{"id":50054694,"date":"2022-06-07T17:12:12","date_gmt":"2022-06-07T16:12:12","guid":{"rendered":"https:\/\/stage.dialogochino.net\/?p=54694"},"modified":"2023-06-27T22:56:59","modified_gmt":"2023-06-27T19:56:59","slug":"54694-what-will-happen-to-ecuadors-paralysed-toachi-pilaton-dam","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/business\/54694-what-will-happen-to-ecuadors-paralysed-toachi-pilaton-dam\/","title":{"rendered":"What will happen to Ecuador\u2019s paralysed Toachi Pilat\u00f3n dam?"},"content":{"rendered":"

In March 2022, Ecuador was shaken by the news that the Chinese state-owned China International Water & Electric Corporation (CWE), the last company to preside over the Toachi Pilat\u00f3n hydroelectric project, was suing the country for US$100 million<\/a>. The reason: Ecuador\u2019s decision to unilaterally<\/a> terminate the contract with the company.<\/p>\n

CWE litigated against the Ecuadorian state electricity holding company (Celec) for “breaches of contract”, such as delays in paying wages. Celec, for its part, accuses<\/a> CWE of a series of failures: in the dam\u2019s waterproofing barriers and control and lighting systems; for accumulating hazardous waste; and its non-compliance with an environmental management plan.<\/p>\n

In an interview with Di\u00e1logo Chino, Gonzalo Uquillas, who until this week was Celec\u2019s general manager, said that, despite the five changes in government since construction of the mega-project began in 2008, the state has fulfilled its contractual obligations and the “companies [formerly involved in construction] are the ones that have not taken responsibility\u201d.<\/p>\n

Toachi Pilat\u00f3n: The beginnings
\n<\/strong><\/h2>\n

The story of Toachi Pilat\u00f3n is a saga that involves many ruptures and setbacks. In the early 1960s<\/a>, the first feasibility studies were carried out for a hydroelectric plant that promised to provide energy to rural and urban areas in Ecuador\u2019s highlands. Yet, it took several decades for construction to begin. It is not the only stop-start case in Ecuador\u2019s promised hydropower revolution.<\/p>\n

During the three governments of Rafael Correa (2007-2017), Ecuador announced the construction of eight hydroelectric<\/a> plants aimed at overhauling the energy matrix and promoting energy security. Aside from the Odebrecht-built Manduriacu plant, all of them<\/a> \u2013 Sopladora, Coca Codo Sinclair, Delsitanisagua, Mazar-Dudas, Minas San Francisco, Quijos, and Toachi Pilat\u00f3n \u2013 are partially or wholly owned by Chinese contractors.<\/p>\n

Yet, at present only four \u2013 Manduriacu, Sopladora, Coca Codo Sinclair<\/a> and Delsitanisagua \u2013 are operational, albeit with structural problems. The rest are still delayed, such as Toachi Pilat\u00f3n, one of the so-called emblems of this new energy era.

<\/p>\n
\"Rafael
In 2011, Ecuador\u2019s then-president Rafael Correa toured the Toachi Pilat\u00f3n works. During the ten years of his government, the construction of eight hydroelectric plants was announced. (Image: Miguel \u00c1ngel Romero\/Presidencia de la Rep\u00fablica)<\/figcaption><\/figure>\n

<\/div>Amid high expectations, at the end of 2007 the project was awarded to the disgraced Brazilian company Odebrecht, which at that time was consolidating its position as Latin America\u2019s top construction company. However, not even a year passed before Odebrecht was expelled<\/a> from Ecuador, accused of mismanagement in the San Francisco hydroelectric project and other important works.<\/p>\n

\u201cPresident Correa has given a lot of ground, but in the end Odebrecht cannot be in the country. We have analysed everything and we believe that it is not possible to continue,\u201d declared Galo Borja, then coordinating minister of Strategic Sectors, at the time, years before the Brazilian company\u2019s extensive international corruption network was revealed.<\/p>\n

From its controversial beginnings, Toachi Pilat\u00f3n became a dream that no one has been able to realise.<\/p>\n

The importance of Toachi Pilat\u00f3n<\/h2>\n

\u00a0<\/strong>Toachi Pilat\u00f3n is located in the centre of Ecuador between the provinces of Pichincha, Santo Domingo de los Ts\u00e1chilas and Cotopaxi, a two-hour drive from the capital Quito. It is considered fundamentally important by the state \u201cas it is complementary to the hydroelectric plants in the eastern cordillera [mountain ranges], when these enter low water levels,\u201d according to Celec.<\/p>\n

The project includes two generation plants: the 49MW Sarapullo<\/a>\u00a0plant, the first to enter commercial operation, in April 2022, and Alluriqu\u00edn, which has an installed capacity of 204MW.<\/p>\n

\u201cIt will take advantage of the ecological flow discharged by the Toachi dam, with the installation of a mini power plant of 1.4 megawatts, giving a total of 254.4 megawatts of installed power, which will contribute 1,100 gigawatt-hours of average annual energy to the National Interconnected System,\u201d a 2019 statement <\/a>from the Ministry of Energy read.<\/p>\n

According to the energy ministry, if it is eventually fully operational, Toachi Pilat\u00f3n will reduce<\/a> thermal generation and energy imports from Colombia. It is also expected to reduce the use of petroleum-based fuels and the outflow of foreign currency to pay for energy imports. Finally, it says it will incorporate efficient hydroelectric and thermoelectric generation as a matter of urgency, eliminating restrictions or blackouts on the national grid.<\/p>\n

Second round of construction<\/h2>\n

After Odebrecht\u2019s departure, in 2010 works were awarded to a Chinese-Russian consortium formed by CWE and Inter Rao. The Banco del Instituto Ecuatoriano de Seguridad Social (Biess) and Russia\u2019s Eximbank would provide the finance. The Chinese company would be responsible for executing the works and the Russian company for the installation and commissioning of the electromechanical equipment.<\/p>\n

However, in 2017, once again unilaterally, Ecuador decided to terminate the contract with Inter Rao due to a series<\/a> of breaches. The Russian company was forced to stop work and consequently sued<\/a>\u00a0Ecuador for US$86 million. The case is progressing slowly through the courts. Toachi Pilat\u00f3n, which should have been completed in 2015, saw work suspended for the next two and a half years<\/a>.<\/p>\n

In 2019, Ecuador signed another contract with the Russian company Tyazhmash, replacing Inter Rao in the provision and assembly of electromechanical equipment<\/a> at the plant. The company would join CWE to deliver Toachi Pilat\u00f3n once and for all. However, in recent weeks, Ecuador decided to terminate the contract with CWE, yet again putting works on hold.<\/p>\n

Failures
\n<\/strong><\/h2>\n

Celec decided to break with CWE due to structural flaws that it claims the Chinese company did not address. Furthermore, the Comptroller\u2019s Office<\/a>, a state supervisory body, reported fissures, cracks and landslides that compromised the power plant and rendered it inoperable.<\/p>\n

Uquillas, Celec\u2019s former top official, said CWE did not remedy cracks that appeared in the nine-kilometre water loading tunnel.<\/p>\n

\n

US$920 million<\/p>\n

\n
\nThe cost, without tax, of Toachi Pilat\u00f3n project, up to April of this year \u2013 without even having operated for a single day
\n\n <\/div>\n <\/div>\n

Similarly, the slopes around Alluriqu\u00edn\u2019s upper balance chimney \u2013 a key structure in preventing surges in water pressure \u2013 are unstable. \u201cThis impedes the operation of the plant,\u201d said Uquillas.<\/p>\n

\u201cThe Chinese contractor did not work on solutions to stabilise the slopes and the Comptroller\u2019s Office warns that there is a risk of chimney collapse,\u201d he said, adding that there were irregularities in the execution of the waterproofing barriers for the Pilat\u00f3n water intake and the Toachi dam.<\/p>\n

Di\u00e1logo Chino tried to contact CWE representatives in Ecuador, but they did not respond to our requests by the time of publication.<\/p>\n

Specialists and former officials consulted for this article said that Toachi Pilat\u00f3n symbolises the squandering of public money that took place during the Correa government. \u201cIt all started badly,\u201d hydroelectric expert Emilio Cevallos told Di\u00e1logo Chino, adding that technical criteria took second place to political alignment.<\/p>\n

Mart\u00edn P\u00e9rez Algarra, a political analyst, said: \u201cIt was an ideological contracting process: only Chinese, Russian or Brazilian companies were called in. In other words, those that were in line with the then misnamed \u2018socialist\u2019 regime of the Citizen\u2019s Revolution that Correa created.\u201d<\/p>\n

Now, the situation has begun to worry experts and government leaders as Ecuador and China seek to bolster their bilateral relations. \u201cThe disagreements between the two state-owned companies put at risk the oil, energy and trade agreements that Ecuadorian President Guillermo Lasso and his counterpart Xi Jinping discussed during his recent trip to China<\/a> in February,\u201d said Cevallos.<\/p>\n

Celec is also currently suing China\u2019s Sinohydro for problems at the Coca Codo Sinclair plant.<\/p>\n

What\u2019s next for Toachi Pilat\u00f3n?<\/h2>\n

As of April 2022, Toachi Pilat\u00f3n has cost more than US$920 million<\/a>. Although if taxes, such as the 12% rate of VAT are taken into account, the project has cost the state more than $1 billion<\/a>.<\/p>\n

Celec reports that between December and January last year, it carried out synchronisation tests \u2013 connecting power generation units to the National Interconnected System \u2013 as a precursor to the full electricity production process.<\/p>\n

\u201cOvercoming a series of stoppages in the construction process, this is finally the first time that this project has delivered electricity to the National Interconnected System,\u201d said Uquillas.<\/p>\n

Toachi Pilat\u00f3n is a monument to waste. It still doesn\u2019t work. Its facilities are abandoned. It does not generate a single kilowatt of energy<\/p><\/blockquote>\n

The Alluriqu\u00edn powerhouse, which will have an installed capacity of 204MW, is expected<\/a> to come into operation in the second half of 2022. Yet, Uquillas admits, there is no date and no certainty on when Toachi Pilat\u00f3n will become fully operational.<\/p>\n

Currently, it is not even operating at a quarter of the planned level, tests showed. Cevallos believes that the giant structure will be another \u201cwhite elephant\u201d that evidences the misuse of public resources.<\/p>\n

Researcher Arturo Torres, who has investigated the issue for his digital portal, C\u00f3digo Vidrio<\/a>, said: \u201cToachi Pilat\u00f3n is a monument to waste. It still doesn\u2019t work. Its facilities are abandoned. It does not generate a single kilowatt of energy, but it did cause a short circuit in the country.\u201d<\/p>\n

He added: \u201cIt was the first bribery scandal linked to a former official of Rafael Correa\u2019s government. The former Minister of Electricity, Alecsey Mosquera, received \u2013 according to court documents \u2013 one million dollars from the Brazilian construction company [Odebrecht] as a bonus.\u201d<\/p>\n

With the departure of CWE, the Ecuadorian state will most likely seek another company to finish the unfinished work and repair the faults. The saga continues.<\/p>\n","protected":false},"excerpt":{"rendered":"

Brazilian, Russian and Chinese companies have been involved in the US$1 billion hydropower project over the past 15 years. Setbacks threaten to sour Ecuador-China ties<\/p>\n","protected":false},"author":50000004,"featured_media":50054716,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[758,757],"tags":[554,556],"hashtags":[],"country":[20000110,50002594],"class_list":["post-50054694","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-energy","tag-hydropower","tag-infrastructure","country-china","country-ecuador"],"acf":[],"yoast_head":"\nToachi Pilat\u00f3n: What will happen to Ecuador's paralysed hydro plant?<\/title>\n<meta name=\"description\" content=\"Brazilian, Russian and Chinese companies have been involved in US$1 billion Toachi Pilat\u00f3n hydro plant that threatens to sour ties with China\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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