Sinohydro explained their move in an official letter responding to a human rights group:
Following the official competition bidding process, we, Sinohydro Corporation Limited, signed the Contract Agreement on November 16th, 2012, with [Honduran private firm] DESA as the Employer for the construction of the Agua Zarca Dam Project. ... Right from the very beginning of our mobilization, it was noticed that there were serious interest conflicts between the Employer of the Project, i.e. DESA, and the local communities, which were treated as unpredictable and uncontrollable to the Contractor. Therefore, Sinohydro Corporation Limited instructed to suspend all the site performance and ongoing preparations, and demobilized all his manpower from the project site on July 15th 2013. On August 24th, 2013, the Contract Agreement between Sinohydro Corporation Limited and DESA was agreed officially to be terminated.No one has yet been arrested, but suspicion is high that the project owner, Desarrollos Energéticos, S.A. (DESA), was involved.
Sinohydro's role on the project has been mis-reported. Even several years after Sinohydro left, the project was still being described as a "joint project" between Sinohydro and DESA -- but Sinohydro's role was limited to winning the tender for construction. (A German company, Voith Hydro (a joint venture between Voith and Siemens), was also involved, as was the World Bank's International Finance Corporation.)
Sinohydro should be commended for responding to human rights concerns and leaving the project -- yet the sequence of events leaves something to be desired. Sinohydro: much better to do your due diligence before signing the construction contract, and before mobilizing your team to the project site. Once that happens, you're already in bed with your partner. It's then hard to jump up and proclaim your innocence.
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