The state-owned company LaGeo plans to invest in its geothermal fields in Chinameca and San Vicente to increase its generation capacity to an additional 80 megawatts.
In order to finance the works, the public company LaGeo, a subsidiary of the Lempa River Hydroelectric Executive Commission (CEL Group), is negotiating a $232 million loan with the World Bank.
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.
It has been announced that thirty companies, including Enel Green Power, have expressed interest in participating in the tender to supply natural gas, valued at $800 million.
From a statement issued by the Presidency of El Salvador:
About 30 companies are interested in participating in the tender to find a supplier of gas for power generation in the investment project run by the company Energías del Pacífico, to produce more than 350 megawatts of power, said the Technical and Planning Secretary of the Presidency of the Republic, Roberto Lorenzana.
Despite the agreement signed last December, authorities from the CEL say it reserves the right to activate in civil courts processes to collect compensation for alleged damages.
After ten years of international litigation by the Italian company ENEL for control of the geothermal station Enel Green Power El Salvador, where the Salvadoran State had everything to lose, in December 2014 an agreement was signed at the International Centre for Settlement of Investment Disputes (ICSID) which stated in Article 3 that: "The parties (the Salvadoran State and Enel) have agreed as a condition non precedent of the effects of the Framework Agreement, the final and irrevocable extinction of the civil action of the crime involving Enel Green Power (EGP) and Enel Green Power in El Salvador criminal proceedings number 171-A-2-13 in the Seventh Court of Peace and 133-2013-12 in the Seventh Court of Instruction, both of San Salvador, that will be extended to all natural persons who are accused of crimes in the same instance ... ".
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.
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.
The Attorney General Prosecutor's Office has announced that the government and the Italian company Enel Green Power have reached an agreement to end the conflict over the ownership structure of LaGeo.
From a statement issued by the Attorney General of the Republic of El Salvador (FGR):
Washington, DC The State of El Salvador and the Italian company ENEL Green Power have reached a framework agreement with a comprehensive solution to the existing dispute over the ownership structure of the company LAGEO SA de CV.
At the request of the parties, arbitration and dialogue has been suspended for 30 days in order to reach an agreement over the shareholding structure of the company LaGeo.
From a statement issued by the Government of El Salvador:
Talks to find solutions to disputes between the State of El Salvador and the Italian company ENEL Green Power, over the ownership structure of the company LAGEO SA, de CV, started today in Washington, DC, with a meeting taking place on the premises of the International Centre for Settlement of Investment Disputes (ICSID), which is the forum for arbitration and conciliation of the World Bank Group.
After a French court judgment affirmed the ruling of the International Chamber of Commerce, the Sanchez Ceren administration has announced that it will continue with litigation against the Italian company.
From a statement by the Presidency of El Salvador:
Government reaffirms commitment to the defense of geothermal resources, assets of the Salvadoran people.
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.
The Italian consortium Enel has filed a case against the Salvadoran State with the ICSID over a dispute on equity interest in the geothermal plant.
The case was filed with the International Centre for Settlement of Investment Disputes (ICSID).
The lawsuit, according to the company, is due to the government trying to be more involved in LaGeo, and also because they believe they have been denied their legitimate rights.
After an initial phase of exploration in Chinameca, San Miguel, LaGeo is to start feasibility studies for a 50 MW plant.
"The whole project takes four years from drilling up until it is exploited, depending on the soil type you have. We believe that it will be functioning by 2016 or 2017," said the president of the geothermal power generation company (LaGeo), Julio Valdivieso.
With an investment of $1.5 billion El Salvador could add 440 MW to the 204 MW already produced with geothermal energy sources.
The projections were made by Julio Valdivieso, president of the company LaGeo . Furthermore, Toshitaka Takeuchi, energy specialist at the Banco Interamericano de Desarrollo (BID), said El Salvador could generate up to 644 megawatts (440 megawatts more than it already has as installed capacity).
LaGeo could exploit geothermal energy in a new well located in San Vicente, generating 30 to 40 megawatts.
The company LaGeo invested about $24 million in the exploration which led to the discovery of the new geothermal source.
As outlined in an article in Eleconomista.net, the Executive Hydroelectric Commission of the Lempa River (CEL), a partner in the LA GEO which belongs to the Italian company Enel, states that "a possible plant could generate more than $37 million in annual revenues for the company."
The security provided to generators in signing long-term contracts means lower electricity rates to end users.
An article in Elmundo.com.sv states that "The entry into force in January, of two new long-term contracts to provide power for two years to distributors, will prevent a further increase in the new energy prices which will be valid from April 15, according to the company DELSUR. "
While in other Central American countries there is a boom in projects for clean energy generation, in the past three years El Salvador has not registered any.
According to data from Bloomberg, for the past three years, El Salvador has not recorded any investment in clean or renewable energy, its last investment was made in 2007, when it invested $45 million.
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