El Salvador: CEL and Astaldi Hold Talks Before Arbitration

The decision of which entity will bear the costs of delays in construction of El Chaparral is being discussed between the parties.

Monday, June 13, 2011

The eight-month delay in the construction of the dam, built by the Italian company Astaldi, has generated additional costs that have not yet been estimated nor has it been determined which of the parties involved will pay them.

Both Astaldi and CEL,the state-owned generator, have been willing to enter discussions in order to resolve the conflict without going to arbitration, a subject raised when evaluating the damage left in the wake of the river Torola.

An article in Laprensagrafica.com notes: "... the delay means more financial resources for repairs and legal action, because a turnkey contract does not allow changes in delivery time or price adjustment. At the moment, it is unknown how much the cost of the delay could be. In the contract, the dam is valued at $219 million, of which CEL will provide a counterpart of $56.9 million and the Central American Bank for Economic Integration (BCIE), through a loan, will provide $163 million. "



More on this topic

Chaparral Dam Contractor to be Changed

April 2012

The works being carried out by Astaldi, are virtually paralyzed because of a disagreement over the need to redesign the plans for the dam.

The work began in 2009, and should have been operational in 2013, which has become impossible given the current lack of progress.

In 2010 the storm Agatha caused landslides where the dam was being built, which according to Astaldi required, for safety reasons, a redesign of the plans.

Dam Construction Reactivated in El Chaparral

May 2011

The talks to resume work have restarted, the cost is estimated at $19 million.

The dam construction project in the north of San Miguel, El Salvador, could soon see the light soon, after delays lasting more than a year.

The effects of hurricane Agatha and some restrictions in the contract between the Italian construction company Astaldi and the Executive Hydroelectric Commission of Rio Lempa are some of the reasons behind the delays in works.

Geological Faults at Chaparral Hydroelectric Plant

January 2011

The problems detected could lead Cel and the Astaldi consortium, responsible for the project, to submit for international arbitration.

The faults which threaten the foundations of the dam were detected after Storm Agatha, halting all works at the site.

The Executive Committee of the Lempa River Hydroelectric Plant (Cel) and the Italian consortium Astaldi, before heading for arbitration, hired an international expert to determine who has the responsibility to cover the additional costs of a possible plant redesign.

Works on the Central Hydroelectric plant begin in El Salvador

September 2008

President Elias Antonio Saca will place the first stone for the El Chaparral central hydroelectric plant that will mark the formal start of construction.

The initial investment, estimated to be $163 million, will be financed by the Central American Bank for Economic Intergration, as was recently confirmed by the president of the Rio Lempa Hydroelectric Executive Commission (CEL), Nicolas Salume.

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Astaldi S.p.A.

Astaldi Group is one of the most important construction companies in the world as well as a leader general contracting and project finance initiatives in Italy.
Operates in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama
Phone: (503) 2523-9500

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