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Latin America Investment News on Viva Tropical

Inconsistent Law Prevents Energy Investments in El Salvador

Article Summary:

Competing energy companies are finding the gaps and inconsistency in El Salvador’s laws a hindrance for business and this poses a very significant risk for investors.

Original Article Text From Prensa Critica via Google Translate :

Unsuccessful Bid for 350 MW

The insistence of the employers that the country has no legal certainty for investors, by the constant changing of the game, helped the bidding of 350 Mega Watt (MW) of firm power and associated energy, administered by Electrical Distributor South (DELSUR), were unsuccessful.

Those were the main reasons that the consortium had Cutuco Energy Central America (CECA), to decide not to bid last minute technical or economic.

Through a statement, said he retired ECSC to participate in the bidding date due to changes ordered by the regulator in the process, gaps in the rules governing it and the structure of long-term contracts, which are very significant risks for investors. “Therefore, we believe that the basis of this tendering process redesign must, in order to ensure legal certainty for participants, providing reliable and competitive energy prices,” he said adding that the consortium should changed the bidding rules to reduce such problems.

Days earlier, the AES Corporation, another strong player, announced his retirement due to a municipal ordinance in the city of La Union which prohibits the construction of power plants based on coal and natural gas.

“The main reason for this decision reflects the current legal conditions governing the municipality of La Union, which is in effect an ordinance that prohibits any construction of power plants based on natural gas or coal. The AES Group had planned build the plant on land adjoining the new port.

“This, today, inhibits the development and actual construction of any project proves successful bidder and had planned to be developed in that area,” he reasoned AES in a separate statement.

Yesterday, as was established, making the delivery and opening of tenders for the supply to 15-year term from July 1, 2016, but only became a participant. The only bid exceeded the ceiling price of $ 136.61 per MWh, set by the Superintendency of Electricity and Telecommunications (SIGET).

The association EMCE El Salvador, Terra Group, of Honduras, the bid to $ 148.58 MWh.

“So that, according to the bidding, this unique offer we had, had to be rejected. In other words, the tender has been unsuccessful,” said Roberto Gonzalez, general manager of DELSUR.

“Unfortunately, we could not have a happy ending as we wanted to be able to give the country an offer for a generation project that would be favorable to the interests of the nation and to give a guarantee to have generation for the next 15 years from in 2016, “he added.

Gonzalez added that should be analyzed the reasons why there were not enough bidders.

Nejapa CEO Power, Alberto Triulzi, said it was not surprising that the tender be declared void and that neither was a negative event.

Now created the possibility that regulatory authorities, SIGET and the National Energy Board, also open the bidding evaluate the involvement of all plants and existing generation technologies, which were excluded from the process, he said.

Link to Original Article:

From Prensa Critica

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