Dispute Over Geothermal La Geo Heats Up Again

Two Salvadoran government agencies are insisting on not giving the majority shares in the La Geo generator to Italy's Enel, despite a court of international arbitration ruling against them.

Friday, March 30, 2012

Inversiones Energéticas (INE) and Comisión Ejecutiva Hidroeléctrica del Río Lempa (CEL) have again refused to give the Italian company Enel Green Power a majority stake in the geothermal company La Geo, despite a ruling by an international body against them.

"The International Chamber of Commerce (ICC) ruled last year that the state run companies INE and CEL, shareholders of La Geo, must allow Enel to be able to capitalize on its investment as stipulated in the contract signed by both parties. If the ruling is complied with, Enel will raise its shareholding in La Geo from 36 to over 50%, which would displace the other two as members of the geothermal mainstream," published Elsalvador.com.

At a shareholders' meeting a few days ago, Enel stated its intention of reaching a settlement with INE and CEL to end the over two year long dispute. However, the two entities could not reach an agreement, according to Valerio Cecchi, the manager of Enel Green Power for Latin America.

"Overall it has been a lost opportunity that has implications for La Geo as well as for the country", said the executive, who said that the impasse is delaying the implementation of investment that could increase the production capacity of electric power.



More on this topic

El Salvador: Favorable Ruling for Enel Green Power

September 2014

As expected, the French Supreme Court has ruled in favor of the Italian company, in its attempt to increase its stake in the geothermal station LaGeo.

In May 2011 the International Chamber of Commerce (ICC) recognized the right of Enel Green Power to increase their investments in geothermal energy in El Salvador and capitalize on these investments through the subscription of new shares in LaGeo.

LaGeo Could Lose Concession in El Salvador

October 2011

The mixed ownership company for geothermal power generation has failed to deliver the power levels cited in the concession contract for the past 3 years.

LaGeo is jointly owned by Italy's Enel and the Salvadoran state through the Executive Hydroelectric Commission of the Lempa River (CEL), and is the subject of litigation between the parties with respect to the Italian’s shareholding.

El Salvador To Appeal LaGeo Ruling

July 2011

CEL has filed a motion to quash the ruling that would allow Enel to have a majority stake in LaGeo geothermal plant.

Tóchez Irving, president of the Commission of the Lempa River Hydroelectric Executive, said: "It is inappropriate to put a country’s strategic resource, such as a geothermal plant, into private hands," when presenting the proceedings before the court of appeals in Paris, France.

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.

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