Chinese will assume management of Coca Codo Sinclair hydro plant after legal dispute is resolved

Ecuador has agreed to drop its legal claim against China’s Sinohydro Corp, builder of the Coca Codo Sinclair hydroelectric plant. In exchange, Sinohydro and parent company China Power have agreed to make repairs and assume management of the 1,500-megawatt plant located on the Rio Coca east of Quito.

The Coca Codo Sinclair hydroelectric plant during construction in 2013.

Ecuador’s public power company CELEC sued Sinohydro and China Power in 2021 for cracking in the plant’s machinery, including the generation turbines. The cracks and other construction faults have limited Coca Codo from operating at more than 1,100-megawatts since it went online in 2016.

As part of the agreement, Sinohydro agreed to drop a counterclaim against CELEC for failure to install transmission lines. The legal dispute had been stalled in arbitration at the International Chamber of Commerce in Santiago, Chile.

Energy Minister Ines Manzano said Tuesday that the deal was reached during President Daniel Noboa’s recent visit to China. “We are pleased that we have an agreement and believe it serves the interests of both Ecuador and China,” she said. “Most important, it means we can finally get to work with the repairs at Coca Codo Sinclair and restore the facility to full operation.”

Manzano and Foreign Minister Gabriela Sommerfeld said final details of the agreement remain to be worked out before Sinohydro assumes management and repair responsibilities.

According to Celec manager Gonzalo Uquillas, the agreement should lower power generation costs at Coca Codo as repairs are completed. He said, however, the “management model” of the plant is under discussion and he could not reveal information about operational plans.

Electrical engineers familiar with the problems at Coca Codo Sinclair are skeptical of the deal. “As usual, we see very little information about how this arrangement will work and, most importantly, how the repairs will be carried out,” says Jorge Quintana, past president of the Pichincha Assocation of Electrical Engineers. “I won’t say it’s a bad deal until I see the details, but I am suspicious that it has more to do with political interests than with resolving problems at the plant.”

Quintana adds that the agreement does not address the larger problem. “The progressive erosion on the Rio Coca means Coca Codo Sinclair will go out of service in less than 10 years — and maybe in as few as six. As far as I know, the government has no plan to replace it.”