Guatemala. Construction of the Palo Viejo hydropower plant

Palo Viejo is Enel Green Power’s fifth hydroelectric project in Guatemala (Municipality of
San Juan Cotzal, Department of Quiché) with a capacity of 84 MW and an investment of
about 185 million euros.

The project has been approved by all the relevant (national and local) authorities. Since it
is a run-of-river hydro power facility, it has an extremely reduced impact, causing neither
flooded lands nor expropriations (the plant has been built in a single private area), or
people relocation. Specific commitments of local flora recovery are aimed at conserving the
ecosystem of the site area. This renewable source project is a sustainable contribution to
Guatemala’s economic growth.

In 2008 Guatemala voluntarily shared and signed a cooperation agreement with the
Municipality of San Juan Cotzal, under which it committed to develop socially useful
projects for a 20 year-period. Up to now 24 projects have been or are being completed.
Social cooperation and functional infrastructural projects (a road network, for instance)
already totalize 4.5 million USD.

Social responsibility tasks and projects have been launched and successfully achieved, with
mutual satisfaction, in every Guatemalan community in which EGP manages its plants.
Social cooperation projects have been carried out both directly and with the involvement of
Enel Cuore Onlus.

950 Guatemalans are engaged in construction work of the plant, of whom 300 from the
neighboring Ixil areas.
Chronicle of the protest and road block: January 3rd. to May 2nd. 2011

On January 3rd. 2011, the community of San Felipe Chenlá, one of the 36 communities of
the Municipality of San Juan, began a road block, alleging that the supply of funds for the
construction of a school in this community had been delayed. The protest was led by a few
NGOs (CONAVIGUA, MOJOMAYA, FUNDAMAYA). The most radical leaders monopolized the
protest, unsuccessfully trying to extend it to other communities and rejecting several
mediation attempts. The road block continued until May 2nd. 2011.

Except for a short period in January, the road was always blocked, causing significant
damages not only to the company, but also to local workers.

Protest leaders never objected to the construction of the plant, claiming instead an
absolute right of those of Mayan decent to lay claim by inheritance to local natural
resources, even if these are on private land belonging to others. Claims have always been
exclusively economic, for instance the equivalent of 20% of revenues from the energy
generated by the plant.

Despite the campaign ignited by the most radical elements, while the block was taking
place Enel Green Power never avoided dialogue, in particular:
- it participated to four public meetings with the communities and their leaders
during the more than 90 days of uninterrupted road blockage;
- it promoted and participated to two mediation attempts (March 28th., April
29th.), which were not attended by the protest leaders, although they had
requested them;
- it launched a broad dialogue with all stakeholders, including those the
protest leaders considered most responsive to the local cause, specifically
Mon. Ramazzini, bishop of S. Marco, and Vitalino Similox, President of the
Guatemalan Episcopal Conference. Other NGOs were involved in the dialogue,
as well as institutions and diplomatic representations of various countries, etc.
Enel Green Power has always prioritized dialogue, but in a legal context and observing
mutual rights and respect.
On May 2nd of last year, after a long negotiation facilitated by Enel Green Power (EGP),
an agreement was reached between the Community of San Felipe Chenlá and the
company. The NGOs removed the unconstitutional road block that obstructed public
access to the construction site of the Palo Viejo hydropower plant and EGP withdrew
the complaints it had filed against the leaders of this protest, which was causing
significant damages to the company, since it had stopped site work, but also to the
Communities, since jobs were lost and associated local industry was paralyzed. The
agreement was signed before the Justice of the Peace, of the parties’ witnesses of
honor (including representatives of the Guatemalan Episcopal Conference and of the
Evangelical Church), of the parties’ legal representatives and of a large public. The end
of the road block allowed resumption of a normal communication process with the
Communities on the tasks prescribed by the cooperation agreement that had been
signed and shared back in 2008 (the program has already generated, with significant
local benefits, works totalizing more than 4.5 million USD).
After the road block ended, on average one monthly public meeting was been held,
aimed at ensuring a continuous dialogue with the Communities and at further improving
the execution of the cooperation plan and its evolutions. These meetings were attended
by local and Enel Green Power representatives as well as several witnesses.

Enel Green Power proposed that the original cooperation plan with the
Communities should evolve to become a shared 20-year program based on an indepth study of local needs. This program, available on this website at the link
Sumando Voluntades - Plan de Responsabilidad Social Corporativa (August 2011),
in Spanish – centred on replicable projects capable of generating self-sustained
and sustainable development – focuses on youth and adult professional training,
environmental education, opportunities from water and forest management and
local entrepreneurial support.

The plan is to be developed by an NGO and followed by a management committee
that will include all parties involved: the Municipality, the Communities, the
parties’ witnesses of honour and EGP.

EGP is developing several socially-focused projects in the other four plants it
manages in different Guatemalan regions, and in other areas. The company has
thus gradually consolidated a model for dialogue which demonstrates its
intention to continue to work closely with the Communities close to its plants (as
is the case in every country where the Group operates).