The Cuyamel Hydroelectric Project (the “Project”) is a small run-of-river hydroelectric generating plant in the northeast region of the Republic of Honduras. The objective of the Project is to meet the increasing regional and national demand for energy by generating clean renewable energy and selling it to the National Power Utility (ENEE) through a Power Purchase Agreement (PPA) contract with a duration of 15 years.

The Project will utilize the waters of the River Frio and will have a total installed capacity of 7.9146 MW and an annual generation of 34.195 GWh. The river has a basin of 108 km2 and average annual flow of 7.19 m3/s, and the hydrology in the area is satisfactory. The Project is located eight kilometers to the southeast of the City of Cuyamel in the Department of Cortes and is being developed by the Honduras Electric Corporation, S.A. (HECO) and will be managed and operated by the Cuyamel Hydroelectric Company, S.A. (COHCUY) a related company of HECO.

The Project will contribute to the sustainable development of the community and country. The local communities of Santa Margarita, Santo Domingo, San Antonio de Las Palmas, San Cristobal, San Isidro, El Mogotillo, and San Jose de Las Brisas will benefit from the provision of an access road, opportunity for rural electrification through the provision of transmission lines, and increased employment. Approximately 40 jobs will be created during the construction phase, and approximately 10 permanent jobs will be created for local people. Additionally, the Project includes a forest management and reforestation plan for the areas surrounding the project zone. The project will also reduce dependence on imported fossil fuels that currently dominate the energy composition of the national grid.

The Project will contribute to sustainable development in the host nation through the following ways:

• Improved generation and reliability of electricity in the Municipalities of San Pedro Sula and Omoa;

• Creation of permanent and temporary employment for the local community; • Generation of indirect employment in the region; • Increased employment opportunities in the local region as a result of training in various technical areas;

• Contribution to municipality resources through the payment of local taxes; • Reduction of the nation’s dependence on foreign sources of fossil fuels thereby strengthening the nation’s energy security and self sufficiency; and, • Reduction of greenhouse gas emissions (GHG), especially CO2.

Development of the Cuyamel Hydroelectric Project will directly reduce greenhouse gas (GHG) emissions produced by thermal energy using fossil fuels that are currently in operation in Honduras. The Project will reduce GHG emissions by 25,725 tCO2e per year which are achieved by displacing thermal generation from the national grid.