The contract covers the preparatory phase for the Patuca III power plant and includes the building of the tunnel diverting river water, construction of a camp, the building of access roads and construction of a quarry, the manager of Honduran state-owned utility ENEE, Roberto Martinez Lozano, said.

Preparatory work for the project could begin in the middle of this year, the ENEE executive said.

The first power plant, which will have a generating capacity of 104 MW, is expected to cost about $350 million and begin operating in 2014, Martinez Lozano said.

The Honduran government and Sinohydro signed a memorandum of understanding on Sept. 8th for construction of the three hydroelectric power plants on the Patuca River.

Sinohydro will obtain funding from Chinese financial institutions for construction of the three power plants, which will have total generating capacity of 524 MW.

The Patuca River projects are part of the renewable energy program being developed by the government to reduce dependence on thermal energy plants, which account for 60 percent of the country’s 1,400 MW of installed generating capacity, Martinez Lozano said