UTE will sign multi-million dollar construction contract for thermal power plant no later than November

The president of Uruguay’s state-owned energy company says “we cannot lose more time”

Uruguay’s state-owned energy company, UTE, has decided to begin construction on a new combined cycle thermal power plant in Punta del Tigre before the end of the year. The project has been delayed by accusations of impropriety arising from the multimillion dollar competitive bidding process. The project is considered “strategic” for UTE to achieve Uruguay’s goal of energy sovereignty by 2014.

The head of the organization, Gonzalo Casaravilla, told El Observador that UTE has decided to sign a construction contract with a private company no later than November. “We cannot lose more time. That much is clear” he said.

Mr. Casaravilla said that if there is any trouble signing a contract with the firm that won the competitive bidding process (the Argentinean company Electroingeniería) or getting it approved by the Tribunal de Cuentas, Electroingenieria will automatically be replaced by the company with the second lowest bid, in this case the Korean company Hyundai. However, they would too would have to be approved.

Mr. Casaravilla told El Observador that it is “natural” for questions to arise about the bidding process since it is a multi-million dollar project. In fact, it is the biggest infrastructure project UTE has contracted out to a private company, but Mr.Casaravilla added that UTE would not let these questions continue to delay construction.

When UTE finally signs a contract with a private construction firm, UTE will have to immediately pay $100 million USD to the construction firm to begin the infrastructure project.

Electroingeniería’s bid was 3.4% lower than Hyundai’s bid for the project which was the second best overall. The Argentinean company proposed charging $531 million dollars for construction and $15 million dollars for continued maintenance. Hyundai bid $529 million for construction but wanted $28 million for maintenance.

UTE will require whoever builds the plant to have the first of the three turbines built within 18 months of starting construction. The plant is scheduled to begin contributing to Uruguay’s grid by the winter of 2014. The second turbine should be completed by the end of 2014 and the third turbine before the end of 2015.

The director of the Eling Group (which includes Electroingeniera among other firms), Carlos Bergolio responded to allegations the company paid bribes for contracts in Argentina by saying “accusations are free” and that all of the allegations that have fallen on the company were dismissed by the justice system. “We have never been on trial”, he said.

This Uruguay Business Reports news article is a translation of a news story that appeared in the Uruguayan newspaper El Observador. The original news story is available here. Uruguay business translation by Donovan Carberry.

Martin Garcia Canal update: Uruguay will receive Riovia’s bid, Argentina will not

After a tense week in Uruguay’s relations with Argentina over dredging the Martín García canal, the delegates of the Río Plate Administrative Commission meet Monday 7.30 to review the proposals from business interested in taking over maintenance of the canal.

Sources within the Uruguayan foreign ministry told La Diaria that Argentina’s unilateral decision to exclude Riovia from the tender exhausted the patience of the Uruguayan authorities, who understand that the Argentinians “are desperate” and they want “to wash their face”.

According to the Foreign Relations Ministry, Uruguay has always acted with “transparency and seriousness” and it was Argentina who asked for an audit and who claimed that they would make CARP’s minutes public, in which they discussed the alleged bribe, and then later did not release them because the same Argentinean government did not permit it.

“Now they are desperate to clean their faces and expunge guilt associated with Riovia”, reported the foreign ministry source.

It will be Monday at 2:00pm when both CARP delegations meet in Buenos Aires to open the bids from the four prequalified canal maintenance companies. The President of the Uruguayan delegation will also receive Riovia’s bid, although Argentina will not.

Days after the Argentinean foreign minister Hector Timerman sent a letter to his Uruguayan counterpart, Luis Almagro informing him that the Argentinean government had decided to revoke Riovia’s prequalification following the Uruguayan Court of Auditor’s investigation into alleged bribery by the firm.

Uruguay understands that arbitrarily excluding Riovia from the bidding could expose both countries to multi-million dollar lawsuits under treaties signed by both Uruguay and Argentina for the protection of investments.

Riovia has already announced that it is studying how to react to being excluded from the tender.

Although Argentina has proposed suspending Riovia from bidding today, they know the Uruguayan delegation will not permit it. Argentinean representatives will not review Riovia’s proposal but the Uruguayan delegation will in order to “cover themselves” in the case of an eventual law suit.

This Uruguay Business Reports news article is at translation of an article that appeared in the Uruguayan newspaper El Observador. The original article is available here. Uruguay Business Reports translation by Donovan Carberry.

MARTÍN GARCÍA CANAL CONFLICT: Argentina agrees to advance tender process for canal dredging

The Argentinean foreign secretary sent a letter to his Uruguayan counter part, Luis Almagro, guaranteeing that the dredging tender process will continue despite investigations into alleged bribes.

The Argentinean foreign secretary, Héctor Timerman, sent a letter to the Uruguayan Foreign Relations Minister Luis Almagro, in which he assured that the start of an investigation into bribery allegations will not impede opening the negotiations on calling a tender to deepen the Martín García canal, sources inside the Uruguayan foreign ministry told the tv program Subrayado.

The note is a reply to the letter sent by Almagro this past Monday the 14th of May. In that missive the Uruguayan government asked to open bidding on a tender for canal maintenance, after which Argentina proposed freezing the tender while beginning the investigation into alleged bribes requested by Buenos Aires.

UNoticias, reported that Almagro communicated to Timmerman the resignation of traveling ambassador, Julio Baraibar, “after he admitted that he heard from mouth of [Uruguayan diplomat] Fransico Bustillo, that they had tried to bribe him to retain the [canal maintenance] concession”.

This Uruguay Business Reports article is a translation of a news article which appeared in the Uruguayan newspaper El Observador. That article is available here. Uruguay Business Reports news translation by Donovan Carberry.

MARTÍN GARCÍA CANAL CONFLICT: Uruguayan opposition asks to freeze tax treaty with Argentina as long as the canal dredging is delayed

The leaders of the opposition closed ranks after asking the government not to send the tax information exchange treaty with Argentina to parliament now that the neighboring government has decided to suspend the process of dredging the Martín García canal while they investigate reports of corruption surrounding it.

“We told them not to send the treaty because we won’t vote for it. We think it’s a very weak position to accept everything Argentina tells us when they don’t accept anything” Colorado senator José Amorín told EL PAÍS digital.

The senator believes that the letter sent by foreign minister Héctor Timerman to External Relations minister Luis Almagro is proof that the Argentinean foreign minister “is only interested in obstructing this [the dredging] and not moving forward, but this something that Uruguay needs”.

He saw that the parliament has to vote on a treaty that is of special interest to Argentina (it will stop Argentinean citizens from using Uruguay as a tax haven) and that this exchange treaty could be used as an element to pressure them in the same way that “they have been using the dredging”.

The same sentiment was shown by blanco senator and president of the National Party, Luis Alberto Heber, who told EL PAÍS digital that “Uruguay should not hurry to sign the tax office information exchange treaty and that we suggested to the executive office not to send it to parliament” he added that now “we will have to wait” to see what happens.

Nationalist senator Jorge Larrañaga told Subrayado (a Uruguayan tv program) that “it would be good to delay the treaty agreement in parliament as a signal to Argentina. It is very difficult to discuss this agreement when Argentina has postponed dredging the canal again”, he explained.

LETTER.

The opposition leader also closed ranks behind the government, to support the tone of the reply letter that Almagro sent to Timerman about the request to initiate an investigation into the alleged corruption.

“the note that Timerman sent to our foreign minister is unacceptable” said Heber and he emphasized that Almagro’s reply mentioned the publication of the proceedings and their dissemination to the public.

“No one doubts the honesty of Almagro and the delegates of the Rio de la Plata Administrative Commission (CARP) but we want to stand firm, we won’t vote on what they [Argentina] asked when they don’t do anything to honor our interests. We there to be feedback[sic]”.

This article is a translation of one that appeared in the Uruguayan Newspaper El Pais. The original news article can be found, in Spanish, here. Translation by Donovan Carberry.

Opinion in translation: Scandal in the Martín García Canal

The [Uruguayan] government has been trapped in a tangled defeat on the issue of dredging the Martín García canal. It is not the bilaterally postponed dredging of the Martín García canal, committed to a few days ago in Montevideo by the Argentinean foreign minister Héctor Timerman and immediately locked in by their representatives in the Río de la Plata Adminstrative Comission (CARP), in a swift demonstration of the almost habitual hostility of the Kichner government towards Uruguay. The more serious issue is the scandal surrounding the renewal of the contract with Riova [a subsidiary of the Dutch company Boskalis International B.V.] for maintenance dredging in the middle of well founded claims of corruption. The questionable contract renewal was accepted by [the Uruguayan] government, causing millions of dollars in damage to the country.

The canal dredging is essential for larger ships to operate from the port serving the majority of our exports Nueva Palmira, the second biggest             port in the country. Argentina has delayed this work for years, in order to protect the competitiveness of their ports which use the other canal, the Mitre, to move Argentinean products. After the meeting with Uruguayan foreign minister Luis Almagro, Timerman assured him that the issue was solved and that finally he would call for the immediate bidding on the Martín García canal. Less than a week later, the Argentinean delegates in CARP put sticks in the wheel by requiring bureaucratic steps causing a new set of delays.

But not even this new blow is the worst of the story. While they were rejecting open bidding and postponing the dredging of the canal Argentina promoted the renewal of the current CARP maintenance dredging contract with Riovia at along with an increase from $12 million USD to $15 million USD in the annual fee paid by both countries. The additional cost was uselessly opposed by the Uruguayan delegation which had established on technical grounds that any increase should not exceed $1 million USD. The embarrassing final wound was the absurdity that CARP never even considered offering the contract to the other Dutch company, Van Oord, who offered to take over the dredging for $9 million USD, six less that what CARP  generously conceded to Riovia under Argentinean pressure.

The CARP decision has been followed by reports of giant bribes from Riovia, who will remain in charge of the work until whatever day CARP calls for open bidding to assign dredging and maintenance on the canal, something that could take two more years. Moreover given the level of corruption that permeated the whole episode it is unbelievable that [the Uruguayan] government could accept the Argentinean impositions in favor of Riovia without any apparent justification, just following head down behind the Kitchener regime and the irregularities of their representatives. A Uruguayan diplomat informed CARP and our foreign minister that he had been offered a million dollar bribe to support Riovia, something that Almagro failed to report as he should have. The foreign minister is trying to clear the confusion in the [Uruguayan] Parliament, which has convened to investigate this case. But it will be difficult to erase what appears to be a painful official setback.

This article appeared as an editorial in the Uruguayan newspaper El Observador. The original article (in Spanish) can be viewed here. Translation by Donovan Carberry.