Despite their controversial track record, Chinese companies continue to win energy contracts in Honduras without transparent processes or real competition, a dynamic that is drawing strong criticism from civil society. This pattern of opaque deals and a history of bad experiences is raising alarms about the risks to the country’s infrastructure and economy.
On May 20, 2025, PowerChina announced it had signed an engineering, procurement, and construction contract with Honduras’ National Electric Energy Company (ENEE) for a 230 kV transmission project. According to the statement, this project is part of Honduras’ national grid expansion plan and includes the construction of nearly 176 kilometers of 230 kV transmission lines and the development or expansion of five substations.
No transparency
The agreement, however, was made without an international public tender, a major point of criticism from civil society. According to Honduran energy and private sector specialist Kevin Rodríguez, from the Association for a More Just Society, the criticism refers to “the lack of competition and transparency in all the processes carried out by ENEE […],” he told Diálogo, adding that other countries in the region commonly use competitiveness bidding to award such contracts.
Bad experiences
The lack of competitive bidding has a controversial history. In March 2024, China Energy won a tender to sell engines to ENEE as the only bidder. ENEE later terminated the contract, leading China Energy to sue the Honduran government and win for more than $127 million. According to Rodríguez, this amount is “equivalent to the annual budget of the state-owned University Hospital” and is a direct consequence of a process that was not competitive.
This pattern of opaque dealings is not new. The incursion of Chinese companies into the Honduran energy sector began in 2012 with the Patuca III project, which was built by Sinohydro, a subsidiary of PowerChina. The project was plagued by problems from the start, including a weak environmental impact assessment that failed to secure financing, allowing Sinohydro to take over. The project “has been a total failure, which had an extremely high cost for what a project of this magnitude should be,” Rodríguez said.
Sinohydro’s track record has been a source of global controversy. The company was a major contractor for the Three Gorges Dam in China, the largest in the world, which has been associated with significant environmental problems.
In Ecuador, the company was the main contractor for the Coca Codo Sinclair hydroelectric dam, a project that has been plagued by thousands of cracks in the powerhouse and other serious construction flaws. This project is often cited as a cautionary tale of Chinese-backed infrastructure in Latin America.
Sinohydro was also criticized for its lack of transparency and controversial practices on the Bakum dam in Malaysia and accused of manipulating public records on the Patuca III project in Honduras.
The Patuca III project was also criticized for its negative impact on local communities. The Washington Post reported in 2017 that “the Honduran government [at the time] did not adequately consult or compensate the communities affected [by Patuca III]. The signatures of residents to receive rice distributions were used as ‘evidence’ of their approval of the project, indicating manipulation of processes that should be transparent and consensual.”
A report by the Honduran nongovernmental organization Center for the Study of Democracy (CESPAD), concluded that the Patuca III hydroelectric project was rife with irregularities, collusion, and corruption to defraud the Honduran state.
Although Sinohydro was not formally charged, CESPAD pointed out that the lack of transparency in large-scale projects, such as this hydroelectric plant, facilitated corruption schemes, including the awarding of secondary contracts without adequate controls.
Repercussions
The risks of relying on Chinese companies extend far beyond a lack of transparency in contracts. According to Rodríguez, “the main victims of these contracts, if they do not have the expected outcome, are the Honduran people, that is, the more than 9 million people who receive ENEE services.”
The long-term sustainability of projects managed by Chinese companies is a major concern, as maintenance failures could leave the country paralyzed. He compared the problem to buying a car from China, where after two or three years “there are no spare parts, or if there are, they take a long time to arrive.”
“If we apply this to electricity, it is a situation of extreme concern due to maintenance failures, or because spare parts take weeks or even months to arrive from China. This means that the country would be paralyzed if Honduras were to run out of electricity.”
This preference for Chinese companies is also raising diplomatic flags. In early May 2025, the ENEE manager announced on X the conclusion of a tour of China, which was paid for by China, to attract investment from Chinese companies. “The origin of the energy companies is not in doubt, but rather the preference shown by ENEE, together with the ideological closeness of the government to the Chinese regime,” Rodríguez said.
He warned that this dynamic “erodes relations with the United States, because it is our main trading partner. Being close to China erodes relations with our best ally.”
