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Mexican state power company CFE has postponed, not cancelled, construction of the 900MW La Parota hydroelectric dam in Guerrero state, the company said.
The decision to delay the plant's construction was based primarily on the country's sufficient generation margin, the difference between capacity and peak demand.
CFE made the announcement to media outlets to counter an article published by local paper El Universal that said the company was cancelling the project entirely.
"It is not cancelled. It is delayed," a CFE spokesperson told BNamericas, adding that the company's position remains in line with the federal program for energy works and investments (POISE) released earlier this year.
The POISE shows CFE as planning for the plant to come online in 2018.
The project would be built 28km from Acapulco on the Papagayo river and feature a 162m-high dam. It has drawn fire due to allegations of high environmental and social impact.
The company admitted that before works begin it must have enough "social consensus" to "have the support of the communities where it will be located," Spanish news agency EFE reported, citing company sources.
Mexico's environmental rights center Cemda and communities' council Cecop have opposed the project on the basis of CFE's wide generation margin, as well as the claim that it would affect 100,000 people in five municipalities and 36 villages. Of the total, 25,000 people would be displaced.
"Yes, it is a cause for celebration, at least for what remains of the federal government's six-year term. But it also does not mean we can ring the victory bells," Priscilla Rodríguez, Cemda's coordinator on the ongoing case challenging the plant's construction, told BNamericas.
Rodríguez highlighted that CFE first attempted to develop the project in the 1970s but was blocked by local communities.
"Nothing impedes them from implementing it in the future," she said. "We have to celebrate it, but we have to remain alert," Rodríguez said.