How Predatory Energy Developers Harassed Honduras
Photo by Héctor Emilio Gonzalez
The impoverished country of Honduras pays some of the highest electricity prices in Latin America, which adds to the high cost of living for residents there and is one of the drivers of migration to the U.S.-Mexico border.
It’s a crisis that’s been accelerated by privatization of the Honduran energy sector, which deepened following a military-backed coup in June 2009 that gained support from the U.S. and other foreign governments. As part of recent efforts to address poverty and curb migration out of the country, the government proposed reforms intended to bring the national energy company’s rates down to a more accessible level.
However, taking advantage of exclusive corporate privileges found in trade and investment policy, a slew of energy firms have launched multi-million dollar claims against Honduras since the reforms were announced in 2022. These claims stem from coup-era contracts marred by claims of corruption and lack of due process and are raising concerns from affected communities.
Opening the Floodgates
Honduras’s post-coup government of 2010-2014 promoted a package of energy sector reforms to further privatize the generation and distribution of electricity, opening the door to the approval of a large number of “renewable energy” contracts, including solar energy.
Soon after, companies began arriving in Honduran communities to launch energy generation projects — and when local residents opposed them, they were often targeted for persecution.
Conflict over two solar energy projects in southern Honduras, for example, has badly damaged the social fabric of affected communities and led to the persecution and criminalization of community leaders. And now the projects’ investors have sued Honduras for $400 million before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).
Leonardo Amador and Marlenis Pastrana are members of communities affected by the Los Prados photovoltaic project in Namasigüe, Choluteca. The facilities are owned by Scatec ASA and Norfund.
Marlenis Pastrana said that in the community of Costa Azul, the solar energy project destroyed a stream where residents used to obtain fish and shrimp. “We no longer have the same food sources as before in our communities,” she said. Before, “whenever we wanted, we could go fishing. Today, we can’t do it because everything has been privatized.”
And now “those streams have been destroyed — there is no more water. This is the scarcity that we are suffering today,” she concluded.
Pastrana and Leonardo Amador participated in a panel discussion in Tegucigalpa to launch “The Corporate Assault on Honduras,” a report published in September by the Institute for Policy Studies (IPS), Honduras Solidarity Network (HSN), TerraJusta, and the Transnational Institute (TNI).
Leonardo Amador is a community leader from Prados 1 who has faced trumped-up charges since 2017 for his opposition to the solar energy project. He says that the energy companies arrived “as if they were the communities’ boss, imposing their interests,” without consulting first with the local population.
“We have faced psychological harms as a result of the persecution that these companies have brought against the communities, turning villagers against each other” in order to install the photovoltaic projects.
Southern Honduras is one of the most arid regions in the country. In 2021, it reported the highest temperatures in the country, with an average of over 100 degrees Fahrenheit, according to the 2017-2021 atmospheric temperature bulletin published by the National Statistics Institute.
Amador reports that the already high temperatures combined with deforestation to install the photovoltaics intensified the heat in his community, which particularly affects people with chronic health conditions, such as high blood pressure.
And he alleges that company supporters have targeted opponents of the project with violence.
“It’s a miracle that we’re alive, those of us who are still talking about what has happened. We have lost comrades in struggle, people were murdered for opposing the project. Other people have had to emigrate away because they have been persecuted” for opposing the solar energy project, he explained.
Links to Organized Crime
Denia Castillo, a lawyer from the Network of Women Lawyers Human Rights Defenders (RADDH by its initials in Spanish), recalled that in 2017, 36 people were charged with crimes for opposing the solar projects.
They brought legal action against community leaders “in order to violently install this energy project in the region. And what did we do? We began a process of research and documentation,” said Castillo, who represents the communities opposing the project.
She said they found that several of the contracts were originally awarded to figures linked to crime and corruption, including Liana María Bueso Majano and Jim Eloy Muñoz Gómez.
The “Corporate Assault on Honduras” report explains that during her career as a public official, attorney Bueso Majano was linked to state entities denounced for corruption, such as the Secretariat of Public Works, Transportation and Housing (SOPTRAVI by its initials in Spanish), and the Public-Private Alliance (COALIANZA).
Both institutions are now defunct. As the report notes, SOPTRAVI was dismantled for its role in awarding government contracts to the Los Cachiros drug cartel to launder drug money. COALIANZA, for its part, had become known as a “nest of corruption” before it was shuttered in 2019.
During the “Parliamentary Robbery of the Century,” an arbitrary legislative session held one day after the legislature period ended on January 20, 2014 during which 67 decrees and 100 renewable energy projects were approved without respect for due process, Bueso Majano and Muñoz Gómez were named beneficiaries of five contracts that would later become part of the Los Prados solar project..
Bueso Majano was also the legal representative of Joya Grande Park, owned by the Los Cachiros cartel, which was confiscated in 2013 by the Office of Seized Asset Management (OABI) after Los Cachiros were designated as a drug trafficking organization by the U.S. Office of Foreign Assets Control.
Based on these findings, said Castillo, they determined that community leaders opposed to the solar energy projects were at high risk.
Bueso Majano and Muñoz Gómez sold their contracts to Norfund for $11.7 million, earning $1.9 million per contract, states the report “The Corporate Assault on Honduras.”
But the indirect relationship with Los Cachiros does not end with this project. Also approved within the framework of the “Parliamentary Robbery of the Century” is the Agua Fria project, initially granted to the company Producción de Energía Solar y Demás Renovables (PRODERSSA) with participation of Roberto A. Mejía and Roberto David Castillo.
Mejía was an assistant to the National Party in the National Congress in 2014 and a lawyer for Los Cachiros, while Roberto David Castillo was sentenced to 20 years in prison as one of the architects of the murder of environmentalist Berta Cáceres and also found guilty in the “Gualcarque Fraud” case. Castillo served as the Executive President of Desarrollos Energéticos S.A. (DESA), responsible for the Agua Zarca Hydroelectric Project, which was opposed by Cáceres and the Lenca people of Intibucá and Santa Bárbara.
In 2018, PRODERSSA was confiscated by the Honduran Attorney General’s Office due to its links to Los Cachiros. Following the arrest of David Castillo in 2019, the board of directors authorized the transfer of Castillo’s and other companies’ shares to Norfund.
“We found that when these contracts were granted, the National Congress was not sitting… Therefore, the companies are illegal, they are fraudulent,” said attorney Denia Castillo. So we filed “33 complaints for corruption against different public officials, against the actors involved, before Specialized Prosecutors Unit Against Corruption Networks (UFERCO). To this day the prosecutor has not followed up.”
This lack of justice stands in stark contrast to the ease with which corporations can sue and get a response.
The Threat of Arbitration
Since February 2023, 14 arbitration claims have been filed against Honduras at ICSID, seven of which involve the energy sector. These cases are largely a reaction to the approval of the Special Law to Guarantee the Electric Energy Service as a Public Good of National Security and a Human Right of Economic Nature, which was approved in May 2022.
The 2022 energy regulation aims to rescue the National Electric Energy Company (ENEE) from imminent bankruptcy, as well as to renegotiate deleterious energy contracts with private companies.
Scatec ASA, Norfund, and KLP Norfund Investments AS brought two of these claims for a total of $400 million. According to “The Corporate Assault on Honduras,” these are aimed at “pressuring the State during the renegotiation of their contracts” and the companies would be willing “to withdraw their multi-million dollar claims if the Honduran Government satisfies certain unspecified conditions.”
The report explains that supranational arbitration claims are a “powerful tool” that allow transnational and national companies to “influence the decision-making of public officials” to the detriment of human, indigenous, labor, and environmental rights.
This is evidenced in the repeated suspensions of the arbitration suits that the Norwegian investors have brought as they reportedly seek a settlement with the State outside of the arbitration. Public officials confirmed as much to report researchers and authors.
“The strategy of criminalizing and paralyzing community members in the defense of their territories is also being used against the government,” said Castillo.
At the same time, Castillo expressed worry at the lack of coordination between the government and the communities in resistance. “If I accompany a case, the first thing to do in strategic litigation is to investigate, document, and look for strategic allies to be able to strengthen a defense strategy. However, we have been ignored, the people of the communities have been ignored.”
The report urges Honduran authorities to rethink their defense strategy and ensure transparency and greater coordination in the arbitration process to enable the participation of affected populations and organizations.
This article was adapted from an earlier version published in Spanish by the Honduran outlet Criterio.
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