Abengoa sues government over solar premium cut in energy sector reform

Spanish conglomerate Abengoa has decided to take legal action against the Spanish government for the reduction in the premium rates paid for thermosolar energy in its reform of the domestic electricity sector.

The Seville-based company has decided to take its complaint not only to the Spanish courts but also abroad, given that some of its thermosolar plants are owned by a company called CSP Equity Investment, which is registered in Luxembourg. As a result it is seeking international arbitrage of its dispute with the conservative Popular Party administration of Prime Minister Mariano Rajoy.

Notice of the legal action was contained in the prospectus Abengoa filed with the US Securities and Exchange Commission (SEC) for its listing on the Nasdaq. Abengoa made its stock market debut on Friday.

The prospectus says that Abengoa's arbitrage demand alleges that the regulatory reform approved by the Spanish government has dashed the reasonable expectations of CSP Investment and constitutes an "expropriation."

CSP Equity Investment is the holders of Abengoa's Helioenergy 1 and 2, Solaben 2 and 3 and Solacor 1 and 2 thermosolar plants.

The arbitrage will be held in The Hague under the rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC). The hearing will be conducted by three arbitrators, two of whom have already been named.

The information provided to the SEC does not specify how much compensation Abengoa is seeking, but company sources indicated it would be around 60 million euros for each year in which the dispute is not resolved.

Abengoa's solar energy division accounts for about a quarter of total group revenues. The concessions it has with the government are for 40 years.