Jilamito Hydroelectric Project: A Framework of Economic Power


Source: Redacción Criterio

Original article published in spanish by Redacción CRITERIO.HN


Text and graphics: Marcia Perdomo

Editing: Emy Padilla

Photographs: Fernando Destephen


redaccion@criterio.hn


Tegucigalpa. –Surrounded by three national parks, two wildlife refuges and a botanical garden, we find the municipality of Arizona in the department of Atlántida, where several extractive projects have been installed, including the Jilamito Hydroelectric Project to which environmental and operation permits have been issued despite not having the consent of the communities and being located within the buffer zone of the Texiguat Wildlife Reserve.


The Jilamito Hydroelectric Project is being executed by Inversiones de Generación Eléctrica, Sociedad Anónima de Capital Variable (INGELSA), with commercial registration 0000033459 - 00000 and in which Herramientas Manuales Centroamericanas Sociedad Anónimas (HERMACASA) and Emin Jorge Abufele Marcos appear as partners. Dun & Bradstreet, a company that collects financial data from private companies, estimates INGELSA's annual revenue to be US $1.07 million and HERMACASA at US $ 9.02 million.


Among the majority partners of HERMACASA, with commercial registration 0000078799 - 00000, we once again find Emin Jorge Abufele Marcos and the US-owned company Simonds Industries Inc. This company — based in Fitchburg, Massachusetts, and which advertises itself as the oldest cutting tool manufacturer in North America — entered into a joint venture agreement with HERMACASA, with 45% ownership, as stated on its website. Dun & Bradstreet estimates its annual revenue for 2020 to be US $927,126.


Other partners in HERMACASA are: Raúl Castillo; Inversiones Oasys, S.A. de C.V., Rafael Prieto, Citric S.A. de CV, Grupo Corona, SA, Jesús S. Siwady, Corporación Makaira SA, Fuad C. Abufele, Omar Abufele Salomon, Jacobo Kattan, Matilde Prieto de Barraouse, Ana Lucía Prieto de Bográn, Dolores C. de Uclés, Mario Prieto Velez, Ferretería La Montañesa, María Consuelo del Reynaud Prieto, José Francisco Reynaud Prieto, Jenny Huda Chahín, María del Carmen Chahin, Pedro Cobos Caminos, and George K. Kawas.


Source: Redacción Criterio

Both INGELSA and HERMACASA appear on their website as members of Grupo Inversiones Eléctricas S.A. de C.V. (IESA Group). This company appears among the partners of the Sociedad Eléctrica Mesoamericana Sociedad Anónima de Capital Variable (SEMSA) with commercial registration 0000035863 - 00000. Other partners are Emin Jorge Abufele Marcos, Finnfund, E&CO and CAREC. The Sociedad Eléctrica Mesoamericana Sociedad Anónima de Capital Variable is in charge of the Mezapa Hydroelectric Project, located in the village of Mezapita, in the municipality of Arizona, department of Atlántida. In the case of SEMSA, Dun & Bradstreet values ​​its annual revenues at US $ 5.58 million.


In both cases, both in the Mezapa Hydroelectric Project and the Jilamito Hydroelectric Project, the Honduran citizen Rafael León de Pioccioto Cueva is mentioned as a representative of the aforementioned companies in the operation contract for the generation of power and electric energy of the Mezapa project and the contract for national water use published in the official newspaper La Gaceta on February 6, 2009 and June 12, 2014, respectively.


Just as Pioccioto Cueva was a representative of SEMSA and currently of INGELSA, the businessman Emin Abufele Marcos Santos appears as a partner in a personal capacity and through his shares in his different companies. Two hydropower generating companies, same partners, same representative, both in the municipality of Arizona in the department of Atlántida.


WHO IS EMIN JORGE ABUFELE MARCOS?


Emin Jorge Abufele Marcos is a businessman from San Pedro Sula linked as a partner to at least four companies that Criterio.hn has tracked: Sociedad Eléctrica Mesoamericana, Sociedad Anónima de Capital Variable (SEMSA), in charge of the Mezapa Hydroelectric Project located in the Mezapita village, municipality of Arizona in the department of Atlántida; Inversiones de Generación Eléctricas, Sociedad Anónima de Capital Variable (INGELSA), who was awarded the Jilamito Hydroelectric Project, also in the municipality of Arizona; Herramientas Manuales Centroamericanas, Sociedad Anónima (HERMACASA); and Industrias Molineros, Sociedad Anónima de Capital Variable (IMSA), among others.


The latter, IMSA, was the third rice company to benefit from the Operation Honduras Solidarity (HS), in which the State allocated 757.5 million lempiras, as revealed by Criterio.hn through the third installment of its Honduras Solidarity Investigation: The Pandemic of Welfare. Through the sales of rice, corn and wheat flour, this company received a total of 33.5 million lempiras from the State in the context of the Covid-19 pandemic.


Emin Jorge Abufele Marcos [president] also appears together with Marjory Rodezno [secretary] and Carlos Rene Ávila [treasurer] as directors of the company Operaciones Hidroeléctricas SA, based in Panama City, incorporated on November 9, 2015 with public deed number 40,000 and registered under folio 155616758 in the Public Registry of Panama. The shareholders named in the certificate are the Panamanian citizens Fernando Antonio and Luz Esperanza Rivera Chacón. It is notable to point out that both Abufele Marcos and Carlos Rene Ávila were the ones who initially constituted Inversiones de Generación Eléctrica, S.A (INGELSA) in February 2006.


The deed of Operations Hidroeléctricas S.A. establishes as the object of the corporation, “the design, construction, operation, maintenance, administration and supervision of hydroelectric power plants, as well as to establish, process and carry out the business of an investment company; buy, sell and negotiate in all classes and consumer items stocks, bonds and securities of all classes; buy, sell, lease or otherwise acquire or dispose of real estate; request and give money on loan, with or without collateral; enter into, extend, fulfill and carry out contracts of all kinds; become a guarantor of or guarantee the performance and fulfillment of all and any contracts; engage in any lawful business that is not prohibited to corporations; and do any of the preceding acts as principal, agent or in any other representative character, whatever it may be.”


Although the Open Corporates site details that, at the end of 2019, Emin Jorge Abufele Marcos, Marjory Rodezno and Carlos Rene Ávila were removed as directors of Operations Hidroeléctricas SA, said removal does not appear in the Public Registry, which in Panama is the official body, for which they legally continue to run said corporation. It is important to highlight that Marjory Rodezno appears in the Honduran commercial registry as a representative of INGELSA; while Carlos Rene Ávila as representative of SEMSA and IMSA.


Emin J. Abufele Marcos is the son of Emin Jorge Abufele Salomón, who in the eighties was part of the Association for the Progress of Honduras (APROH), a far-right organization that was formed in Honduras to counter the social movement that emerged as a result of the cold war and that was against the American invasion of Central America. Abufele Salomón was also a presidential advisor during the nationalist government of the late Rafael Leonardo Callejas, (1990-1994).


ORIGINS OF ADJUDICATION


The Jilamito and Mezapa Hydroelectric Projects can be traced back to September 2006 when the State Forestry Administration - Honduran Forest Development Corporation (Afe-Cohdefor) now Forest Conservation Institute (ICF), issued technical opinion DAPVS-0113-2006 following a request by the Sociedad Eléctrica Mesoamericana, SA de C.V. (SEMSA). In it, Afe-Cohdefor “determines that the intake works of the Hydroelectric projects on the Mezapa and Jilamito rivers are within the buffer zone of the RVS Texiguat and that the power houses of the same projects are outside the limits from RVS Texiguat, but within the declared micro-basins of the Mezapa and Jilamito rivers.”


The former implies a tacit recognition by the State that the hydroelectric projects are within a buffer zone, reason enough for them not to be successful, however, their actions say the opposite, because they have extended the permits and even the environmental license.


It is important to note that although the Jilamito and Mezapa hydroelectric projects are managed by companies with different names, the name of some partners coincide, such as Emin J. Abufele Marcos. In the case of SEMSA, the company was incorporated on February 28, 2005 by Emin Jorge Abufele Marcos and J. & E. Manufacturing, S.A. [a company dedicated to the manufacture and marketing of metal castings and related accessories, steel stamped products and related materials] as partners; while INGELSA was established on February 9, 2006 by Carlos René Ávila García and Emin Jorge Abufele Marcos as partners [the former is no longer registered as such].


In October 2007, the National Congress chaired by Roberto Micheletti Baín approved the Law for the Promotion of Electric Power Generation with Renewable Resources, through Decree 70-2007 with the aim of promoting public and/or private investment in electric power generation projects using national renewable resources. A year later, the National Congress approved a new incentive decree (Decree 55-2008), in favor of the Generation of Electric Power with Renewable Resources; however, this was vetoed by then president of the Executive Power, Manuel Zelaya Rosales, as documented by the International Federation for Human Rights in the report, “Honduras: Protected areas and endangered water resources. The case of the Cuyamel II hydroelectric project in San Francisco, Atlántida.”


Zelaya Rosales was removed from the Executive Power by a coup on June 28, 2009 with the participation of the Armed Forces. Through this violent action, the National Congress appointed its then president, Roberto Micheletti Baín, as the head of Honduras and left the liberal José Alfredo Saavedra, directing the legislative body. In August of that same year, the General Water Law was hastily approved, opening the doors to the concession of Honduras's water resources to third parties. At that time, Congress was made up of 62 deputies from the Liberal Party (PL), 55 from the National Party (PN), six from the Democratic Unification Party (UD), three from the Christian Democratic Party (DC) and two from the Innovation Party and Democratic Social Unit (PINU).


Also, in September of that same year, the National Electric Power Company (ENEE) announced the international tender No. 100-1293 / 2009, for the contracting of 250 MW of renewable energy.


Subsequently, in September 2010, the National Congress, under the leadership of the nationalist Juan Hernández [current president of the Executive branch], awarded at least 39 of 47 renewable energy contracts to the National Electric Power Company (ENEE) through the international bidding process number 100-1293/2009. After the hasty 2009 elections, the National Congress came under a majority of the National Party with 71 deputies, the Liberal Party with 45, the Christian Democratic Party with five deputies, Democratic Unification with four, and the Innovation and Social Democratic Unity Party with three.


On June 8, 2010, INGELSA signed the Power Supply and Associated Energy Contract, N. 73-2010, between the manager of ENEE, Roberto Martínez Lozano, and INGELSA through his representative Rafael León de Piocciotto Cuevas. However, it was not until September 3 of that year that the National Congress approved 39 of the 47 renewable energy contracts awarded by ENEE through the international bidding process, number 100-1293/2009.


On November 9, 2011, INGELSA signed the contract for the use of national waters for the generation of electricity with the Secretary of Natural Resources and Environment [then known as SERNA], representing the state-owned company, Roberto Cardona Valle. This contract was not published in the Official Gazette La Gaceta until June 12, 2014, by Decree No. 341-2013.


Ten months later, on September 10, 2012, SERNA again, through its undersecretary, Darío Roberto Cardona Valle, signs the Operation Contract for the Generation, Transmission and Commercialization of Power and Electric Energy of the Jilamito Hydroelectric Project with a representative of INGELSA, Rafael León de Piocciotto Cuevas. This contract was published in La Gaceta on June 12, 2014 under Legislative Decree 343-2013.


At the beginning of December 2013, SERNA issued resolution No. 1429-2013 in which the application for the Environmental License of the Jilamito Hydroelectric Project was declared valid. Through ambiguous wording, it establishes that the socialization of the project has not yet been carried out. Specifically, it is in paragraph three, section three where they write, “Currently this project has not been socialized, so the representatives of SINEIA established that the Jilamito Hydroelectric project must follow a socialization process that allows the inhabitants of the community be well informed and be taken into account in decisions related to local resources.” But six months later, on June 5, 2014, without having rectified the aforementioned, SERNA gave INGELSA the certificate of Environmental License No. 77-2014 to the Jilamito Hydroelectric Project under category three.


In January 2015, Emin J. Abufele Marcos y Aplicaciones Manuales Centroamericanas, S.A. (HERMACASA) established the company, Desarrollos Hidroeléctrico Jilamito S.A. (DEHJISA). In February 2017, this company merged with Inversiones de Generación Eléctricas, S.A. de C.V. (INGELSA), both companies had Jorge Emin Abufele Marcos as a partner.


Between the creation of DEHJISA and its subsequent merger with INGELSA, the residents of the municipality of Arizona in an open town hall in November 2015 decided by majority to declare their territory free of mining and hydroelectric power plants despite attempts to manipulate the town hall by local authorities. This resolution was ratified on two more occasions, once on March 24, 2019 and on December 28, 2020. Despite this rejection by the residents of the municipality of Arizona, both the Inter-American Development Bank through its business branch IDB- Invest and the United States International Development Finance Corporation (DFC) have decided to finance 74.1% of the project cost, which is valued at US $75.561 million.


(Source: Redacción Criterio)

CUNNING THE SERVICE OF ILLEGALITY


From the historical configuration set out above, it is clear that the Hydroelectric Project on the Jilamito River was conceived by the hand of its twin in the Mezapita River - also in the municipality of Arizona - long before the General Water Law was approved in August 2009. Moreover, despite the fact that the project was not socialized, SERNA issued Resolution No. 1429-2013 in which it declared valid the application for an environmental license, despite the fact that the same document establishes that socialization with the communities had not yet taken place.


The Broad Movement for Dignity and Justice (MADJ), through its coordinator Víctor Fernández, maintains that in Arizona, more than conflicts, there is a type of violence exercised by public officials of the Government who make decisions and impose without the consent of the communities. “The SERNA official who signed the feasibility study, the water treatment and the environmental license, was never here. And from there he developed a distant and arrogant behavior of giving up what is not his. It is violent for an official to ignore the relationship that people have, hiding the information from them and bringing military and police officers into the area to impose a project," explains Fernández.

The lawyer explains that the legal requirement for this type of project is: first to authorize the feasibility study, second to process the environmental licensing, third to sign energy generation and commercialization contracts with ENEE and SERNA to later be approved by the National Congress and to be published in La Gaceta.


Despite this, in the case of the Jilamito river concession, Criterio.hn confirmed they first signed the supply contract with ENEE [June 2010] and the water use contract [November 2011] and the operation contract for the generation, transmission and commercialization of power and electric energy [September 2012] with SERNA, but paradoxically it wasn’t until December 2013 that the application for an environmental license was declared valid.


This is how it is explained that although the water contract and the generation contract were signed in 2011 and 2012, they were not published in La Gaceta until June 2014. The contract was given without an environmental license; however, to feign legal adherence, these were not published in the official gazette until the application for an environmental license was declared valid.


“This is corruption. The delivery of 24 rivers in the department of Atlántida in this way is violence […] officials who are in collusion with private companies to get the most generous spoils, which is the issue of power generation, with contracts that only imply winning, winning, winning, "says Fernández.


Faced with the possible collusion between public officials and private companies, MADJ presented in October 2020 before the Specialized Fiscal Unit Against Corruption (UFERCO) of the Public Ministry a complaint for “facts that could constitute the commission of crimes of fraud and abuse of authority carried out by officials of the National Electric Power Company (ENEE) and partners of the trading companies Inversiones de Generación Eléctrica SA (INGELSA), Sociedad Eléctrica Mesoamericana S.A. de C.V. (SEMSA) and ten other commercial companies that would be arranged to illegally favor the contracting for the supply of power and its associated energy with renewable resources outside of the International Public Bid 100-1293-2009." As well as an investigation in relation to, "irregularities in the environmental licensing of the Jilamito Hydroelectric Project."


In relation to INGELSA and its partners, Fernández believes that the commercial company is interested in accumulating capital at the expense of the municipality of Arizona and the country. “Its partners and shareholders, Emin Abufele and all these, are a gangster structure in this country. […] They already have two other projects here. And they come with another.'' In addition, he adds that they are, "part of the business structure [...] that is interested in continuing to loot and extract money from the State."


In the third installment of this special, Criterio.hn delves into the monetary subsidy by financial and cooperation agencies in the Jilamito Hydroelectric Project and the impact on communities that reject extractive projects.


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