Dutch pension fund withdraws from Mexico wind farm project

Dutch pension fund PGGM has decided to withdraw the 250mn euros (US$283.8mn) it had set aside to invest in the 396MW Eólica del Sur wind farm in Mexico's Oaxaca state, the construction of which has been out on hold as a result of opposition from local residents.

Members of the Juchitán people's assembly (APPJ) welcomed the decision, according to newspaper El Imparcial.

Residents have long opposed the project, despite the government having carried out an eight-month consultation process among the Zapotec indigenous communities in the region to be affected, after which the energy ministry (Sener) announced that the local residents had voiced their approval of the project.

After Sener had announced the people's approval, local residents took out an injunction with a federal judge in Salina Cruz to halt the project, calling for the protection and guarantee of the indigenous communities' rights. The judge revoked the authorization and permits, as well as the land use authorization in response to the petition from more than 1,000 members of the local Zapotec indigenous communities.

While PGGM has made no formal statement on the matter, El Imparcial quoted Dutch newspaper De Telegraaf as reporting that the pension fund decided to withdraw after a four-year delay, considering the potential project was no longer profitable.

Members of the APPJ told El Imparcial that the withdrawal of the fund is a sign that the consultation was not carried out transparently, was conducted in bad faith and violated international standards set down by the World Labor Organization regarding respect for indigenous peoples.

The project, which would have comprised 132 turbines to be supplied by Danish firm Vestas, was rejected by two other municipalities in Juchitán; San Dionisio del Mar and Álvaro Obregón.

However, withdrawal of the financing does not guarantee that the project has been definitively canceled, APPJ spokesman Mariano López Gómez told El Imparcial, as he called on a federal judge in Salina Cruz to protect the rights of indigenous communities.

In December, Oaxaca tourism and economic development secretary José Zorrilla de San Martín Diego said that the planned investment for the wind farm would still be made.

He said the local and federal governments will continue to inform the local residents of the benefits of the US$894mn, 132-turbine wind farm, which would be the largest in Latin America. He added that investment would go ahead because the people of Oaxaca do want the wind farm, and that resistance to such projects had emerged in the past because local communities were not sufficiently well informed, he said at the time.

Denmark's credit export agency EKF has been backing the project to facilitate the involvement of Vestas.

EKF's deputy CEO Christian Oelgaard told BNamericas in March: "We can confirm that EKF, the investors and the banks are currently discussing a new structure for the financing of the wind farm. These are complex discussions with many parties involved. EKF remains committed to the wind farm and is working actively to see it constructed."