• Costa Rica Real Estate

ICE seeks annulment of $112 million payment to Italian company

December 20, 2017

The state-owned Costa Rican Electricity Institute (ICE) asked for an annulment of the mediation proceedings that require the institute to provide a large payment to the Italian company Enel Green power for additional expenses in the construction of a hydroelectric plant.

The ICE announced in a statement on Tuesday that it has asked the Supreme Court of Justice to annul an order from the International Center of Conciliation and Mediation (CICA) that the ICE pay $112.5 million to Enel Green in additional costs for the construction of the Chucás Hydroelectic Project.

The plant, located on the Tárcoles River, 50 km west of San José and with a 50-megawatt capacity, is valued at $107 million.

In its request, the ICE argued that one of the three members of the arbritration panel should have recused himself from the case because of profesional connections to Enel Green.

The CICA finding indicated that the costs of the project increased because of flooding and landslides that obliged the construction company to suspend work for three months, and that the ICE is responsible for that increase.

The ICE, however, argues that the agreement with Enel Green was a Build-Operate-Transfer contract (BOT) under which the Costa Rican government committeed only to purchase the generated energy, and is free of responsibility for additional construction costs.

“It is notable that the Arbitration Court is unfamiliar with the criteria of our own [Costa Rican] courts, which have reiterated that, because of the nature of BOT contracts, the contractor assumes construction risks,” ICE Legal Director Julieta Bejarano said in the statement.

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