El Salvador: Italians denied majority interest in geothermal generator

The Executive Hydroelectric Commission for the Lempa River (CEL) repeated that it will not allow the Italian company Enel to hold the majority of shares in LaGeo CEL and Enel are partners.

Thursday, June 12, 2008

Enel has been seeking to increase its participation in LaGeo since 2004, but CEL has blocked it. Now, the Italians are talking about taking the issue to arbitration because, they say, CEL has not fulfilled its part of the agreement it signed with Enel in 2001.
The agreement allows Enel to increase its participation once it has increased its investment. But Nicolás Salume, head of CEL, says the solution is to renegotiate the accord.
But Enel insists that this constitutes changing the rules of the game.

More on this topic

Arbitration Favors Italian ENEL Over Salvadoran CEL

July 2011

The decision means that ENEL will be able to capitalize the geothermal GEO and become the majority shareholder in the business it maintains with the Executive Hydroelectric Commission of the Lempa River (CEL).

According to an article in Elsalvador.com, ENEL had sued its partner for breach of contract in November 2008 because CEL had blocked a $100 million investment, which meant that ENEL went from having just over 36% the company's shares to almost 53%. "The contract, signed in 2002, provides that Enel has the right to capitalize on their investments, that is to say, investments in La Geo are transformed immediately into shares."

El Salvador's LaGeo Ruling will be Known in January

September 2009

The International Chamber of Commerce will communicate its ruling on the arbitration trial filed by Enel for $120 million.

The complaint filed by Italian company Enel in October 2008 is based on noncompliance by the Salvadoran government with its commitment of handing over shares of company LaGeo.

Enel sues Salvadoran Government for $120 million

October 2008

The case was presented before an international tribunal in France, which the parties had established to settle conflicts that might arise in the preparation of the LaGeo.

Italian company, Enel, which partnered with the Salvadoran government in the operation of the LaGeo geothermic electric generating plant, took the government to court internationally for $120 million for not allowing it to hold the majority of shares that corresponds to the investments carried out, based on the contract between the two parties.

Enel seeks control of Salvador's geothermal monopoly

May 2008

Italian energy company Enel called on the government to abide by its commitment to give Enel a minimum 60 percent stake in the government-controlled geothermal monopoly LaGeo.

LaGeo provides about a quarter of all the electricity consumed in El Salvador. Enel currently has a 36.2 percent state in the company.

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