AES LOSES US$477 MILLION CONTRACT.

The Honduran government has canceled a 12-year, US$477 million contract to buy power from AES Honduras, a unit of U.S. energy company AES Corp, reports Reuters (Sept. 13, 2003):

State energy company Empresa Nacional de Energia Electrica canceled the contract, under which AES Honduras

was to supply some 200 megawatts of power to ENEE for 12 years, because "AES did not comply with certain clauses that were in the contract...and it was decided that the contract would not be continued," said ENEE's Angelo Botazzi. He said AES failed to supply job compliance guarantees and operation contracts and had failed to meet deadlines that had been agreed upon. "Moreover it was nine months behind schedule according to the work schedule the company had itself supplied," said Botazzi;

The AES subsidiary signed the emergency contract last December after the government canceled a contract it had awarded in November to a Honduran company, Luz y Fuerza Sociedad Anonima, following complaints the bidding process that led to that contract was flawed;

Honduras consumed 800 megawatts of energy last year, 500 megawatts produced by the state and 300 megawatts by local private companies, and anticipates an energy shortfall in the near future. AES Honduras executive Carlos Larach said the company would consult its lawyers about the canceled contract. "I'm not sure if this decision was taken legally, but we'll be consulting with our lawyers," he told journalists in the northern city of San Pedro Sula. AES has previously announced it plans to build in Honduras a 700-megawatt power plant to sell power to Guatemala, El Salvador and Honduras.

Copyright 2003