El Salvador Nationalizes Geothermal Station LaGeo

The Italian company Enel Green Power will be selling its stake in the geothermal electricity station LaGeo, which could end to the dispute between the company and the Salvadoran government.

Friday, December 12, 2014

As outlined in an article on Laprensagrafica.com, a transfer of the 36.2% stake belonging to Enel has been valued at $280 million, payable via a trust based on the future flows from LaGeo, an instrument which must be operational before December 15th, 2014. This trust will be later extended to $480 million, a figure that casts doubts on the total price of the Enel shares.

"... The shares will be transferred to Inversiones Energéticas S. A.(INE) a subsidiary of CEL which is currently the owner of 63.8% of LaGeo. The document clarifies that actions can be passed on to a third party, if INE so wishes. "

"... This is part of an agreement reached between Enel Green Power and the Salvadoran Government, represented by the Attorney General's Office (FGR by its initials in Spanish), to put an end to the long dispute over the majority stake in the joint venture of LaGeo, which supplies a quarter of the country's total energy demand, and generates many millions of dollars in dividends every year. "

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More on this topic

El Salvador: End of Legal Dispute with Enel Green Power

September 2015

The settlement was made through the purchase of the Salvadoran Government for $280 million stake in geothermal LaGeo which owns the Italian company.

From a statement issued by the Executive Hydroelectric Commission of the Lempa River:

While in El Salvador preparations are being made to celebrate the country's independence, in Washington representatives of the Salvadoran government and the Italian company ENEL GREEN POWER are putting and an end to a long running dispute. The agreement allows the Salvadoran State to recover the total shares of LaGeo that had been held by the Italian company.

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.

Dispute Over Geothermal La Geo Heats Up Again

March 2012

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.

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.

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.