E.P.C. sued for more than $15 million

An American multinational is suing the Electricity Power Corporation (E.P.C.) for more than $15 million tala in damages over claims the utility unfairly tried to renegotiate a contract for generating renewable energy in Savai'i. 

Louis Berger Power LLC, a New Jersey-based multinational, alleges the Government-owned power company proposed last-minute price changes to the deal in a manner that ran contrary to government guidelines and made the project financially unattractive. 

In a statement of claim made available in open court for the first time this week, the American company argues the renegotiation came after it was chosen as a successful bidder for the project and already incurred expenses. 

Louis Berger Power LLC says that in February 2015 the E.P.C. opened invitations for bids for the Savai'i project, the awarding of which was expected to lead to a 20-year agreement for purchasing renewable power. 

One of the main criteria was the costs of feed-in tariffs proposed by bidders. (Feed-in tariffs are payments made to businesses generating their own sustainable and environmentally friendly electricity).

But Louis Berger Power claims that after it successfully won the bid, the E.P.C. sought to renegotiate the cost of this tariff by tying it to the cost of diesel fuel as its board met to finalise the terms of a 20-year deal to purchase renewable power from the project.

The American company's 2017 statement of claim argues the introduction of the diesel was not relevant to the project and substantially changed it, contrary to rules that only allow minor variation.

“Renegotiation of the key contractual terms after a contract is awarded is prohibited."

“The E.P.C. was bound to comply with any procurement guidelines promulgated by the Financial Secretary [...] in accordance with the Public Finance Management Act 2001.” 

The E.P.C. did not respond to multiple requests for comments this week. The company's statement of defence to the allegations is expected to be aired in Court when the matter resumes. 

Louis Berger alleges that the amended costs left them facing a financial loss and unable to finalise the project. 

Louis Berger's claim says its loss of projected profits amounts to just over $14,500,000 over the 20-year life of the potential but is also seeking exemplary damages of $1 million and legal fees.

According to the statement of claim, the loss of projected profits from the 20 year P.P.A. amounts to $14,517,987; exemplary damages in the sum of the $1 million and cost of solicitor client and the such further relief the court deems just. 

The company says its costs include about $8,400 for labour; about $50,000 for establishing a private overseas investment vehicle; more than $100,000 in legal fees and other expenses amounting to a total of nearly $225,000.

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