AES PROJECT: ANNOUNCEMENT OF 210MW BID WINNER

UNCLAS TEGUCIGALPA 002897

SIPDIS

SENSITIVE

GUATEMALA FOR COMATT: DTHOMPSON
STATE FOR WHA/CEN

E.O. 12958: N/A
TAGS: ENRG EPET EINV ECON HO
SUBJECT: AES PROJECT: ANNOUNCEMENT OF 210MW BID WINNER
DELAYED AGAIN

REF: a) 01 TEGUCIGALPA 2872, b) TEGUCIGALPA 02207, C)

TEGUCIGALPA 02857


1. (SBU) Once again, the announcement of the winning bid in
the 210MW energy contract has been delayed (bids were
presented on July 26). Angelo Botazzi, the general manager
of the state-owned electricity company ENEE, now says the
decision will be announced sometime before October 23rd. As
the decision draws near, is postponed and draws near again,
the American bidder, AES, continues to request USG advocacy.
As noted in ref a, Embassy has advocated for this project,
consistently, at the highest levels of government.
Ambassador and DCM have discussed the tender personally with
President Maduro and Minister of the Presidency, Luis
Cosenza on several occasions. Econoffs continue to show
Embassy support for a fair process at all opportunities.


2. (SBU) On October 16th, Emboffs met with ENEE general
manager, Botazzi and passed on concerns expressed by the
U.S. company, AES, about possible irregularities in the
evaluation process, including the fact that some
confidential documents from the evaluation committee have

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been circulated publicly.


3. (SBU) Botazzi replied that while it is possible an
individual on the evaluation committee has acted
irresponsibly, he has complete confidence that the
committee's decision will result in a fair and transparent
outcome. He added that the decision of the evaluation
committee will be unanimous, limiting the ability of any one
individual to unduly influence the process. The evaluation
committee's recommendation will also need to have the stamp
of approval from the separate transparency committee (which
is serving as a watchdog) before it is submitted to the ENEE
board. Botazzi stated he is confident that the winner of
the bid will be the project that meets all the requirements
and has the lowest evaluated cost.


4. (SBU) Despite the repeated delays in the announcement,
Botazzi promised the decision would be announced within the
week. He professed not to be concerned about the time the
decision has taken up to now, since the tender evaluation is
very technical and complicated. He noted that the committee
is working hard to make sure the recommendation is so well
documented that no party will be able to challenge the
decision.


5. (SBU) This position is consistent with a conversation
Econcouns had with Presidential advisor, Ramon Medina Luna,
on October 15th. Medina Luna said that it was important for
the Government to avoid any possible legal challenges that
would delay the awarding of the contract. Since the country
desperately needs this energy by 2004, they do not feel they
can afford the delays of a legal challenge. Both Botazzi
and Medina Luna indirectly acknowledged the importance of
AES's El Faro project, but neither one gave any indication
AES will definitely be the winner of this contract. Note:
AES's El Faro project is technically independent of the
result of this bid. However, all parties understand that
under the current world energy market conditions obtaining
this contract would probably be necessary for AES to get
financing for El Faro. End Note.


6. (SBU) Comment: We believe the meetings with Botazzi and
Medina were useful in communicating again USG interest in
the fairness of the tender and the American company's
concerns about possible irregularities. Embassy will
continue its advocacy on this case at all appropriate
opportunities. End Comment.
PALMER