Chinese energy development company Sinohydro announced it has signed a contract for the construction of the largest to be hydropower plant project in Ecuador. At the same time, this will also be the largest overseas hydropower project undertaken by a Chinese company.

The Coca Codo-Sinclair hydropower project is a USD 2.3 billion investment. The signing ceremony was attended by the Ecuadorian President, the National Secretary of Planning and Development, and other country's senior officials, along with the Chinese Ambassador in Ecuador and the vice president of Sinohydro and other company officials. The project represents a great employment opportunity for Ecuador, as well as being a major electricity producer for the country's rising needs.

The numbers are indeed impressive – the power plant will consist of eight generation units, totalling in 1.5 GW of power generating capacity, capable of producing 8.8 TWh annually. The project will mostly be financed by the Export-Import Bank of China (85%).

San Rafael water falls. (Image: Colonos)

Another side of this story is that there are major concerns about the environmental impact of the Coca Codo-Sinclair project. As with every hydropower project using dams, there is a consequence – flooding of upstream river banks. One of the major sites that could be affected is one of the greatest natural attractions in the country, the San Rafael Falls, which could end up getting dewatered.

Local indigenous people and environmental activist groups are still strongly opposing the project, which originates back in the 1980's, when it was first stopped due to devastation caused by the erruption of the Volcano El Reventador.