El Fraile Small Hydro Power Plant
Host party(ies) Panama
Methodology(ies) AMS-I.D. ver. 17
Standardised Baselines N/A
Estimated annual reductions* 14,011
Start date of first crediting period. 15 Dec 11
Length of first crediting period. 7 years
Period for comments 22 Sep 11 - 21 Oct 11
PP(s) for which DOE have a contractual obligation Carbon Management Consulting Ltd.
The operational/applicant entity working on this project has decided to make the Project Design Document (PDD) publicly available directly on the UNFCCC CDM website.
PDD PDD (324 KB)
Local stakeholder consultation report: N/A
Impact assessment summary: N/A
Submission of comments to the DOE/AE Compilation of submitted inputs:
 	DOE to be more careful so that this is a genuine CDM project. What is the exact project cost? The project cost is covering what? Each value considered must be validated with proof. The machinery is second hand purchased or fresh and new from an OEM? In either case DOE to check all the quotations, proposals, purchase orders, invoices, way bills, transport bills, proof of payments like bank statements. DOE to check with banks by way of written confirmation the amount transacted, to whom the money is paid, when the money is paid, is the party paid is the correct party as shown in the purchase orders. It may so happen that the values, party names, dates are fabricated and misrepresented in this project. DOE should terminate their contract for this project immediately. This is the only way out to protect the value of CDM process. If the PP is purchasing second hand or second quality equipment and inflating the purchase order values and invoices, this must be probed thoroughly and real values to taken for additionality calculation. Then Iím sure the additionality is not there at all in such a situation.

 	 How is the base line defined in this project? Is Base line hypothetically defined with no proper evidences and proper justification? In such case, DOE cannot take the base line as suggested by the PDD.  Please check that there are real emission reductions beyond the real and factual base line. It may so happen that this project qualifies for no CERís. DOE cannot assume values and things as giving by this PP. Whatever values are considered throughout the project in all documents including the real DPR (not the one prepared for CDM, the one given to the banks and others), they must be validated, verified and double checked. Do not ask PP for DPR. Ask the parties who have been given DPR by the PP. Get directly from the bank and others by each page of the DPR and Feasibility report signed. Such document can be considered as a real DPR or FR. UNFCCC CDM process cannot be degraded by fabricating and misinterpreting the project base line and additionality.  

 	Has the PP considered the CDM revenues while envisaging the project? Without CDM the project was not viable, is it right? This project is having a debt component? Then how bankers or lenders gave the loan? Have the bankers or lenders considered the CDM revenues while agreeing to give loan to this projects? If not this project should be rejected right away by DOE by terminating the contract forthwith. If yes, where is the proof? What is the date of the evidence document from bank? Is this document printed now a days or earlier. DOE to independently check the same. If the document is  available from Bank it must be checked from all angles so that it is genuine and not forged and date changed by putting back dated. This is normally done, DOE to be aware of this please. Please check the communication the PP had during that time with banks, emails and postal receipts and the weights and dates mentioned on the receipts. Do not believe in courier bills and receipts since these can be cooked up easily. Insist on government owned postal service receipts only. If the project is fully equity project then on what basis the PP has invested full equity in to the project while considering the CDM revenue? DOE to check the same in detail and bring out the facts. Is there any past record of this PP to invest or not to invest at returns what he is talking about in this project? Proper evidences must be reviewed and digged out by the DOE and take decision on the project based on established facts. Do not ask documents from PP, DOE to collect the same from different sources to do independent evaluation. 

 	Is the project equipment purchased second hand equipment or sourced from cheap foreign sources? If yes, the issue must be probed by DOE since invoices will invariably be inflated and forged. Total project costs mentioned by PP will not be the same as originals. Hence no additionality. These facts must be probed in full by DOE by checking all documents and money transactions along with bank statements and certified accounts by a legally acceptable financial analyst. 

 	From DOE side which auditor has done marketing and business development for acquiring this business of validating this project? With whom he or she was co-ordinating at PP or CER buyer? The same person who has done the marketing and business development to acquire the business do validation or participate in any manner what so ever in the validation process? One cannot do like that. It is against the accreditation rules and norms followed since ages. DOE should send auditors from different offices or countries to do this validation audit. DOE must take care of impartiality and accreditation rules. Due to the targets set by the DOE managements auditors are doing marketing and meeting clients and giving promises that the project will be taken care. Is it acceptable and fair? This must be stopped. No auditor should do marketing. Only non-auditing staff should do marketing. DOE to ensure the same please. 

 	If applicable only: Is these machines, equipment was a part of any bundle of CDM activity envisaged and developed earlier. DOE to check the same through independent sources also. Once some bundles are non-additional and getting negative validation from a DOE, PP is rolling out the same project as an individual project which is not a CDM project at all. DOE to verify the same from independent sources and also take undertaking in the form of an affidavit from the PPís that any misrepresentation or false statement with respect this would attract strict legal action from UNFCCC and DOE. Furthermore the registered project must be de-registered in case of any future findings contradicting the submissions made by the project owner.  

 	DOE to ensure that the PDD values are consistent and ensure that the CDM project is a genuine project
 	DoE to check the Detailed Project Report and Feasibility Report which is submitted to the other agencies and Banks by Project owner and ensure that the values match with the DPR/FR  submitted to DoE also. 
 	Careful study must be done so that the DPR/FR is not in different versions made and submitted with different purposes to different agencies, which is totally unacceptable, illegal and unethical. 
 	Project owner should show some undertaking letter from bank manager to DoE stating that both DPRís are same. These kinds of letters should not be accepted and entertained by DoE at face value, but must be checked independently. While collecting the DPR/FR from banks and other agencies, all DPR/FR pages should be counter signed by Banks and other agencies so that the real DPR/FR given to other parties by the PP/Consultant is same as the one submitted to DOE. 
 	DPR/FR values must be probed fully. DOE must take a written undertaking from the PP/Consultant about the list of parties to whom this DPR/FR is submitted and for what purposes. Then DOE should cross check with all the parties and confirm that the same DPR/FR is submitted to all the parties correctly without any changes. DOE must not accept any reports and undertakings from PP/Consultant. DOE must make independent evaluation and use totally different parties without informing the PP or Consultant to cross check the facts. 
 	DOE to write to the party who prepared the DPR/FR which is submitted to the banks and other agencies and the same is verified against the one submitted to the DOE by PP/Consultant. 
 	DOE must not entertain this project any more if found the DPR/FR is tampered with at any point in time. PP can not give different DPRís and FRís. They must submit only the one given to Banks and other agencies while obtaining loans and decision making time. 
Submitted by: sud

The El Fraile hydroelectric project is not additional, and lacks an adequate environmental impact assessment.

During the last twelve months, the Government of Panama has strongly complained about the exaggerate margins of profits obtained by hydroelectric generators in the country.  In February of this year, the Consumer Protection and Competition Defense Authority (ACODECO) opened an investigation on 18 hydro-power generators and 7 thermo-power generators for fixing exceedingly high prices (La Prensa, February 3, 2011).   The owner of the El Fraile power concessions, Hidroiberica, S. A., was among the power companies being investigated by the government for these abusive practices.

In Panama, hydroelectric generators have the possibility of selling in the spot market at the same price as thermo-electric generators (yet with a lower generation cost) whenever the national demand exceeds the amount of energy that has been previously contracted through Power Purchase Agreements (PPAs).  In the last two years, the Government of Panama has tried to prevent these kinds of transactions that increase the cost of energy for consumers as well as the margin of profit for generators (Capital, July 4, 2011).   In order to avoid a social explosion, the national government has chosen to subsidize domestic consumption of energy.  This measure has further ensured an exaggerate margin of profit for hydropower generators such as El Fraile.

In addition, as a small hydroelectric plant, El Fraile is eligible to special incentive legislation.   Law 45 of 2004 allows energy plants producing less than 10 MW to sell directly to distribution companies.  This law also exonerates these plants from any distribution and transmission costs.  For all of these reasons, in Panama, hydroelectric investments such as El Fraile do not require any additional contribution from the CDM to become financially viable.

Finally, the El Fraile hydroelectric project lacks an adequate environmental impact assessment (EIA) that considers environmental impacts above and below the dam site.  Although El Fraile is undeniably a relatively small facility, it will block the main stem of the Rio Grande, one of the most important tributaries of the Parita estuary.  No proper assessment has ever been conducted of the environmental effects of the dam on the estuarine system of Parita Bay as well as on the highly important migratory bird populations and fisheries that depend on these ecosystems.  Likewise, no proper environmental assessment has ever been conducted of the fish and shrimp populations that migrate along the altitudinal gradient of the Rio Grande and will therefore be impacted by the construction of the dam.

For all of the reasons explained above, we truly recommend the CDM Executive Board not to validate the El Fraile hydroelectric project as eligible to receive Certified Emission Reductions (CERs).
Submitted by: Osvaldo Jordan

Comment (805 KB) submitted by: Asociacion Ambientalista de Chiriqui on behalf of ASAMCHI, AAPRODIUPA, RED DE AFECTADOS POR REPRESAS HIDROELECTRICAS...

Comment (715 KB) submitted by: Asociacion Ambientalista de Chiriqui on behalf of ASAMCHI, AAPRODIUPA, RED DE AFECTADOS POR REPRESAS HIDROELECTRICAS...

Comment (805 KB) submitted by: Asociacion Ambientalista de Chiriqui on behalf of ASAMCHI, AAPRODIUPA, RED DE AFECTADOS POR REPRESAS HIDROELECTRICAS... (corrected copy)

Comment (109 KB) submitted by: Osvaldo Jordan on behalf of Alianza para la Conservacion y el Desarrollo (ACD)

The comment period is over.
* Emission reductions in metric tonnes of CO2 equivalent per annum that are based on the estimates provided by the project participants in unvalidated PDDs