The Sumaco rain forest nature reserve covers an area of 120 000 hectares and is located on the edge of the Amazon prairie in the Northeast of Ecuador. The population lives predominately on subsistence agriculture and trading in agricultural produce.

Being the headwaters of the Amazon, the region has rich hydro potential, which can be exploited for electricity production. This in turn will help to uplift economic activity in the region and thus secure regular income for the population, while at the same time preserving the natural habitat.

The company Energía Renovable y Desarrollo Sustenable - ERDESU (Renewable Energy and Sustainable Development) was founded in 2002 aiming at a rational development of the hydropower resources in the region. It is constituted by local public organisations and village associations (40% of shares) and by the private sector (60% of shares). ERDESU plans the development of a site on the Jondachi river. At present two potential sites have been identified with a gross heads of 155 m and 125 m and design discharges 12.4 and 18.6 m3/s respectively. Run-off-river plants at these sites would yield 16 to 20 MW, which can be connected to the national grid through 69 kV transmission line 25 km and 15 km long respectively. Based on technical and economic considerations, one of the sites will be selected for more detailed studies and implementation. In addition, ERDESU will promote productive end use and new income generation by installing isolated micro-hydro plants in remote villages that do not have grid access.

For a three year period beginning in 2003, the German Agency for Technical Cooperation (GTZ) will support ERDESU with the Proyecto Hidro Amazónico (PROHA) in this venture. This project will provide the basic structures and data for the development of hydro electric potentials in the Sumaco region as follows:

• Preparation of the relevant decision papers, such as pre-feasibility studies, cost comparisons, Environmental Impact Assessment (EIA), impact studies on economic development, financing proposals etc. for the Jondachi project.
• Strengthening of ERDESU as an Independent Power Producers (IPP) and project developer through human capacity building and human resource development.
• Design and construction of micro-hydro plants in remote villages.

The Jondachi Hydro Power Plant will essentially contribute to the improvement of electricity supply in North Eastern Ecuador. The revenues from power sold into the national grid will be channelled by ERDESU into new regional development projects and enhance income generation of the local population.

• Administrative and regulatory preparations of hydropower projects such as obtaining water rights and concessions, negotiations for integration into the national electricity supply system, tariff structures, power purchase contracts and the like
• Development of financing models suitable for national and international financiers and investors
• Consulting services regarding national and regional energy politics