International complaints highlight looming environmental disaster of Alto Maipo Hydroelectric Project, Chile

January 24, 2017

Complaints presented before accountability mechanisms at the Inter-American Development Bank (IDB) and the International Financial Corporation (IFC) in Washington, DC for non-compliance with operational policies in their investment in the Alto Maipo project

WASHINGTON, DC – New financial tremors are shaking the Alto Maipo Project, as two international complaints were filed, one before the Independent Consultation and Investigation Mechanism (MICI) of the IDB and the Compliance Advisor Ombudsman (CAO) of the IFC, for lack of compliance with their environmental and social policies and access to information policies, among others. Both banks invested in the project after it was already under construction, and without proper evaluation of the studies carried out by the company – studies that lacked rigor in determining the risks and severe impacts the run-of-the-river project entailed for the Maipo River watershed.

“In 2015 we warned these same institutions of the financial risk of a disasterous project like Alto Maipo. The project’s implementation hasn’t taken into consideration the precautionary principle or the preventive principle enshrined in Chile’s environmental legislation, which should have detained the project’s evaluation, authorization, and initiation, which puts at risk the storage of potable water and its distribution to the capital of Chile, Santiago, and the entire Metropolitan Region,” confirmed Juan Pablo Orrego, who traveled to present the complaints with Marcela Mella, spokesperson for the No Alto Maipo Citizen’s Coordinating Committee.

Through their complaints, petitioners are calling for the banks to review whether the project complies with their policies. They are furher asking the banks not to fund the unexpected cost increases of the project, and instead to divest completely from Alto Maipo.

“The environmental and social policies of the IDB and IFC were created to avoid environmental damage and human rights violations during a project’s implementation. When the banks stop respecting these policies, communities on the ground suffer the consequences. We hope the MICI and the CAO comply with their mandate to investigate and recommend strong corrective action in the Cajón del Maipo and in Chile,” stated Carla García Zendejas of the Center for International Environmental Law (CIEL).

The complaints were presented by a coalition of Chilean and international organizations, including the No Alto Maipo Citizen Coordinating Committee, Ecosistemas, CIEL, International Rivers, and the Natural Resources Defense Council (NRDC).

Alto Maipo suffered serious problems throughout 2016. Unexpected engineering complications resulted in construction delays. Projected costs of the project grew by 22%, causing discord between investors, and just last week, the Luksic group took a $350 million loss to pull out of the project.

Despite these problems, the project still has investment from four Chilean Banks, two multilateral banks and 3 foreign lenders, the US Overseas Private Investment Corporation, the German DNB, and Norweigen KfW.