The decision of the Paris Court of Appeals means that ENEL can become the majority shareholder in the geothermal company La Geo.
This new resolution validates the verdict of the International Chamber of Commerce (ICC)’s Court of Arbitration, issued in July 2011.
According to Elsalvador.com: "In a note sent to the National Stock Market Commission (CNMV), Enel’s renewables subsidiary reports that the French court "had rejected Ine’s appeal to override the award in its favor, confirming that the trial was conducted fairly," according to the news agency Europa Press.
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.
LaGeo, the company dedicated to power generation, has announced an investment of $41 million in geothermal exploration in El Salvador.
The exploration will be directed specifically towards the fields of Chinameca and San Vicente, over which the company holds a concession, announced its president Julio Valdivieso.
"In Chinameca and San Vicente we are in the exploratory phase right now.
The Salvadoran Foundation for Economic and Social Development is concerned about SIGET's intervention in the conflict between Italy's Enel and Lageo.
A statement by FUSADES reads:
Legal certainty in public procurement: Necessary element for the investment climate
The legal environment, legal certainty, clear rules and independent institutions are elements that every investor evaluates to measure the business climate in a country and decide whether to invest in it.
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.
The dispute between the Italian company Enel and the CEL and INE commissions has sent a negative message to foreign investors.
In the opinion of experts, the fact that by the Ente Nazionale per l'Energia elettrica (Enel) and the Lempa River Hydroelectric Executive (CEL) are going through an arbitration process in order to decide who gets majority control of the geothermal plant, could be affecting the country’s attractiveness in terms of foreign investment.
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.
The way that the government handles the arbitration failure at the International Chamber of Commerce on the La Geo case could dictate the success or failure of state-business partnerships.
The private-public scheme has been promoted recently by the Salvadoran government for the implementation of large public infrastructure projects because they can free the state from the significant investments that such works require.
GTherm, the owner of the patent, is negotiating with Instituto Costarricense de Electricidad (ICE) to develop a 12 MW pilot project.
Within ICE's strategy to develop clean electricity sources, since October 2010 it is negotiating a pilot project to generate electricity by harnessing geothermal energy in the subsoil, a rich resource in Costa Rica.
Costa Rica spent in 2010 $ 164 million in oil to generate electricity, while it wastes 1,000 MW of geothermal potential.
According to current legal framework and planning, the Instituto Costarricense de Electricidad expects to generate 4,018 megawatts by the year 2016, of which only 35 MW will come from geothermal sources; it represents only 2% of the total.
Explorations by LaGeo point out that the country's third geothermal energy plant could be located in Chinameca.
Napoleón Guerrero is the president of energy company LaGeo. He states that in the current stage of the exploration process "...evidence suggests Chinameca as the location of the third geothermal energy plant".
"As of now, LaGeo operates two geothermal plants, one in Berlín, Usulután, and the other in Ahuachapán", reports Laprensagrafica.com, "... in June, geothermal generation represented 26%, 180 MW".