Arbitrator is assigned for GasAtacama dispute. Proceedings expected to end first quarter of 2013
22-Aug-2012 Diario Financiero – News
Víctor Vial del Río, UC Law School Professor, assigned to arbitrate the dispute
Arbitrator is assigned for GasAtacama dispute. Proceedings expected to end first quarter of 2013
Arbitration started a few weeks ago and will possibly last six to eight months
GasAtacama dispute is in progress. Conflict between both partners- Endesa Chile and Southern Cross- has not been settled and consequently arbitration process continues. The last action they took was appointing an arbitrator.
Víctor Vial del Río, Professor at UC Law School, was assigned to arbitrate the arbitration proceedings Southern Cross filed against Endesa at Arbitration and Mediation Center of Chamber of Commerce of Santiago.
Sources close to the proceedings have said that this is just beginning and it would be groundless to make any statement on how long it will take; however, they estimate it might take at least 6 or 8 additional months.
The conflict between partners exists because Southern Cross has been wanting to sell its 50% participation in power plant for months because investment is already in conditions to generate value. Although they submitted offers for Endesa to take its preemption right, no agreement was reached.
The problem is that Southern Cross is stating that the electric power company controlled by Endesa Spain would be interfering with its plans by refusing to accept the first proposal for considering it was not a proposal and thereafter by delaying negotiations. Thus, claim is that provisions of agreement are complied with in order to be enabled to sell their shares to a third party.
Asset in conflict
GasAtacama has an installed capacity of 740 MW and is facing its second complicated period after the crisis of Argentinean gas. This time because there is no gas supplier available and its contracts with mining companies are about to mature.
However, Rudolf Araneda, General Manager, has asserted that company’s EBITDA in forthcoming years will be between US$30-60 million even without electric power contracts.
He also stated that the company will be forced to generate power with diesel to comply with the contracts that are still in progress. Besides, for this same reason, the company will become a backup power plant for the years to come until 2016 when re-gassing plant is expected to be inaugurated to receive shale gas and close contracts with U.S. suppliers which are already being negotiated.
