Energy
Santa Cruz River Hydroelectric Complex
Basic Information
Name: Santa Cruz River Hydroelectric Complex
Chinese Name: 圣克鲁兹河水电站
Location: Santa Cruz Province, Argentina; one dam 185 kilometres from the mouth of the Santa Cruz River and a second 250 kilometres from the river mouth.
Type of Project: Energy (hydroelectric generation).
Project Developer: Represas Patagonia, a temporary consortium comprising China Gezhouba Group Company Limited (a subsidiary of China Energy Engineering Corporation), Hidrocuyo S.A., and Electroingenería S.A.
Main Contractor: China Gezhouba Group Corporation.
Financiers: Bank of China; China Development Bank (CDB); Industrial and Commercial Bank of China (ICBC).
Cost: 4.7 billion USD
Project Status: Under construction.
Project Outline
The Cóndor Cliff Dam will be a 950 MW, 70-metre-high hydropower dam 130 kilometres to the east of the town of El Calafate in Argentina’s Santa Cruz Province; La Barrancosa Dam is being built 170 kilometres from the city of Comandante Luis Piedrabuena, also in Santa Cruz Province, and will be 45 metres high, with an installed capacity of 360 MW. Both dams are part of a project for the hydroelectric exploitation of the Santa Cruz River in the eponymous province in the south of Argentina. Projected to produce 15% of the country’s hydroelectric generation and 5% of the national electricity supplyp. 91 , the development has been negatively received by local people and activists who claim it will have impacts on the culture, lifestyle, and sacred lands of 14 indigenous communities who live in the area. It also risks pushing to extinction the Macá tobiano (Hooded grebe), an endangered waterfowl whose numbers have decreased by 80% in the past 25 years; it is estimated that fewer than 800 individuals remain.
Plans for this hydroelectric complex were conceived in the 1950s and a series of preliminary studies was carried out before 1980. However, it was not until 2007 that then president Cristina Fernández de Kirchner (in office from 2007 to 2015) revived plans for the construction of the two dams under the names Kirchner and Cepernic as a tribute to former president Néstor Kirchner (also her late husband) and Jorge Cepernic, a former governor of Santa Cruz Province. From the beginning, there has been a lack of transparency in the tendering process. Four entities participated in the public tender for this project. The Represas Patagonia consortium—comprising China Energy Engineering Group Company Limited (CEEC) through its subsidiary China Gezhouba Group Company Limited, as well as Electroingenieria S.A. (Argentina), and Hidrocuyo S.A. (Argentina)—submitted the third-highest of the four bids, but was then allowed to make a second, discounted offer, thus reducing its bid to the lowest, in a move that was widely criticised and denounced as irregular.
On 20 August 2013, the Argentine Ministry of Federal Planning, Public Investment, and Services awarded the contract for the work to the Represas Patagonia consortium. The two dams were to be constructed over five years at a cost of 4.7 billion USD. One year later, in July 2014, during Chinese President Xi Jinping’s visit to the country, the Argentine Government signed a credit line for a total of 4.713 billion USD, with 2.498 billion USD from the China Development Bank (CDB), 1.414 billion USD from the Industrial and Commercial Bank of China (ICBC), and 801 million USD from the Bank of China. The loan had an interest rate of Libor + 3.8% and a five-year grace period (payments were expected to begin when the project was finished).
Construction began in early 2015. In 2016, the Argentine Association of Environmental Lawyers of Patagonia and the Forest Bank Foundation (Fundación Banco de Bosques) initiated legal action, denouncing the lack of a proper environmental impact assessment (EIA) and public consultation processes. In December 2016, the Supreme Court of Argentina suspended construction of the dams until the EIA process and a hearing required under Argentina’s Environmental Impact Law of Hydraulic Works (Law 23,879, which sets out a detailed EIA procedure) have been conducted. The suspension was also based on the grounds that the dams could destroy archaeological sites and have a negative impact on the Perito Moreno Glacier within Los Glaciares National Park—a top tourist spot in Argentina and one of South America’s largest bodies of ice.
In 2017, then president Mauricio Macri (in office from 2015 to 2019) considered cancelling the dams. He was ultimately unable to do so, mainly because of a ‘cross-compliance clause’ that deems the construction of the dams a prerequisite for other Chinese-financed projects in the country. Although civil society organisations and scientists had warned authorities to stop the project, the government eventually decided to lift the precautionary measure and approve the EIA. In September 2017, after the height of the dams and the number of turbines were scaled down to reduce the environmental impact, the Supreme Court agreed work could resume.
Judicial, political, and technical issues persisted in the following years and were exacerbated by the Covid-19 pandemic, causing delays and the elapse of the initial grace period. By August 2021, Chinese banks had suspended the disbursement of the remaining loan amount (about 1.7 billion USD of the total 4.7 billion USD had already been disbursed) and required Argentina to begin repaying the debt, although the dams remained uncompleted. In October 2021, the Argentine Government negotiated an addendum to the contract and an extension of the payment period. According to the latest work schedule approved at the end of 2021, La Barrancosa is expected to come into operation in 2024 and Cóndor Cliff at the end of 2027, almost eight years later than originally planned.
Project Impacts and Controversies
- Employment and Labour Rights: The project is estimated to employ 5,500 people during the construction period (no information is available about whether these are Chinese or local workers). Once complete, the Hydroelectric Complex will employ only 108 people for operations, maintenance, and management. There have been several reports of controversies related to labour rights, especially during the pandemic.
- Environment: The site is a natural ecosystem of high preservation value and the project has the potential to push to extinction the endangered, endemic Macá tobiano (Hooded grebe), which lives in the area. The project EIA was undertaken in a rush by Serman y Asociados—a firm that not only had questionable ties to the authorities in charge of the evaluation of the project, but also wrote an EIA that lacked key information and a deep analysis of the environmental impacts.
- Land: The dams are expected to flood more than 47,000 hectares of land. Indigenous groups say the project’s location falls within their sacred lands.
- Local Community: The project does not require people to be resettled, however, the construction will impact 14 indigenous communities in Santa Cruz, especially the Comunidad Mapuche Tehuelche de Lof Fem Mapu in Puerto Santa Cruz, which is in the direct area of the project.
- Governance and Financing: As discussed in the background section, there has been a lack of transparency in the tendering process. Criticisms also focus on the fact the financing contract signed with the CDB for the dams is linked to the financing of the Belgrano Cargas Railway through a cross-default clause according to which cancelling one project could stop the financing for the other—despite the fact the two developments are unrelated.
The dams have been controversial since their inception, especially in relation to their expected environmental impacts. Both dams constitute a threat to access to water for future generations and will have negative impacts on large river and glacial ecosystems including the iconic Perito Moreno Glacier, which is a World Heritage Site.
In December 2016, the Supreme Court of Argentina issued a precautionary measure that suspended construction work until the EIA and a public hearing provided for in the Environmental Impact Law of Hydraulic Works had been undertaken, ‘or until the moment the final judgment is issued, whichever occurs first’ (read also this analysis in Diálogo Chino). In July 2017, a public hearing was held at the National Congress, in which nongovernmental organisations warned of the deep deficiencies and technical and informational omissions in the original EIA presented by Emprendimientos Energéticos Binacionales S.A. (EBISA). They argued that EBISA lacked the necessary independence and suitability for this type of study because its former president, engineer Jorge Marcolini, was also an official of the ministry that had to evaluate the EIA. In addition, EBISA was not authorised to carry out analysis of the environmental risks of the work because it was not registered in the Registry of Environmental Impact Consultants of the Ministry of the Environment at the time of publication of the EIA.
Moreover, the EIA lacked crucial information, and state technical organisations such as the Argentine Institute of Nivology, Glaciology and Environmental Sciences and the National Institute of Seismic Prevention did not have enough time to go over all the details and implications before the EIA was finalised. These shortcomings became evident in November 2019 when landslides were detected on the banks of the Santa Cruz River at the site where the Cóndor Cliff Dam was to be built. Calculation and analysis errors in the construction of the Cóndor Cliff Dam caused a 20-metre crack in one of the landfill containment slopes beside the Santa Cruz River, which forced a redesign of the project and generated an additional outlay of 250 million USD—that is, about 5% of the total value of the project. In mid 2021, the problem worsened and it was confirmed the crack was by then at least 70 metres long. The company has built retaining walls to stop its advance, although various groups complain this is only a temporary solution.
Many potential social impacts in the area remain unaddressed. While the project does not require people to be resettled, the construction will impact 14 indigenous communities in Santa Cruz, especially the Comunidad Mapuche Tehuelche de Lof Fem Mapu living in Puerto Santa Cruz, within the area of the project. For these communities the river is a fundamental social space, and the project will impact their burial grounds and community dynamics. In addition, the works are being undertaken with no free, prior, and informed consent—a right acknowledged by the International Labour Organization Convention No. 169, which Argentina has ratified, and the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). In August 2017, the Lof Fem Mapu community filed an appeal against the national and provincial governments and against the company over the lack of free, prior, and informed consent. On 30 October 2017, a federal judge ruled in favour of the community, ordering the state to set up a dialogue. Between March 2018 and November 2019, six dialogues were held. In the final dialogue, an intercultural cooperation agreement was signed, allowing the presence of indigenous intercultural technicians at the construction sites.
The companies and financiers involved, as well as the Chinese state, have not responded to concerns and complaints made by civil society organisations. These include a letter dated 20 May 2020 addressed to the Minister for Commerce of the People’s Republic of China and the Director of China’s State-Owned Assets Supervision and Administration Commission signed by 73 civil society organisations from Argentina, Peru, and Ecuador. The letter raised concern about the project and demanded immediate action—in particular, insisting on the suspension of construction until a free, prior, and informed consultation process with affected indigenous communities was conducted, and a comprehensive EIA was undertaken that includes environmental and social impacts. The letter also raised issues related to Covid-19, asking the Chinese Government to exclude these controversial projects from receiving possible pandemic-related financial support.
During the pandemic there have also been reports of violations of labour and health rights of the workers employed on the project, particularly in terms of overcrowded conditions, lack of epidemiological control, lack of Covid-19 testing, and insufficient sanitation. In early 2020, the workers complained they had not been given any health or safety guarantees and quarantine measures were not complied with. Due to a growing Covid-19 outbreak in late October 2020, health authorities ordered the total closure of the Cóndor Cliff site for three weeks.
Another controversy is related to the fact that the financing contract signed with the CDB for the dams is linked to the financing of the Belgrano Cargas Railway through a cross-default clause according to which cancelling one project could stop the financing of the other. This means failure to realise the Cóndor Cliff–La Barrancosa complex could affect the funding for other infrastructure projects in Argentina. At the end of 2021, financing conditions as well as disbursements continued to be a critical issue in bilateral talks (for more context on the relationship between China and Argentina, read our country profile). However, in January 2022, negotiations were resumed and China accepted a financial addendum that reactivates the financing and contemplates the additional costs motivated by changes to the initial design. This addendum was finalised after President Alberto Fernández’s visit to Beijing in February 2022, when new financing packages were negotiated. As of April 2022, the project is advancing even though the complaints about the environmental and technical impacts remain unaddressed.
In-Depth Sources
Civil Society Organisations. 2018. ‘Breach of the Extraterritorial Obligations of the People’s Republic of China: Human Rights Violations at the Cóndor Cliff–La Barrancosa Hydroelectric Complex on the Santa Cruz River.’ Letter. Link.
Fundación Ambiente y Recursos Naturales [Environment and Natural Resources Foundation] (FARN). 2016. Being Informed is Part of the Solution: Dams on the Santa Cruz River. Buenos Aires: FARN. Link.
Fundación Ambiente y Recursos Naturales [Environment and Natural Resources Foundation] (FARN). 2016. ‘Beyond the Dams.’ Environmental Pulse Magazine, August. Link.
Fundación Ambiente y Recursos Naturales [Environment and Natural Resources Foundation] (FARN). 2018. ‘False Promises: The Dams in the Santa Cruz River.’ News, 20 July. Buenos Aires: FARN. Link.
Lara, Tais Gadea. 2020. ‘New Argentina Government Reactivates Controversial Patagonia Dams.’ Diálogo Chino, 25 February. Link.
Mora, Sol. 2018. ‘Social Resistance to China’s Cooperation in Infrastructure: The Kirchner–Cepernic Dams in Argentina.’ Colombia Internacional (94): 53–81. Link.
