Agua Zarca

FMO and Agua Zarca

In 2014 FMO invested in The Agua Zarca Project, a proposed run-of-river hydroelectric plant, located on the Gualcarque River in the North West of Honduras. Our client was the owner and developer of the project, Desarrollos Energéticos S.A., DESA in short.

We expected this project to have a positive impact on the standard of living in Honduras. The hydropower station would supply urgently needed electricity and create jobs in a country where more than half of the population is living in poverty. At the start, we were aware that this was a complicated project with diverse stakeholders. The project was met with broad support, but also knew opposition.

On 2 March 2016, Berta Cáceres was murdered, human rights activist and chair of COPINH, the organization that opposed the construction of the hydroelectric facility. This murder upset us deeply, and our hearts and our thoughts go out to her family and friends. 

After the murder, FMO and FINNFUND (b-lender to the project) commissioned an independent fact finding mission and sought a responsible exit from the project. After the publication of the Independent Mission report, FMO and FINNFUND finalized their exit from the project in July 2017.

In July 2021, the CEO of DESA, David Castillo, was convicted for his involvement in the murder of Berta Cáceres. The verdict means FMO financed a company whose CEO has now been found guilty of being involved in murder. We are devastated by this. In hindsight, we wish we would never have invested in the Agua Zarca project.

As a result of legislation, increased supervision, and adjustment of our own policies much has changed within FMO since the exit. Project selection criteria have become increasingly strict, with an even greater focus on local interests, their complexity, human rights, and Know Your Customer.

COPINH, together with three children of Berta Cáceres and two members of the communities surrounding the Agua Zarca project, have taken legal action against FMO for financing the Agua Zarca project. These legal proceedings started in 2018 and are still ongoing.

Next to this page is a list of news articles and statements on the Agua Zarca project that we published on our website over the past years, as well as reports by third parties and two lists of frequently asked questions. If you have any further questions, please contact us through the contact form on our website.