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Abener Garabito appeals for judicial review in Costa Rica

May 13, 2005

The Consortium composed by the companies Abener Garabito Energía S.A., Abener Energía S.A. and Abengoa S.A (hereinafter “the Consortium”), successful bidder at the international competitive bidding which took place in April 2003 for the construction of the Garabito Combined-Cycle Thermal Power Station, communicates to the public opinion that the Consortium has made an application for judicial review appealing for legal protection and declaration of fundamental rights against the National Council for External and Internal Financing (CONAFIN) and against the Costa Rican Institute of Electricity (ICE) before the Constitutional Hall of the Supreme Court of Justice.

In July 2004, the ICE's Board of Directors awarded the building contract following competitive bidding to the Consortium Abener Garabito – Abengoa - Abener, which achieved the best scoring and which offered the lowest cost per kilowatt. The maximum price tendered by the Consortium was US$ 0.076 per kilowatt vs. the US$ 0.088 tendered as minimum price by Hitachi. This difference, multiplied by the generation rate indicated by the ICE for such station (700 GWhr/year), means a saving of at least Eight Million Four Hundred Thousand US Dollars (8,400,000.00 USD) per year for the public finances, during each of the 25 years of the station's working life expressly required on the board, which should reach a Total Sum of Two Hundred and Ten Million US Dollars (210,000,000.00 USD) which should be financed by the Costa Rican public funds due to such decision.

The Consortium, after holding a close correspondence with the ICE and the CONAFIN in order to enforce the legal grounds which protect the Consortium, and not being granted with a period of hearing or audience, has brought this appeal as the sole possible solution in this moment in order to protect its legitimate interests with the object of refuting the following three recent administrative resolutions breaching the fundamental rights of the companies composing this Consortium:

  1. The "objection" report issued by the CONAFIN on last 11 March to the application filed by the ICE for the approval of the financing of the project.
  2. The unilateral measure adopted by the ICE's Board of Directors for withdrawing the resolution of awarding the bidding in favour of the Consortium.
  3. The arbitrary award made by the ICE in favour of the company postulated in second place, not existing any regulation to support this.

The administrative resolutions challenged by the Consortium breach the Due Constitutional Process, specially the principles of “ pressumption of innocence and accusation”, “ non-retroactive nature of the law” and “ opportunity to defence” . These resolutions contradict the constitutional principles governing and inspiring the administrative contracts in Costa Rica.

Among the grounds of the aforesaid report, the CONAFIN erroneously and unlawfully considered that a possible penalty to the successful bidder for the construction of the project (the Consortium of Abener Garabito-Abengoa-Abener) may affect the awarding of the bidding adjudicated by the ICE. The CONAFIN's resolution is based solely and exclusively on publications appeared in several means of communication to which absolutely no juridical accuracy can be attributed.

Completely licit acts and non-existence of investigations

We emphasize that none of the successful bidding companies (Abener Garabito-Abengoa-Abener), either considered acting in a consortium basis or individually, has ever been in dispute for any kind of potentially irregular acts during this process or in any other and have not and have never had all through their wide industrial and commercial experience any relation with acts in favour of civil servants. These Companies, present in more than thirty countries, are recognized for their good technical and industrial performance and for the satisfaction of their clients and suppliers

Therefore, the CONAFIN's decision makes the Consortium suffer the burdensome consequences of an hypothetical penalty, which has never been imposed and which has never been object of any pre-trial or judicial proceeding and which in these matters may affect to any of the other bidders.

Re-awarding of the bidding contrary to the correct procedure.

On the other hand and in an act contrary to law, absolutely arbitrary, and not existing any communication nor any right to defence, the ICE decided to re-award the project to the company postulated in second place. According to some newspaper versions, the ICE is requesting from Conafin a new report in order to obtain the approval for the financing of the works.

It clearly results that re-awarding of the project to another company different from the one which did obtain the best scoring, and therefore more expensive and burdensome for the Public Administration and definitively for the economic and social interests of the country, infringes another constitutional principle: the principle stating that the Government must contract the best tender offered in the strict defence of public interests.

For all the reasons hereinabove stated, the Consortium requested from the Constitutional Hall the withholding of the measures of re-awarding the bidding while the merits of this application for judicial review and declaration of fundamental rights are decided.

The Consortium and the companies composing the consortium are waiting for the prompt affirmative resolution of the appeal so that they can carry out the construction project of Garabito's Combined-Cycle Thermal Power Station in an effective and profitable way for the Costa Rican Public Administration and for the Costa Rican social interest. Again, we must say that the companies in the consortium are, as it should always be, permanently available for casting light on any event that may be eventually required.

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