Ecuador grabs Odebrecht projects over performance dispute

24 September 2008

The projects affected are San Francisco, Toachi-Pilaton and Baba. The former plant was commissioned last year and the others are under construction. In addition, the Government has taken control of the Carrizal-Chone project water transfer project.

No formal statement on the action was available from Odebrecht, the leader of the JVs that built San Francisco and are building the other two plants.

In an emergency decree, the Government said that the action was centred on a performance dispute on the 230MW San Francisco project. The decree claims that the Government has not had satisfactory indemnification over what it claims are faults with the project.

As part of the decree, the Government says it is worried over electricity supplies in the country and the possible risk of blackouts.

The San Francisco plant (2 x 115MW) began to generate commercially in the second quarter of 2007, and annually is to produce 1,426GWh/year - or approximately 12% of the country's electricity supply.

In addition to having called last month for an acceleration of improvement works it said were needed to tunnels and turbines, the Government also demanded repayment of US$20M given for early works completion, it said. The plant was completed nine months early, the Government noted at the inauguration in June last year.

The run-of-river project began construction in 2003 under a 30-year concession and is upstream of the 156MW Agoyan plant. The concession was awarded by the state electricity authority Conelec to the Hidropastaza consortium, comprising Odebrecht and Hidro Agoyan.

The work at San Francisco was carried out on an engineering, procurement and construction (EPC) basis by Odebrecht, Alstom and VA Tech Hydro. Detailed design was carried out by Caminosca and PCE Engenharia.

Baba is a multi-purpose project being built at the confluence of the Baba and Toachi rivers, and will convey extra water to the underutilised 213MW Marcel Laniado de Wind plant. The concept behind the scheme is to use excess winter flows to increase storage at the Daule Peripa dam. The sponsor is Fideicomiso Hidropacifico.

The project is being developed on a public-private partnership (PPP) basis by an Odbrecht JV. It was scheduled to be completed - including commissioning of a new 42MW power plant - towards the end of 2009.

The Toachi-Pilaton project is to have an installed capacity of 228MW. The run-of-river scheme will have two plants - 50MW on the Pilaton river and 178MW on the Toachi river. It has been sponsored by Hidrotoapi, which a state JV of the Government and Pichincha province.

In its complaint against Odebrecht last month, the Government also claimed dissatisfaction with similar approaches and methods being used on the hydro power projects, echoing concern cited in May 2007.

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