Enel Green Power Latin America presently holds a 36.2% interest in a joint venture company, LaGeo, with the government of El Salvador. The company is currently a pure geothermal venture and operates two geothermal plants, the first in Ahuachapán with an installed capacity of 95 MW and a second one in Berlin with 109 MW.
In August 2001 the government of El Salvador - supported by top-level international banks and legal advisors - launched an international public tender to select a strategic partner for the development of geothermal energy in the country. After a competitive tender, Enel Green Power was selected to establish the joint venture, “LaGeo”, with the Salvadoran state-owned power company, INE/CEL.
In 2002, Enel Green Power acquired 8.5% of LaGeo and signed a Shareholder Agreement (SHA) that recognized, inter alia, its right to reach the majority in LaGeo by capitalizing investments in the company.
Over the following years, Enel Green Power fulfilled its obligations as a strategic partner and thereby increased its stake in LaGeo to 36.2%, through the mechanisms provided by the SHA. Nonetheless, INE/CEL refused to recognize Enel Green Power’s right to further buy-in to LaGeo through reserved capital injections in exchange of investments, as provided in the SHA. Therefore, in 2008, Enel Green Power initiated an arbitration proceeding against its partner for breach of the SHA under the Rules of Arbitration of the International Court of Arbitration of the International Chamber of Commerce. INE/CEL counterclaimed for damages from alleged breaches by Enel Green Power of its obligations under the SHA.
On May 30th, 2011, the international arbitration tribunal issued an award recognizing Enel Green Power´s right to invest in geothermal energy in El Salvador through LaGeo and to capitalize such investments by subscribing new shares in the company. In particular, the arbitration tribunal recognized Enel Green Power's right to capitalize investments amounting to US$ 127.4 million, which would increase Enel Green Power's stake in LaGeo 53.3%. The arbitration tribunal also dismissed entirely INE’s counter-claim against EGP.
Enel Green Power Latin America's vision is not only to grow in El Salvador’s power market but also to create a technical hub for its geothermal activities in the region on the basis of a combination of LaGeo’s and Enel Green Power’s know-how, resources and competencies.