Environment & Energy Report

Indigenous Groups Cry Foul in Vote on Mexican Power Plant

March 13, 2019, 10:00 AM

Mexican indigenous and community groups are casting doubt on the results of a “consulta"—public referendum—organized by the new administration to gain public approval for a power plant in central Mexico.

The dispute touches on two campaign themes of Mexican President Andres Manuel Lopez Obrador who pledged during last year’s campaign to expand the grid and cut electricity costs, and to support rural and indigenous communities.

Nearly 60 percent of the voters who participated in the Feb. 24 public referendum backed the combined-cycle natural gas project. The mostly complete plant is located in scrubby and arid plains about 100 miles south of Mexico City in a rural indigenous community, Huexca, in the state of Morelos.

Community activists, however, say that several factors make the vote meaningless, including an expansion of voter eligibility to include the entire state of Morelos, as well as 25 municipalities in Puebla and nine in Tlaxcala. Both states would have to carry a gas pipeline related to the project.

“We feel that the voting was manipulated,” said Juan Carlos Flores, a community leader who opposes the plant’s construction.

“The indigenous communities have the right to decide whether the project can exist in their territory or not, but the president allowed third parties to determine whether the project would take place,” he added.

But Mexican energy specialists say the conflict represents the type of problems that could undermine investor confidence in energy projects.

“My concern is that the investment dollars are going to look elsewhere,” Andrea Calo, director of Market Intelligence-Mexico at Customized Energy Solutions, told Bloomberg Environment.

Indigenous Activist Murdered

The conflict over the plant is an example of the contradictions Lopez Obrador faces: During his campaign he both urged a nationalization of electricity generation and pledged to boost the respect granted to indigenous and rural communities.

The political volatility around plans for the project spiked when an indigenous community leader, Samir Flores Soberanes, was assassinated by unknown assailants three days before the consulta vote took place.

The Morelos attorney general has said the murder was not related to the project, but the community activist group that Flores led, the People’s Front, has said they blame the federal government for Flores’ death.

For Lopez Obrador, the Huexca plant represented an opportunity to both expand the availability of electricity and help rural citizens.

The site for the plant was chosen on the basis of its central location between Tlaxcala, Puebla, and Cuernavaca and the growing demand for power in an industrial zone in nearby Cuautla, Morelos.

Almost Complete

The fact that the plant is almost complete was a factor in the vote. Mexico’s national power company, the Federal Electricity Commission, or CFE, had already spent more than $700 million on the natural gas-fired plant since it was first planned in 2011.

Its completion was blocked, however, by over 20 “amparos” or temporary injunctions filed by neighboring indigenous communities, based on concerns about water sourcing and its proximity to the Popocatepetl volcanic area.

Most of the injunctions have been resolved in court, apart from one that raises questions about whether enough water for the power project could be provided by a nearby wastewater treatment plant.

The indigenous community has argued that additional water will be drawn from the nearby Cuautla River and they continue to file injunctions.

Under Mexican law, indigenous community approval is required for projects to move forward if a project would affect their lands. The plant currently only requires about 500 feet of additional gas pipelines.

Locals Promised Final Say

Lopez Obrador promised that these communities would have the final say in this vote, publicly stating that “even if there are shouts and fist-fights, it will be the pueblo that will decide on this work”.

Instead, eligibility for voting was expanded beyond the indigenous communities to nearby cities, including Cuernavaca, which overwhelmingly voted in favor of the project, and it is now expected to move forward, given the president’s interest in its completion, according to Dwight Dyer, a former senior Energy Ministry official in the Pena Nieto administration.

The Nahua groups in Huexca have opposed the project based on concerns about where cooling water would be secured for the plant, challenging the assertion that enough surface water is available. They have also raised concerns about methane leakage from the gas pipeline that is part of the project.

Lopez Obador has pushed for the completion of the proposed thermoelectric plant, which is designed to generate up to 622 megawatts of power, as a way to expand the CFE’s generation portfolio and potentially reduce electricity rates for the surrounding states.

“The administration has a plan to reverse the spread of private companies producing private electricity,” said Ernesto Velez, an independent energy project manager in Mexico City not affiliated with the facility. “This plant was a good target because it is already almost completed, meaning more generation capacity for the CFE.”

Land Issues Problematic

Yet the effort to do so with what seemed to be a relatively low-cost plant illustrates the challenges in building new electricity infrastructure in Mexico, especially in communal or indigenous territories. These challenges come from the federal requirement to get community approval, a process that invites conflict when companies move forward with infrastructure projects and then try to go back and push through the required consent.

“This is a good example of bad management of a project,” said Daniel Gomez, a water law expert with V&A, a Mexican environmental law firm focused on regulatory issues.

“This requirement for a public consultation has been in the law for 20 years now, but they did not do what they needed to do to get meaningful consent. Before you start construction, it would be better to get in touch with the community,” he said.

Several community rights experts also are critical of Lopez Obrador’s decision to use a consulta to move the project forward, saying it is an unorthodox method for the president to be able to push his views and then argue that they are publicly supported.

“It was entirely a sham process—it did not follow any of the legal requirements,” Dyer said. “The president made sure to communicate his preference. The fact that an indigenous environmental activist was murdered a few days before the consulta did not help to make it a transparent process.”

To contact the reporter on this story: Emily Pickrell in Mexico City at correspondents@bloomberglaw.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Steven Gibb at sgibb@bloombergenvironment.com; Rob Tricchinelli at rtricchinelli@bloombergenvironment.com

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