El Salvador, Astaldi terminate contract for 65.7-MW El Chaparral

El Salvador utility Comision Ejecutiva Hidroelectrica del Rio Lempa (CEL) and Italy’s Astaldi Group have agreed to terminate the construction contract for the 65.7-MW El Chaparral hydroelectric project on El Salvador’s Torola River.

The utility and the builder agreed to end the $US220 million contract by mutual consent because it did not provide for redesign of the project, found to be necessary as a result of landslides from 2010 Tropical Storm Agatha and the discovery of geological instability in a portion of the project site.

CEL said July 17 that the parties resorted to a direct settlement due to the need to reactivate the project as soon as possible and to prevent further damage to the site. CEL said the termination allows continuity at El Chaparral and avoids legal disputes that might arise in international arbitration. The potential for arbitration already had stalled work at the project site.

The parties set the total liquidation of the contract in the amount of US$108.5 million. Based on progress of the work and payments made in advance, CEL said the contractor built the equivalent of $85 million, including $79.8 million and $5.2 million of work canceled or pending cancellation. The agreements recognized the remaining $23.5 million is to be paid to Astaldi.

Astaldi S.p.A. was named winning bidder in 2008 for turnkey construction of El Chaparral, including a roller-compacted-concrete dam, reservoir, and powerhouse containing two Francis turbine-generators.

CEL awarded a contract in 2009 for supervision of construction to a consortium, Eurostudios-Ingetec. Construction began in 2009 and was to be completed in 2013.

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