (
see photos: above, vegetation in dam curtain; at right, vegetation along top of dam curtain; below, cranes resting on bed of sediment). However, the expert nonetheless concluded in his presentation to the communities that the dam is safe. He did recommend that the Mexican governmental authority in charge of the dam, CONAGUA, immediately take steps to address problems with the dam. One of the main recommendations made by the expert in July 2011 was that instruments be installed to measure movement of the dam curtain. Those instruments are currently missing, broken, or are inaccessible. To date, those instruments have not been reinstalled or repaired and the Mexican dam authority, CONAGUA, states they have no budget to make these changes. The
communities remained concerned about dam safety because of lack of instrumentation to measure dam safety, presence of risk factors with no plans to address them and intended use of explosives near the dam curtain should the project alternative move forward (prior use of a small amount of explosives caused cracks in homes in the villages). Remaining dam safety concerns are one of the communities’ primary reasons for rejecting any further project construction on November 14, 2011.
With the rejection of the company’s alternative design of the project, the OPIC Office of Accountability is now initiating a compliance review into OPIC’s role.
Our Role
Accountability Counsel represents members of the communities of Paso Canoa, Santa Ursula, and Cerro de Oro in coalition with other groups in Mexico and the United States. As with all of our cases, our goal is not a specific outcome, but rather assistance with bringing community voice to the corporate and institutional decision-makers in a process that is fair, transparent and effective. In this case we conducted multiple, extensive trainings in each community to explain and assist the communities in their evaluation of whether to use the OPIC Office of Accountability process. We assisted the communities with the research and drafting of their complaint and assisted in every step of the dispute resolution process. We are now continuing to assist the communities with their compliance review complaint and are working to ensure that the process is independent, fair, transparent, and effective.
In Mexico, we are working with the group Fundar, Centro de Análisis e Investigación AC (Center for Analysis and Research), in their program Transparencia y Rendición de Cuentas en Instituciones Financieras Internacionales (Transparency and Accountability in International Financial Institutions); Servicios para una Educación Alternativa A.C. (Services for an Alternate Education) (EDUCA); and Coalición Internacional para el Hábitat (Habitat International Coalition, HIC). In the United States, we have worked with support from Berkeley Law’s International Human Rights Law Clinic and Environmental Defender Law Center (EDLC).
Above, turtle species from the Arroyo del Sal. Photos by K. Ramachandra and N. Fields © 2010 & 2011.
