BEIRUT: Abener-Butec, the Spanish-Lebanese energy consortium, whose $662 million provisional contract to rebuild the Deir Ammar power plant was canceled by Cabinet last December, denied reports that it officially submitted a lawsuit against the Lebanese government to the World Bank’s international investment mediation panel last week.
Multiple Arabic media outlets reported that Abener-Butec was seeking $100 million in compensation from the Lebanese government through the International Center for Settlement of Investment Disputes last week after the state Shura Council upheld the Energy and Water Ministry’s decision in February to launch a new tender for the project, which was awarded to the Greek energy company J&P Avax, subject to Cabinet’s approval.
Myrna Zakharia, Butec’s PR and communications adviser, told The Daily Star that the company had not yet received a final verdict from the Shura Council regarding their compensation claim and said they were not seeking international mediation – yet.
“We are not planning to file with the [ICSID] because our case is not finished at the [Shura Council],” she said. “We hope they will study it further and show that stopping the tender that we already won is illegal. It’s not about how much we lost studying the procedure for Deir Ammar Phase Two,” Zakharia said. “We’re not asking to be reimbursed as far as cash is concerned. We’re talking about respecting the law.”
The legislation in question is law 181, which established a budget to increase the capacities of the Deir Ammar, Jiyyeh and Zouk power plants in order for them to collectively generate 700 megawatts of electricity.
Energy Minister Gibran Bassil began negotiations with Abener-Butec to reduce the costs of the project in November after the Cabinet said the consortium’s bid exceeded the $502 million allocated to fund Deir Ammar’s reconstruction.
Under the terms of the tender, the Energy Ministry is allowed to ask the company that wins the contract to reduce costs by 10 percent, so Abener-Butec agreed to downsize the capacity of the new plant from 535 megawatts to 430 megawatts – though such a move would increase power production costs in the long term.
But Abener-Butec argues that the $160 million cost reduction demanded by the ministry was beyond the amount mandated by the law. “You cannot ask us to deduct more than 10 percent of the total costs of the project, because if we were able to reduce costs more than that then how much profit would we be making? We’d be stealing from the government,” Zakharia said.
The ministry has claimed that Abener-Butec has no right to sue them in the Shura Council or seek international mediation since the contract was never signed and the provisional agreement contained no arbitration clause, which the ICSID requires both parties to agree to in order to adjudicate a claim.
An Abener representative at their headquarters in Spain did not respond to requests for comment, but a source at the Spanish Embassy in Lebanon confirmed that the company had not made a decision about whether to file its suit with the ICSID.
“They read in the newspapers that the Shura Council decided to uphold [Cabinet’s] decision to cancel the contract, but Abener hasn’t made any decision yet on whether to file a suit [with the ICSID]. They may do so in the future, but until now they haven’t moved in this direction.”