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    International arbitration to decide Iberdrola-CFE dispute

    August 11, 2022 - CE Noticias Financieras


      Alejandro Alegría Periódico La Jornada

      Thursday, August 11, 2022, p. 19The

      dispute between the Federal Electricity Commission (CFE) and Iberdrola for the start-up of the Topolobampo III power plant has escalated into an international arbitration, for which the state-owned company is requesting a compensation of 190 million 200 thousand dollars, according to data from the transnational


      The Spanish firm led by Ignacio Sánchez Galán acknowledged in its consolidated reports for the first half of this year that it initiated international arbitration against the Mexican electric company and expects the process to conclude with an award in the first quarter of 2023.

      The conflict between both companies derives from the CFE conditioning the start-up of the Topolobampo III power plant, located in Sinaloa, to the payment of conventional penalties for the delay in the construction of the plant, in the amount of just over 16 million US dollars plus value added tax (VAT)


      To resolve the conflict of the plant operated by Iberdrola Topolobampo, a subsidiary of Iberdrola Mexico, filed an international arbitration to request the recognition of governmental force majeure and the recognition of the entry into operation of the plant on July 20, 2020.

      The transnational energy company has also demanded the return of the conventional penalties paid for 2 million dollars, the inappropriateness of the conventional penalties requested, the payment of the expenses incurred and the capacity charges during the force majeure period for an amount of no less than 10 million US dollars.

      In addition, it also requests the amount of damages caused by the delay in the commercial operation date of the plant.

      However, the CFE has opposed Iberdrola's claims, so it filed a counterclaim in the arbitration and claims damages in the amount of 185 million 500 thousand dollars and 4 million 700 thousand dollars in additional penalties for not having reached the percentage of national integration.

      So far, the CFE has not taken a position on the conflict it has with Iberdrola over this plant, while the transnational has only reported what is happening through its quarterly results reports.

      It is worth noting that in 2017 the Spanish capital firm won the bid to build the natural gas-based generation plant, but five years after the construction was completed, it has not yet entered into operation despite the fact that the contract establishes that it was to supply gas 30 months after the agreement began.

      This dispute is in addition to others that Iberdrola maintains in the country, such as the request for an injunction to avoid paying the new tariffs established for the use of the electricity transmission network by renewable energy generating plants. If Iberdrola Mexico does not obtain the definitive suspension, it will have to pay 2 thousand 584 million pesos.


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