Preamble to the Law

LAW PREAMBLE TO THE

Defensoras de la madre tierra

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LEGISLATIVE DECREE NUMBER PREAMBLE TO THE LAW. Members of Congress, Bertha Isabel Cรกceres Flores, a Lenca indigenous leader, human rights defender, recognised environmentalist, protector of indigenous natural resources and cofounder in 1993 of the Civic Council of Popular and Indigenous Organizations of Honduras (COPINH), was brutally murdered in her home, during the early hours of March 3rd 2016, in the town of La Esperanza, department of Intibuca. At the time of her killing she had been granted precautionary measures by the Inter-American Commission on Human Rights and was under the protection of the Honduran State.

Prior to her vile and cowardly murder, Berta Caceres was the victim of a series of violent attacks including harassment, legal prosecutions, death threats, attempted assassination and assassination of members of her organization.

Berta had lodged official complaints with the Public Ministry relating to the construction of at least forty-nine hydroelectric dams, operating without having complied with the terms of Convention 169 on the rights of Indigenous Peoples. One of the contested concessions was the Agua Zarca Hydroelectric Dam, located on the R Gualcarque river, in the municipality of San Francisco de Ojuera, between the departments of Santa Bรกrbara and Intibucรก and operated by the DESA company.

Information obtained from investigations carried out revealed that the concession granted by the Congress for the generation of 14.458 megawatts of electric power using national waters from the Gualcarque river, was later modified and increased by eight megawatts for a total output of 21.7 megawatts. The timeframe for the concession was also expanded, adding a further 20 years to the original agreement of 30 years approved

by the Congress, bringing the total to 50 years. Modifications to the concessions approved by Congress were authorized by means of a Contract Addendum. However, these addendums were not brought before Congress for ratification but were granted by a Ministerial Resolution issued by SERNA, details of which were published in the Official Gazette.

Article 205 of the Honduran Constitution in paragraph 19 states that the National Congress shall have the following powers: “To approve or reject contracts that involve tax exemptions, incentives, and concessions, or any other contract that will produce or continue its impact in the next term of the Government of the Republic”.

In line with this constitutional rule, article 13 of the State Procurement Law establishes: “Contract Exonerations with Impact on the Next Period of Government: Any contract that involves tax exonerations, incentives or concessions requires congressional approval. This obligation must be complied with, especially when the contract in question produces or prolongs impacts in the next term of government”.

According to paragraphs one and three of Article 32, “ All contracts, entered into by persons who lack the legal authority to sign agreements or violate specific prohibitions which are detailed in articles 15 and 16 of the Law, shall be declared null and void and will be subject to compulsory elimination, and the parties involved may be collectively held responsible for their actions as specified in article 19 of aforementioned law”.

Therefore, it is the responsibility of the contracting parties to declare null and void these contracts, and to proceed to communicate this decision to the Attorney General’s Office, which has the responsibility to determine actions needed to make reparations for any harm and damages incurred, as outlined in article 19 of the law; and the municipalities must take action to comply with these obligations.

LEGISLATIVE DECREE NUMBER Members of Congress, CONSIDERING: That the Republic of Honduras has adopted and ratified International Labour Organization (ILO) Convention 169, which deals with the rights of indigenous peoples, and mandates States to comply with the right to prior, free and informed consultation. The responsibility to oversee such consultation processes rests with the State and not with private companies.

In the case of DESA, the government failed to undertake a prior, free and informed consultation process nor did it obtain the consent of the Lenca peoples, on the contrary after licences had been granted and decisions made, only a few informative sessions were held.

CONSIDERING: That following approval in the National Congress, the contracts granted by the Honduran State to the DESA company, were subsequently modified by SERNA, resulting in changes to the Operating Contract and to the Water Contract , increasing the electric generation capacity from 14,458 megawatts to 21.7 megawatts and extending the time frame from 30 to 50 years, without these modifications being submitted for Congressional approval, in spite of a huge increase in terms of millions of lempiras, and effects which impact beyond the period of the current government.

CONSIDERING: That two of the key lenders of the Agua Zarca hydropower project in Honduras, the Netherlands Development Finance Institution (FMO), and the Finnish Fund for Industrial Cooperation (FINNFUND), mutually agreed on July 6, 2017 to end their existing contractual relations and withdraw from the project citing their desire “to reduce international and local tensions in the area�. FMO had invested fifteen million dollars while Finnfund, the B-lender had contributed five million dollars. BCIE had previously disbursed nine million dollars for the project and declared that they would act in unison with FMO and FinnFund.

CONSIDERING: That at the same time the international financial institutions made public their decision to withdraw from the Hydroelectric Project, the Mission Against Corruption and Impunity in Honduras (MACCIH), announced that they are opening a formal investigation into the allegations of corruption previously made by the murdered environmentalist indigenous leader Berta Caceres, in regard to the operations of the Agua Zarca dam, and taking into account additional new evidence, “MACCIH considers that there is sufficient justification to set up a special investigation team in coordination with the Honduran Public Ministry”.

THEREFORE: DECREES: Article 1: Instructs the Ministry of Natural Resource and Environment (SERNA) to immediately undertake all the necessary analysis and administrative procedures to declare null and void the contracts drawn up between the State of Honduras and the company Desarrollos Energéticos S.A. (DESA) for the implementation of the Agua Zarca Hydroelectric Dam on the Gualcarque River, located in the departments of Santa Barbara and Intibuca; based on the failure to carry out a free, prior and informed consultation process as mandated by ILO Convention169; and the failure to seek the appropriate approval for the addendums which increased the electricity output from 14,458 megawatts to 21.7 megawatts, and expanded the time frame of the concession from 30 to 50 years, permission for which can only be exclusively granted by the National Congress.

Article 2. That the Ministry of Natural Resource and Environment (SERNA) communicates with the Attorney General’s Office on the appropriate next steps to be taken.

Article 3. The present decree will be enforced on the date it is published in the Official Gazette.

Agreed in the City of Tegucigalpa, municipality of the Central District, in the Chamber of the National Congress, on the ____ day of the month of _____ in the year ______

_________________________________ Mauricio Oliva Herrera President.

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