Enagás has redoubled its legal battle against the Government of Peru and has presented before the international arbitration body (ICSID) a new demand to recover the 400 million euros of the investment made in the South Peruvian Gas Pipeline (GSP), a contract that Peru unilaterally broke in 2017. This new request for arbitration, registered by ICSID on December 23, joins a procedure already opened for the same reason in 2018 and which is in the process of sentencing. The Linklakers law firm defends the interests of the Spanish company in this conflict.
As Enagás explains in its 2020 report, this process would imply for the company to recover almost 2,000 million euros in which this investment is valued, something that they qualify as possible to recover and are reflected in the company’s balance sheet.
In January 2017, and unilaterally, the Peruvian Government declared the “termination of the concession for reasons attributable to the concessionaire”, that is, to Enagás, alleging that the Spanish company had not been able to obtain the necessary financing to complete the work in a timely manner. He then kept the guarantee (262 million dollars), in addition to fining Enagás and executing the bank guarantees. He also kept the assets of the gas pipeline.
From that moment on, the Spanish gas company tried to reach an amicable agreement with the Peruvian government to compensate it financially since it had not complied with the Peruvian norm when it came to withdrawing Enagás from this work.
No friendly settlement
However, these attempts to end the procedure amicably have not come to fruition and in 2018 Enagás submitted a request for arbitration to ICSID in which it demands that the Government of Peru pay it the full value of the investment assets. 1,913 million euros in total.
The Spanish gas company considers that, once the payments it would have to make to the creditors of this project, to the subordination and loan assignment contracts signed between Enagás and its partners, have been discounted, the funds to be recovered exceed 500 million dollars. Enagás has updated the value in 2020 and puts it at just under 400 million euros. This process is pending judgment and the company expects it to be carried out throughout 2022.
But, now, the company has presented a new arbitration to try to send to Spain the future dividends of this project, which the Peruvian government also prohibits the Spanish company. Enagás considers that these dividends amount to 186 million dollars, about 164 million euros, that would be added to the almost 400 million that he hopes to recover from the other arbitration.