Enel Green Power Starts Lawsuit in Costa Rica Over Delay in Works

The Italian company in charge of the 50 MW hydroelectric station Chucás has appealed the fine of $4.6 million imposed due to delays in the construction of the plant.

Monday, July 13, 2015

The hydroelectric project, which is being built in the format of Build, Operate and Transfer (BOT) in Atenas in Alajuela, has been delayed due to "external causes such as landslides caused by geological problems and flooding", explained the company to Crhoy.com .

In addition to the "external" factors affecting the work schedule, the company argues that there is with the Instituto Costarricense de Electricidad a "difference of interpretation of the contract" and therefore it has "requested an injunction to stop the fine".

Enel Green Power Costa Rica told Crhoy.com that there is "a difference of interpretation of the contract" with the ICE, therefore they went to a third party (the Administrative Court) to find a solution. In addition, the company confirmed that it went to the International Center for Conciliation and Arbitration (CICA) of the American Chamber of Commerce (AmCham), where it applied for arbitration to resolve the dispute. "

More on this topic

The High Cost of Poor Management

November 2017

In Costa Rica, the state power company will have to pay $112 million to the contractor of the Chucás hydroelectric project, for "additional expenses that it authorized and then refused to recognize."

In the ruling issued by the International Center for Conciliation and Arbitration (CICA), to which the company Enel Green Power Costa Rica appealed to resolve a conflict that originated in 2015 due to an almost $148 million increase in the Chucás hydroelectric project, which has not yet been completed, it was established that Instituto Costarricense de Electricidad (ICE) acted with "bad contractual faith".

CEL’s Problems with Contractors

May 2012

The Executive Hydroelectric Commission of the Lempa River in El Salvador is generating recurring conflicts with international companies who they have contracted.

"The administration of the Executive Hydroelectric Commission of the Lempa River (CEL) is still creating expenses for Salvadorans both because of a lack of investment as well as the international arbitrations it has caused, for which it had to pay millions in compensation, and what is more, it is likely to continue to incur expenses in the 'conflict resolution'," according to an article Laprensagrafica.com.

Hydroelectric Construction Contract Uses “BOT”

August 2011

"Build-Operate-Transfer" is the format under which the company P.H. Chucás will manage the hydropower project for the Instituto Costarricense de Electricidad (ICE).

The contract countersigned by the Controller General of the Republic (CGR) states that the ICE will buy "hydroelectric energy in blocks of up to 50 MW (megawatts)" for a period of 20 years, therefore paying a total $495 million to P.H. Chucás .

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."