Palo Viejo hydroelectric plant, Guatemala

A controvertial new hydroelectric plant being built in Guatemala, on the Cotzal river and its three tributaries. SIMEST is providing financial backing to the project.

Re:Common is actively monitoring this case

Palo Viejo hydroelectric plant – history and current situation

The investment is very controversial because the plant is built inside the Finca San Francisco, a huge estate of about 14,000 ha, that covers most of the municipalities of San Juan Cotzal and Uspantán in the departments of El Quiche and Alta Verapaz. The Finca San Francisco occupies an entire valley, whose land has been increasingly grabbed from the communities for about 100 years now.

Guatemalan government authorises construction of Palo Viejo damGovernment approves substantial expansion of the projectCommunity protests reach a peak, with shots fired into crowd of demonstratorsConstruction of the dam complete

How are ECAs involved

Italian ECA SIMEST is supporting the Italian energy utility Enel GreenPower in the creation and management of the new hydroelectric plant. The total investment is ł€185 million. Through a Venture Capital fund, SIMEST has acquired 6% of the Guatemalan company Renovables de Guatemala, which will operate the plant for a financial commitment of around €10 million.

A history of land grabbing

The history of land grabbing in the Finca San Francisco began in 1902, when Pedro Brol, a contractor of Italian origin, began to "accumulate" land. During the violent conflicts of the civil war in Guatemala in the 1980s, the Brol family actively participated in the repression of insurgents in Ixil and, taking advantage of the ensuing chaos, the Brol family continued undisturbed to grab land from the communities. Today, the estate has 14,000 hectares cultivated mainly with coffee, which is then sold to Starbucks.

In early 2011 local population peacefully protested against the hydropower project. After a few weeks police forces heavily intimidated and repressed the demonstrators.

Recent developments

According to information publicly available, since the demonstratins of 2011, SIMEST has not further reviewed the ongoing impacts associated with its investment in Guatemala. On the contrary, with a focus on renewable resources that have not yet been used in Latin America, Massimo D'Aiuto, CEO and Managing Director of SIMEST has recently stated that "It's against this background that we are thinking with Enel Green Power on large-scale projects in the area."

Communities, who have not been consulted in violation of ILO Convention 169, are requesting to directly benefit from some of the profits generated by the project. ENEL keeps refusing to recognise indigenous authorities as counterparts in this process and recently signed an agreement with the major of San Juan Cotzal for a 300,000 euro compensation amount per year for twenty years. The final allocation of these compensations will be decided by a committee on which two representatives of the company sit. Communities are organising to start legal action against the lack of consultation.

More information

Re:Common has published a report on this case (in Italian).

Re: Common works together with a group of associations and citizens named "Solidarity campaign with Ixiles communities of Guatemala". Additional materials on this case are published on their website:



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