El Salvador Investigates Public-Private Energy Contract Amidst Debate for New State Concessions Law


The disputed LaGeo geothermal energy plant in Ahuachapán that El Salvador is fighting to keep in public hands. Photo: Fernando Marroquin

The National Legislative Assembly has created a special commission to investigate the contract between the Italian company and the state energy company that established LaGeo, the public geothermal energy company, as a public-private partnership under the administration of Francisco Flores of the right-wing Nationalist Republican Alliance (ARENA) party in 2002. The commission, convened on February 13, was formed in the wake of the controversy surrounding a recent international court ruling granting the private company Enel the right to acquire a majority of shares in LaGeo. Salvadoran Attorney General Luis Martínez also announced the creation of a special commission to investigate the case to begin work this week. President Funes has been outspoken in his rejection of the Enel-LaGeo decision, which would result in an annual loss of millions of dollars for the Salvadoran state. Among the slew of irregularities that Funes has cited surrounding the 2002 contract: the lawyers for both the state company and Enel were from the same law firm, and LaGeo President Guillero Sol Bang modified the shareholders agreement just hours before signing the contract itself. Funes announced that he would file suit with the Supreme Court to annul the contract. The President called the case “the biggest swindle that has occurred in the country,” and assured that he will do everything in his power “not to turn over the patrimony of Salvadorans to foreign hands.” He has accused ARENA and right-wing organizations like the National Association of Private Businesses (ANEP) of conspiring to hand LaGeo over to Enel, and called the Enel-LaGeo contract “a disguised privatization.” The President’s position on the case has raised eyebrows in the Salvadoran labor movement, which is currently fighting a US-pushed Public-Private Partnership (P3) Law that sits before the National Legislative Assembly. Labor leaders contend that this P3 Law, presented by the Funes administration, would make state entities and infrastructure across the country vulnerable to corporate takeover in the style of the Enel-LaGeo privatization scandal.

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