Panama's federal government has said that it will work with project financiers to replace Generadora del Istmo S.A. (Genisa) as developer of the 29-MW Barro Blanco hydropower project due to repeated environmental and social concerns.
Construction of the run-of-river plant was halted by the Authoridad Nacional del Ambiente (Anam) in February due to environmental impact study non-compliance and disputes with indigenous groups in the Ngabe-Bugle region.
"During the Barro Blanco dialogue process and based on input from the indigenous commission, as well as that from the government technical team, recurring administrative faults and inadequate development were found," a government statement said.
A panel including government and indigenous representation will be established later this month, the government said, to review the economic, legal and social impacts associated with Barro Blanco as the project moves forward.
A Genisa statement said the company had not been notified of the government's decision, but that the company is hopeful it can "still reach some type of conciliation."
Work on the project's infrastructure is about 90% complete.
Barro Blanco is located on the Tabasara River within Panama's Chiriqui province. Genisa was awarded a concession for the project's development in 2007 by power regulator Autoridad Nacional de los Servicios Publicos (Asep) after bidding US$750,000 for the project.
Financing for the US$78 million project is reported as coming from the German Investment Corporation, Netherlands Development Finance Company and Central American Bank for Economic Integration.
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