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Analysis: Impsa loses crucial Uruguay deal

URUGUAY: Woes have deepened for Argentina's bankrupt wind turbine manufacturer and developer Impsa following the decision by Uruguayan state utility UTE to cancel its contract for the 65MW Libertador I-III wind development project.

Impsa's silence on the collapsed turbines at Cerro Chato IV-VI, Brazil, has not helped dispel doubts about robustness
Impsa's silence on the collapsed turbines at Cerro Chato IV-VI, Brazil, has not helped dispel doubts about robustness

On top of this, the contract for the 50MW fourth phase, Libertador IV, is also widely expected to be rescinded.

"Recovery of Impsa's wind business is now looking unlikely," said Brian Gaylord, Latin American renewables specialist at Make Consulting.

Impsa's wind division leads the partnership that won the public tender in 2012 to build and operate the 50MW Libertador development. The main minority partner is German wind developer Innovent. The project – located across the border between the Lavalleja and Maldonado departments — was combined with two other neighbouring developments, each at 7.5MW, to form Libertador I-III.

Neither Impsa nor Innovent would respond officially to inquiries, citing an ongoing legal appeal against UTE's decision.

While UTE has not responded to inquiries, company insiders told the local press that the decision to rescind is "irreversible". Impsa has stretched its September 2014 deadline and March 2015 deadline extension without fitting "even a screw", one UTE source told local paper El Pais; the company has "lost all credibility" related to the project, he added.

An adviser working directly on the project confided to Windpower Monthly that UTE had shown "great flexibility" with deadline extensions "to save private investment" and to keep Uruguay's strong wind growth — with 405MW added last year — on track.

Three new investors recently came on board to save the project, according to the adviser, preferring not to reveal their identigy. Yet, despite their "successful experience in Uruguayan wind development UTE remains unmoved", had added.

The investors had even offered to reduce the power price to around $US63/MWh, from the $US80-90/MWh originally agreed, to no avail. Rather, the adviser said UTE is now intent on drawing upon the contractual guarantee for enforced project cancellation, set at around $US5 million.

Gaylord points out UTE is already developing new projects to pick up the slack from the Libertador fallout. Make Consulting's 450MW new capacity forecast for the country in 2015 remains unchanged.

But for Impsa, the cancellation compounds a series of recent blows. The company went into default in December last year, following long delays by Brazilian utility Eletrobras in resolving a $US250 million bill.

That situation exacerbated other financial woes at Impsa, particularly outstanding payments to creditors totalling around US$770 million. Rating agency Standard's & Poor dropped Impsa's rating to D, from C.

In Brazil, Impsa's biggest market for turbine sales, the company has been forced to put up around 150MW of wind assets for sale.

Yet the value of those assets was dealt a large potential blow in December when eight Impsa 2MW wind turbines collapsed in gales hitting Eletrobras's Cerro Chato IV-VI wind complex in the Brazilian state of Rio Grande do Sul. No damage was reported to Wobben turbines operating in the same district and Impsa's silence on the incident has not helped dispel doubts regarding the robustness of its machines.

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