What we know and don’t know about the Tumarín mega-project

A journalist’s testimony of experiences in the area where the Tumarín hydroelectric dam will be built. crossed with an economist’s analysis and reflections.

Cristopher Mendoza

Mendoza: We journalists go to where things are happening so we can talk to the people there
and give them a voice. We’re not satisfied with official statements from institutions or companies or with speeches from bureaucrats. In October 2010, we became interested in the area where they said the Tumarín hydroelectric megaproject would be built. Although we knew very little about this project, we did know that Nicaragua has more water with the potential to generate electricity than any other Central American country and we also knew that Tumarín would be the largest and most important of all the projects emerging in Nicaragua in recent years, aimed at changing the country’s power matrix and moving us from dependence on oil derivatives: a hydroelectric dam that would produce nearly 30% of all the electricity we consume in Nicaragua.

Ground Zero

To learn more about this project I had to go to Apawas, a town of 2,000 inhabitants that is pivotal to where the dam will be built. There are no telephone lines in Apawas and only two satellite phones. I didn’t know anyone there but my father is from Camoapa and he knows a friend who has a friend who has a farm there. This would be my first contact.

Apawas is a Mayangna name. This territory and the lands nearby belonged to this indigenous people, but they were pushed out by mestizo settlers from Boaco, Camoapa and Chontales about 50 years ago…

To reach Apawas I traveled for about nine hours by bus from Managua to San Pedro del Norte, then hired a boat and went on for a further 3 1/2 hours. That trip on the Río Grande de Matagalpa was unforgettable: that mirror of water, that immense river, up to 100 meters wide in some places. On the banks I saw stones where young turtles, caimans and crocodiles were sunning themselves with their mouths open. It was beyond my imagination; something I’d only seen on the Discovery Channel without knowing that such places existed right here in my own country. I also saw otters. I saw rocks with petroglyphs engraved by our ancestors. It was a magical world…

I soon discovered that what I saw that day I would never see again if the Tumarín project is implemented because the massive flooding that will result will affect the animals that spawn there and our ancestors’ relics will be submerged forever… This magical world will change if the 21.24 square mile reservoir of Tumarín becomes a reality.

The boat took me to “ground zero,” where they plan to build the dam’s retaining wall. Metal markers are already in place and lines were marked out indicating the levels the water will reach. There I met the owner of this land: Juliana González Valle. She told me that the people from the company came only once, in 2009. I asked her to tell me about it.

“I saw them embedding a pipe and making some marks. They made measurements with some rolls and ropes and began to make marks… Worried, I asked: ‘Sir, what are you doing?’ He told me: ‘This is where we’re going to build the Tumarín dam.’ ‘You’re going to build what here? Why here, and not further away?’ The man told me that the study says it has to be here and we’re all going to have to sell this land. I argued with him: ‘But we’re not thinking about selling anything.’”

An engineer named Sandro talked with Juliana and told her more: “Well, if you don’t want to sell then you’re going to have a problem, because the land registry people aren’t playing about and they’ll give you what they want, not what you ask for, because this dam will be very beneficial to the whole country, not just to you. Understand this: you aren’t going to see any individual benefit from it, except for the development of the whole country. And understand this as well: you have no choice but to sell.”

I met Juliana again a year later, in 2010, and she was still distraught. “Nobody told me anything and now, where are we going to go?” This is what concerns people when someone comes and talks emphatically about how they’ll buy their land and that something like a flood will occur. They don’t know how to react.

Jarquín: In 2008, when they first announced the launching of the Tumarín hydroelectric project on the downriver section of the Río Grande de Matagalpa, we welcomed it. Why? It’s obvious. Nicaragua has the greatest hydroelectric potential in Central America, yet proportional to its consumption it generates the least hydroelectric power.

As a fundamental requirement for consistent productivity and competitiveness and hence development, Nicaragua needs to change its power grid. Despite having enormous hydroelectric, geothermal and wind potential, we are one of the Latin American countries most dependent on oil for energy.

Copalar: A precursor to Tumarín

Mendoza: The decision to use our hydroelectric potential didn’t start with Tumarín. It began in the 1970s with the Copalar project, also in the Río Grande de Matagalpa basin, a megaproject to be financed by the Inter-American Development Bank. They said that project would change not only the country’s power grid, but also the map of Nicaragua, because if it had been implemented we would have had a third major lake in Nicaragua, in addition to Cocibolca and Xolotlán. The massive Copalar dam would have formed an enormous reservoir, half the size of Lake Xolotlán, which covers over 405 square miles. Twenty tributaries from the Río Grande de Matagalpa would flow into that reservoir. At the time, the estimated cost was US$277 million and it would produce 350 megawatts of power.

That project was abandoned, first because of the war against Somoza in the 1970s and then because of the war in the 1980s. They wanted to take it up again in the 1990s but couldn’t. Not until 2002, during Enrique Bolaños’ administration, did it seem the project would really go ahead with a consortium of transnational companies as part of the infamous Plan Puebla Panama. But it met with new difficulties, among them the steadfast and unified resistance of the population of Bocana de Paiwas, one of the entire municipalities that would be submerged thanks to the mega-dam. Paiwas is another name with Mayangna origins but there are no longer indigenous peoples there either; the population is all mestizo settlers.

Women speak out against Copalar

Notably it was the women who decided to confront the Copalar project. Women from Bocana de Paiwas organized and led popular resistance against Copalar from the “Palabra de Mujeres” radio station. The women joined together, unified their ideas, marched in the streets, distributed information, formulated slogans, protested with ongoing mobilization and made it known that the population had never been consulted about this project. It had no support from the people.

Why were the women so united against Copalar? Amongst other things, because if the whole area was to be flooded and they had to sell their land, most of it was legally in men’s names, not theirs and the women felt they would be subject to decisions by the men of the family about whether or not to sell and on the price of the land. This also stimulated the larger women’s struggle.

When I spoke to the people of Bocana de Paiwas about that era they told me the Copalar promoters gave them no information, only the warning that: “Everything here will be flooded.” Just like now with Tumarín. But the people didn’t understand what it could mean for such an extensive, hilly territory like Bocana de Paiwas, with slopes you have to climb on your knees, to be submerged.

The worst part is that they didn’t know where they would live once everything was flooded. Between 30,000 and 50,000 people from Bocana de Paiwas and the other communities were spared this anguish when the Copalar project fell through and only the Tumarín project remained. The Tumarín hydroelectric dam was just one part of the huge Copalar project; one of the three reservoirs that comprised that mega-project.

What’s a «fair price» for the land?

Let’s go back to my trip to Apawas. When I finally got to the town, the first thing I found was a man with a megaphone calling people to a meeting. It was yet another meeting to see how to resolve the conflict they were already having with Hydroelectric Plants of Nicaragua (CHN), the company implementing the Tumarín project. CHN is made up of two Brazilian companies—Eletrobras and Queiroz Galvão—plus the State-owned Nicaraguan Electricity Company (ENEL), which has 10% of the shares.

When I was there in 2010, and still today, people’s main complaint is that the company doesn’t want to pay a fair price for the lands that will be flooded by the project. That day they told me that the company had already given 8,000 córdobas (roughly US$380) to each family as a kind of compensation, a gift, for coming to invade their territory. They were asked to sign what they were told was a receipt for it, ostensibly to keep control so they could later make a report. Miguel Winchán—a very common surname in those parts—complained to me: “Do you know what the company is now saying? That those 8,000 córdobas they gave us as a gift are part of the compensation they are going to give us and that what we signed wasn’t a receipt but a commitment to sell to them at the price they put, a kind of contract that binds us to selling. I now feel like an idiot for having signed.” A lot of people like him were tricked into signing. Carlos Morales, who was at the time defending the town’s interests as a member of the Nueva Apawas Cooperative along with Winchán, told me in 2013: “Just imagine how much time has passed and we’re still in the same struggle. To this day they keep throwing that 8,000 córdoba ‘gift’ in our face and don’t want to come to an agreement with us.”

The farmers and ranchers who have to sell their land to CHN initially demanded a payment of US $572 per hectare but, because of the project, the land has been revalued and they are now demanding 60% more than that original amount. They want to sell their lands so they can buy land elsewhere, and almost certainly turn it into pastureland. We must be clear that most of the people there have no environmental awareness; what they want is a good price for their land. They aren’t indigenous people, rooted in their ancestral lands; they aren’t Mayangnas, who have a river culture; they’re mestizo peasant settlers: farmers and ranchers.

The tradespeople are even more worried. Carlos Morales told me that he’s now vice president of the negotiating commission for the Apawas tradespeople: “Look, I don’t just want them to pay me a good price for my house and land; they also have to pay for my trade route because I’ve been living in Apawas for years and have many customers in La Cruz del Río Grande and now, with this project right in the middle, I’m going to lose them.”

“Onda Local” reports on Tumarín

On my return from Apawas, more knowledgeable about what was happening in the area, we did a radio program about the Tumarín project on “Onda Local.” Participating in the program were Mauricio Lacayo, a marine biologist and faculty member of Nicaragua’s Autonomous University (UNAN), who was a consultant in the preparation of the project’s feasibility study and environmental impact study; Petrona Gago, who was at that time in the Environmental Quality Department of the Ministry of Natural Resources and the Environment (MARENA) and made several commitments during the program, among them to transmit the opinions of the people from the area who spoke on the program so as to start a review of the project’s processes; Iris Valle from the Humboldt Center, an NGO that follows up on the environmental consequences of such projects; and Alberto Espinosa, a member of the Regional Council for the South Atlantic Autonomous Region (RAAS), where the Tumarín project is located.

Espinosa was one of those who voted for Law 695, which created this project, in 2009. He candidly stated: “Yes, we passed it. This law came with representatives’ backing. I protested to Representative Eliseo Núñez Morales about the time limit we were given to study the law in detail. But what could we do? We just had to pass it because it came already sewn up from above.”

The MARENA official on the program told us that anyone interested in the environmental impact study, endorsed by MARENA in March 2010, can access it by making the respective application. I did this both as a journalist and as a citizen. I have requested access to these studies on several occasions and my request has been “received” but I’ve never received any information.

Local concerns and corporate justifications

Looking at the river from the top of a hill in Apawas, Evercio Álvarez, the síndico (natural resources official) of what they call Indigenous Tumarín, pointed below and told me: “You know what’s going to happen here? This big wall they’re going to build is going to fall apart; it’ll fall on top of us and wash us away.” I mentioned this commentary to one of the project’s engineers, who laughed: “People are crazy, that’s why they say such crazy things.” During the program, Iris Valle insisted that people have these beliefs and fears because they are uninformed, haven’t been given the slightest detail. They are just told that something’s going to happen, something big that’ll affect them and they can’t stop it no matter what they do.

Could an accident such as the one that settler was talking about happen here? A few months ago, Julio Francisco Báez, the expert on tax law, recalled in his envío article the justification for the failure to meet the project’s deadlines and the continual cost increases given by Marcelo Conde, representative of Queiroz Galvão, one of the two Brazilian companies responsible for the Tumarín project, in a 2012 interview on Canal 8, owned by the presidential family. On that occasion, Marcelo Conde said: “This region is frequently affected by hurricanes and heavy rains and there’s also a geological fault there. We’ve done similar projects in Brazil, but in Nicaragua there are two or three times as many adverse conditions. We had prepared for a more conservative situation.”

Didn’t the feasibility studies warn them about these adversities? Conde’s confession makes me doubt the quality of these studies, which they swear up and down were done correctly, but who knows? Nobody knows what they contain, with what expertise they were done, what provisions were made for any accident…

In other words, isn’t the gentleman right to fear that the dam wall will collapse and wash them away? What is clear is that everything surrounding Tumarín generates fears because it’s being treated like a state secret. There’s no information, everything is done behind our backs…

Jarquín: Energy is a public good. The cheaper it is; the better for everyone. And even more so if the power is generated with natural resources—wind, geothermic, water—which belong to the country and not to anyone in particular. Why, therefore, is there so much state secrecy? Tumarín isn’t a business deal between private parties, but a public good. It’s a governmental issue so there shouldn’t be any secrecy, although there obviously is.

Do the investors need to recoup their investment and make a profit, as any investors might expect? Of course they do. Do those financing the investors—they say it’s Brazil’s National Development Bank—require guarantees that they will recoup their credit? Of course they do. Does Nicaragua not only want to change its power grid but also reduce its energy costs? Of course it does. But, as consumers and producers, what do we gain by changing the power grid, currently so dependent on the price of oil—which Chávez didn’t sell us at the “fair price” Ortega likes so much—unless the cost of energy is reduced? These are questions the government should answer.

Will our electricity bills go down?

Mendoza: I also met people in the area where they’ll build Tumarín who agree with it, are even satisfied, and say: “The project sounds good; it sounds like it’ll help Nicaragua, like it’ll lower the price we pay for electricity.” Will it? It’s hard to know because everything about the Tumarín project has been peculiar and forever changing. In April 2010 they told us they would start work by the middle of that year, that the new hydroelectric plant would be operating by the end of 2013, generating 230 megawatts of electricity, and that the investment would cost just over US$625 million. But every year they change the project’s dates, deadlines and costs.

Almost 50% of the power we’re currently consuming in Nicaragua is produced by oil and the other 50% by renewable energy: wind, solar, hydroelectric, biomass, geothermic… The renewables have been advancing rapidly in recent years. They now say that Tumarín will produce 253 megawatts and, when it does, we’ll have an even better ratio: 90% renewables and 10% from oil. This will happen five years after they start to build Tumarín but it still hasn’t gotten started; the delays continue…

They tell us that our electricity bills will go down if there’s a major change in the national power grid. They tell us the country will save a lot by not having to purchase as much oil to produce electricity. They tell us this will improve Nicaragua’s gross domestic product. They tell us the project will create a lot of employment in an area of high unemployment and that’s why Tumarín will revitalize that area and the country. Is it all true? How can we know when the company announced in 2011 that the cost of the investment in Tumarín had risen to US$800 million and in 2012 that it had increased to US$1.1 billion?

Jarquín: The Brazilian ambassador to Nicaragua has compared the potential impact of the Tumarín hydroelectric plant on Nicaragua’s development to that of the gigantic Itaipú hydroelectric plant on Brazil’s development. A bill amending the 2009 law that authorized the Tumarín construction was sent to the National Assembly with significant modifications to the project in terms of its capacity, investment amount, financial incentives, etc. While acknowledging the efforts made to change the country’s power grid to make it less dependent on oil, the bottom line is that unless Nicaragua appreciably reduces its electricity rates—by far the highest in Central America—we will never improve productivity and competitiveness, and thus won’t have investments, new jobs or the economic growth we need to get out of the backwardness and poverty we’re in. With the current rates [just raised] and their impact on production costs and the cost of living, almost the only attraction to investing in Nicaragua is its low wages. The electricity rate is literally the key to understanding if Tumarín will have an impact on Nicaragua’s development, equivalent to what Itaipú has had in Brazil.

How much does a megawatt
of power really cost?

Mendoza: If the international price of a megawatt produced from hydroelectric power varies between US$1.5 and $2 million, and Tumarín is such an expensive investment, how much will a megawatt produced by that megaproject cost the country? Given the international reference rate and the project’s current cost, it’s amazing what each megawatt produced in Tumarín is going to cost us. To be in line with those international prices, this project shouldn’t cost more than about US$500 million, yet they first told us it would cost $625 million, then they said $800 million and now it seems they are saying US $1.1 billion, which doesn’t even include the cost of building the road from San Pedro del Norte to the project area because that has now become the government’s responsibility. It’s a super-inflated amount. Why the difference? Into which pockets does this money go? Other private companies generating renewable energy in Nicaragua have protested, adding that in addition to being very costly, the Tumarín project has been privileged with special legal treatment.

At the rate way we’re going we could end up paying almost the same price for a megawatt of renewable energy as a megawatt produced by oil… What criteria, what references have been used in Tumarín to set this megawatt price? Nobody knows. It has been argued that that the project has become more expensive because the initial capacity was 220 megawatts and will now be 253. It has also been alleged that the cost has increased through the construction of infrastructure such as that 31-mile road and a bridge over the Río Grande de Matagalpa as well as the relocation of some 3,000 people. But with all this and more, the cost of US $1.1 billion still seems inflated.

Jarquín: Itaipú, a binational hydroelectric project for Brazil and Paraguay over the River Parana, was the largest in the world until China recently constructed its “Three Gorges” hydroelectric plant. With its installed capacity of 14,000 megawatts, Itaipú has supplied almost all of Paraguay’s electricity needs and just under 20% of that consumed by gigantic Brazil. However, its positive impact hasn’t been limited to supply. More importantly it has had a significant impact in giving Brazil an electricity rate that contributes to its competitiveness. The price for Itaipú electricity is so cheap that the Paraguayan Foreign Minister demanded an increase, even though they had revised it a year earlier, tripling the annual amount Brazil pays Paraguay.

The impact that the Tumarín project will have on Nicaragua’s electricity rate isn’t clear—or at least the government hasn’t informed us about it—but they’re now talking about an investment amount per megawatt of installed capacity that’s far higher than that of equivalent projects in other countries. Itaipú began operating 25 years ago, increased its capacity to its current level only five years ago, and invested approximately US$1.5 million for each megawatt. In Tumarín they are talking of investing more than $4 million per megawatt. Although there’s been an increase in costs over time, this figure is an eye opener.

Why so many delays?

Mendoza: And why have there been so many delays in a project of such significance for the country? Why have the deadlines and the prices been changed so many times? What interests are at stake and who’s behind this mega-investment? The main argument that’s put forward is that the people in Apawas and the other communities, the settlers, those who own the land, have become intransigent and won’t come to an agreement about selling their land. They also say that the delay is due to some people who don’t want to sell their lands and have held a year-long strike in La Estrella, about three hours upriver, close to the municipality of San Pedro del Norte. We are told that this strike has held up the trailer trucks filled with the company’s construction equipment and tractors, which aren’t being allowed through.

A priest who knows the people of San Pedro del Norte well told me that these peasants show all the mistrust and individualism of a peasant culture. They were contras, are now medium landowners with 34.5 to 172 acres, and are very united in their determination to keep the company out until everyone is paid to the last penny.

They also say that the delay is because the Albanisa consortium is increasingly interested and involved in renewable energy projects and that until the dozens of Venezuelan thermal plants that Hugo Chávez has sent to Nicaragua since 2007—which work with bunker also from Venezuela—cover their costs, Tumarín won’t start operating. That suggests that Albanisa is involved in the Tumarín project. The 2011 change of government in Brazil has also been alleged to have affected and justified the project’s delays.

Jarquín: Once again the Tumarín hydroelectric project, the flagship for changing the power grid, seems to be having serious difficulties in becoming a reality. Although as usual, the government has said nothing about it, the information has been spreading in business circles, including those developed under Ortega’s auspices. It’s bad news for the country, and we Nicaraguans would know what’s happening if we had a responsible government.

The difficulties facing the project aren’t technical because it’s a perfectly feasible project, but derive from what’s now euphemistically called the “business model”: how the different corporate players involved in the enterprise work together and what previsions are there for investment and the recovery of that investment. Because of the government’s secrecy about a matter of national interest and the limited information on which to form opinions, it’s very hard to make definitive judgments about what’s happening, but there’s very little doubt that the investment amount, announced and now established by law, looks inflated—well above the average for similar projects in Central America. That could be impeding the “business model” because it would doubtless expose Brazil’s National Development Bank and other potential funders to journalistic scrutiny. The conflict of interests between Ortega as government and Ortega as entrepreneur could load the dice across the energy industry and scare off responsible investors.

What about the environment?

Mendoza: Finally let’s say somethin about the environment in that area. The Brazilian investors reported in 2010 that they were committed not only to changing the power grid but also to “good environmental practices” and announced that they will reforest 900 hectares on the banks of the Río Grande de Matagalpa. In that same year, the renowned Nicaraguan scientist, Dr. Jaime Incer Barquero, handed over to the minister of energy and mines, Emilio Rappaccioli, the guanacaste (sometimes called Elephant Ear tree) and cedar tree seeds that represented more than a million trees the company pledged to plant.

When we researched Tumarín, I spoke with Incer Barquero by phone and he confirmed that they already had a nursery going with 460,000 seedlings to plant in the area. In 2012, Marcelo Conde reported that they had planted out more than 26,000 of them, thus initiating a new forest in Tumarín. But when I recently asked Carlos Morales to report from Apawas, he confirmed that they had been planted but the cattle had eaten them because they hadn’t come to any agreement with the company about the price of their lands. “The young cows like to eat green leaves,” the boy told me. Those 26,000 plants no longer exist.

It’s clear that the environment in the area will be affected. It would be impossible for it not to be. Some people there told me “it’s going to reduce the flow of the river and we’ve always lived from fishing, we’ve always used boats for transport, we’ve gone up and down this river all our lives… so when this happens, everything will change. What’ll we do?” But nobody’s telling the people what they are going to do when Tumarín changes the landscape and their lives…

Jarquín: Hearing all this reinforces a belief I’ve held for some time: that so far, those who are behind this project aren’t so much investors as speculators, dealers in concessions, hoping to make enormous profits from selling rights to concessions for building other infrastructure in the area. That’s all.

Cristopher Mendoza is a radio journalist for the “Onda Local” program and Edmundo Jarquín, a former Inter-American Development Bank official, has written numerous articles on the Tumarín project over the past two years.

Print text

Send text