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Vestas in $32m currency row with Argentine wind developer

Genneia wants to pay an outstanding balance in Argentine pesos, instead of euros or US dollars, as Vestas claims was agreed - a move that could leave the turbine group facing a heavy currency exchange loss on the more than $32m it says it is still owed.

Danish turbine maker Vestas has started international arbitration proceedings against Argentina's Genneia - the only company to successfully develop wind power in the South American nation - in a row over payments, Recharge has learned.

Genneia wants to pay an outstanding balance in Argentine pesos, instead of euros or US dollars, as Vestas claims was agreed - a move that could leave the turbine group facing a heavy currency exchange loss on the more than $32m it says it is still owed.

Vestas provided 43 of its V90-1.8MW turbines for Genneia's Rawson 1 and 2 wind farm projects, which came on line in January

Vestas has applied to begin arbitration proceedings over the issue at the International Court of Arbitration of the International Chamber of Commerce.

Genneia's apparent decision to pay its Danish supplier in pesos instead of US dollars is as a result of an expected change in its own contract with the federal administrator of Argentina's wholesale electricity market Cammesa, a source tells Recharge.

That power contract is currently set for remuneration in US dollars. However, that may be changed to pesos as Argentine President Cristina Kirchner seeks to staunch billions of dollars in outflows,... more [truncated due to possible copyright]  

Danish turbine maker Vestas has started international arbitration proceedings against Argentina's Genneia - the only company to successfully develop wind power in the South American nation - in a row over payments, Recharge has learned.

Genneia wants to pay an outstanding balance in Argentine pesos, instead of euros or US dollars, as Vestas claims was agreed - a move that could leave the turbine group facing a heavy currency exchange loss on the more than $32m it says it is still owed.

Vestas provided 43 of its V90-1.8MW turbines for Genneia's Rawson 1 and 2 wind farm projects, which came on line in January

Vestas has applied to begin arbitration proceedings over the issue at the International Court of Arbitration of the International Chamber of Commerce.

Genneia's apparent decision to pay its Danish supplier in pesos instead of US dollars is as a result of an expected change in its own contract with the federal administrator of Argentina's wholesale electricity market Cammesa, a source tells Recharge.

That power contract is currently set for remuneration in US dollars. However, that may be changed to pesos as Argentine President Cristina Kirchner seeks to staunch billions of dollars in outflows, and accumulate central bank reserves to make debt payments and fund spending.

If Vestas is in turn paid in local currency, the value of the transaction would be calculated at the official exchange rate, currently 4.66 pesos to the US dollar.

But Vestas would face using the unregulated currency market to convert its payment into US dollars - currently standing about 6.30 pesos per dollar - leaving the turbine group nursing a heavy loss on the difference.

Vestas claims it is owed a balance of $19.87m, plus $1.87m which Genneia does "not acknowledge as an obligation", according to the record of the claim listed on financial information source NOSIS.

Vestas is also claiming a further €8.04m ($10.37m) because a financial deadline was missed.

Payments for a five-year operations and maintenance agreement also apparently hang in the balance.

Vestas and Genneia - which was known as Emgasud until a few months ago - did not immediately return requests for comment.

Genneia - which is led by prominent businessman Alejandro Ivanissevich - won a large percentage of the first, and so far only, renewables tender held by the federal government in 2010.

The financial stability of the company has been questioned, as its debts have become significant. It recently announced plans to issue up to 70m pesos in new bonds.

The Rawson wind projects were financed through a $157m bond with a coupon of 11% for seven years. Some of the proceeds from that bond were used to pay off previous debts. The national social security administration, Anses, is said to have purchased 80% of the bonds, with the rest bought by Macro Bank, according to a renewables industry source in Argentina.

The 50MW Rawson 1 and 30MW Rawson 2 wind farms are supposed to be paid at rates of $128.70/MWh and $124.20/MWh, respectively, for a 15-year term.

Supporters of renewables development expressed dismay at the situation.

"The Argentine renewable energy industry is already perceived to be comatose, as these 80MW of wind were among the very few projects that were built from the 895MW approved by the government in 2010," says Carlos St. James, president of regional industry body LAC-CORE and former president of the Argentine Renewable Energies Chamber.

"Legal disagreements such as these - irrespective if there is merit to the case or not - are akin to unplugging the industry's life support system in Argentina."


Source: http://www.rechargenews.com...

SEP 12 2012
https://www.windaction.org/posts/34858-vestas-in-32m-currency-row-with-argentine-wind-developer
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