By Catalino Hoyos | 2025-05-22

QUITO -- After almost two decades of cost overruns, construction delays and alleged corruption, Ecuador's Toachi-Pilatón hydroelectric complex launched commercial operations on April 10, just as the country grapples with a deepening energy crisis.

The Ministry of Energy and Mines and the state-owned Electric Power Corporation (Celec) confirmed the start of operations at the Alluriquín power station, which draws energy from the Toachi and Pilatón rivers and adds an estimated 254.4MW to Ecuador's national grid.

Construction on the project began in 2008 under former president Rafael Correa's administration. Situated southwest of Quito, the facilities span the provinces of Santo Domingo de los Tsáchilas, Pichincha and Cotopaxi.

Led by China International Water & Electric Corp (CWE), the project suffered from irregularities that tripled its initial cost. CWE ultimately abandoned it, leaving the Ecuadorian government to clean up the mess.

Celec later reached a partial agreement with Russian firms Inter RAO and Tyazhmash, which stepped in to complete the plant. But the resolution came at a high price: Ecuador was forced to pay an additional $45 million to Inter RAO and $20 million to Tyazhmash, after both companies claimed extra, unforeseen expenses.

Despite the controversies and inflated costs, the government has touted the project's launch as a critical step toward stabilizing Ecuador's fragile energy supply.

Hope meets crumbling concrete

Ecuadorians welcomed the launch of the Toachi-Pilatón hydroelectric complex with cautious optimism, after enduring up to 14 hours of daily blackouts between September 23 and December 20, 2024.

But concerns are mounting over the plant's structural integrity and the track record of CWE.

The General Comptroller's Office of Ecuador raised red flags as early as 2021, pointing to serious construction flaws. Inspectors found fractures, fissures and extensive leakage in the main load tunnel, defects that threaten the facility's long-term viability.

CWE, a subsidiary of the state-owned China Three Gorges Corporation, ignored critical engineering protocols, decisions that may have hastened the infrastructure's deterioration, say officials.

The situation mirrors long-standing issues at Coca Codo Sinclair, Ecuador's largest hydroelectric plant, also built by a Chinese firm. Authorities there uncovered more than 7,600 cracks in critical components and more than 20,000 in the distributors, which channel water to the turbines.

As the country leans heavily on Toachi-Pilatón to ease its energy crisis, fears grow that Ecuador may be repeating costly mistakes, this time with even more at stake.

Billions without a blueprint

The Toachi-Pilatón hydroelectric project has become a textbook case of mismanagement, inflated costs and murky accounting. During its troubled construction, CWE, hired for civil works in 2010, created a web of technical, legal and contractual problems that drained Ecuador's public finances.

Projected to cost $336 million in 2008, the project's price tag ballooned to $1.02 billion by the end of 2023, according to the state-run electricity company Celec. That is a 204% overrun, largely attributed to delays, structural flaws and questionable contract modifications.

As reported by the magazine Vistazo last November, funding for the plant came from multiple sources: $246 million in fiscal resources, $250 million from the Social Security Bank (BIESS), $52 million from Russia's Eximbank and $475 million from Celec's own coffers.

CWE was expected to complete the project by 2014, but progress stalled repeatedly. Between March 2017 and July 2019, CWE froze construction. In 2022, Celec finally terminated CWE's contract after uncovering critical structural defects.

More than 17 years after officials broke ground, the true cost of Toachi-Pilatón may never be fully accounted for, but the damage to Ecuador's infrastructure and public trust is already clear.

CWE global scrutiny

CWE continues to face mounting criticism for engineering failures and regulatory breaches across Latin America.

In Peru, the regional government of Loreto filed a lawsuit against CWE in 2020, accusing the company of cost irregularities and technical flaws in a public works project that caused widespread flooding, foul odors and waterborne illnesses in surrounding communities.

Meanwhile, in Chile, CWE-controlled Rucalhue Energía has pushed forward with the Rucalhue Hydroelectric Project since 2018, despite growing legal and environmental concerns.

Critics warn the project threatens protected ecosystems and ancestral species in the Bío-Bío region, raising alarms about both environmental impact and regulatory transparency.