AES Caracoles

distressed

The provincial government of San Juan in November 1997 awarded to AES Corp. the 30-year concession contract for the Caracoles Hydro project. The award includes the operation of an existing 45-MW facility (Quebrada de Ullum) taken over by AES in 1998, and the construction of two additional generating units totaling 183-MW (Caracoles and Punta Negra), as well as construction of an irrigation system to serve the province. The construction works on the two new plants started in early 2001 financed with a US$ 145 million loan from JP Morgan to the province, a US$ 38 million subsidy from the government and cash-flows from the 45-Mw operating unit. In 2002, AES Corporation filed legal proceedings with an international arbitration tribunal (International Centre for Settlement of Investment Disputes - ICSID) against the Argentinean government. The proceeding seeks compensation for losses incurred by the company at the time of the devaluation of the Argentinean currency. For updates on the international arbitration proceedings, check http://www.worldbank.org/icsid (case # ARB/02/17). None