NEWS

The Dominican Government and the Odebrecht-Tecnimont-Estrella Consortium Reach Agreement to Settle All Existing Disputes and Guarantee Completion and Final Delivery of the Coal-Fired Central Termoeléctrica Punta Catalina Project (CTPC)

Within the framework of the International ADR Center of the International Chamber of Commerce (ICC), the Dominican Government, through the Corporación Dominicana de Empresas Eléctricas Estatales (CDEEE), managed to reduce from US $973.2 million to US $395.5 million the amount claimed by the Odebrecht-Tecnimont-Estrella Consortium as additional payment for the construction of the coal-fired Central Termoeléctrica Punta Catalina Project (CTPC).

The final settlement of all the existing disputes to date was reached through a negotiation process between the parties, which started as soon as their respective claims and positions were formulated in July 2017, and ended in an international mediation in the city of New York, in accordance with the Mediation Rules of the ICC, that took place in several sessions held between the months of January and March 2020. The mediation was conducted by the renowned international mediator, Mrs. Mercedes Tarrazón.

Mrs. Tarrazón guided the parties in extensive discussions that analyzed their different positions, as well as the advantages and disadvantages of reaching an agreement through mediation versus subjecting the dispute to a lengthy and costly arbitration process. The mediation resulted in, among other things, a complete and final agreement concerning all existing disputes to date, including the US $973.2 million the Consortium claimed as extra payments against the Dominican Government, due to additional works and time extension.

Of the US $395.5 million agreed upon to settle said disputes, the Dominican Government will only be required to disburse US $59.5 million. This is because the US $336 million Contingent Fund, which was originally set up in June 2018 to secure continuation of the works (subject to resolution of such disputes), will be finally credited towards payment of the US $395.5 million total amount agreed upon.

Payment of the US $59.5 million will be made gradually and to the extent the Consortium completes, within certain deadlines, the remaining works to which such payment has been subject to, including successful completion of the tests necessary to bring CTPC’s Unit 2 into final operation. This will allow the Dominican Government to take advantage of the maximum generation potential of CTPC’s two power-generating units, which account for between 30% and 35% of the demand supplied through the Interconnected National Electric System (SENI). During its testing phase, CTPC has invoiced US $163 million, at prices much lower than the spot market prices, which has significantly benefited the finances of the electric distribution companies.

The Dominican Government was represented by US-based law firms Foley Hoag LLP and Manatt, Phelps & Phillips, LLP, and advised, throughout the entire process, by the century-old US-based engineering firm Stanley Consultants, Inc. The Odebrecht-Tecnimont-Estrella Consortium was represented by the law firm Clifford Chance US LLP.

CTPC is the main infrastructure project undertaken by the Dominican Government and constitutes the largest power generation facility in the country. CTPC is comprised of two coal-fired units of 376 MW each, for a total gross capacity of 752 MW, with a nominal efficiency of 39.2%-LHV, a coal handling port, and other related infrastructure, including, among others, a completely closed building to store 200,000 metric tons of coal, a 345 kV output electrical substation and a 345 kV transmission line. CTPC has integrated systems for the reduction of gas emissions with the capacity to reduce up to 98% of Sulfur Dioxide (SO2), Sulfur Trioxide (SO3) and heavy metals, including mercury. CTPC’s Unit 1 and the above-mentioned port and other related infrastructure were formally transferred to the Dominican Government in November 2019 and are fully operational. The operation and maintenance of CTPC are carried out with the assistance of General Electric, who supplied the turbines and generators. CTPC’s projected revenues are estimated at US$ 550 million annually, with an EBITDA of US$ 250 million annually. The annual positive impact of CTPC on the public sector’s finances is estimated at between 0.4% and 0.5% of the country’s GDP.

https://www.businesswire.com/news/home/20200317005791/en/Dominican-Government-Odebrecht-Tecnimont-Estrella-Consortium-Reach-Agreement-Settle

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