The Algerian energy giant, Sonelgaz, has initiated an international arbitration procedure against the Spanish company, Duro Felguera. At the center of this dispute is a power plant project in Djelfa, which was abruptly halted. Sonelgaz is seeking the substantial sum of 413 million euros, citing significant breaches by its Spanish partner.
Originally signed in 2014, the contract between Sonelgaz and Duro Felguera aimed to build a combined cycle power plant, a major project intended to bolster Algeria’s energy production capacity. The two companies had partnered to execute this strategic endeavor. However, disagreements quickly emerged, leading to the suspension of work and ultimately this legal showdown.
Duro Felguera attributes the suspension of work to unforeseen circumstances and the need to adapt the project to a shifting economic context. Sonelgaz, however, dismisses these arguments as baseless, highlighting the significant financial losses caused by this halt.
Notable Decrease of the Euro Against the Algerian Dinar on the Black Market
Both parties have opted for international arbitration to resolve their dispute. This procedure, often lengthy and costly, represents a significant financial stake for Duro Felguera, which is already weakened by economic challenges. For Sonelgaz, it’s about preserving a strategic project and recovering invested funds.
Duro Felguera will submit a written response to Sonelgaz on December 10th Duro Felguera has expressed disagreement with the arbitration initiated by Sonelgaz. The Spanish company plans to submit a written response before December 10th to contest the allegations against it. It argues that the contract suspension was in line with agreed-upon terms and is also considering seeking compensation for the losses it believes it has incurred.
In response to this situation, the Spanish National Securities Market Commission (CNMV) has temporarily suspended trading of Duro Felguera’s shares to ensure full transparency until more information about the dispute is available.
For Algeria, the Djelfa power plant represents a critical strategic project for enhancing its energy infrastructure. The halting of the project not only jeopardizes this initiative but also the country’s energy ambitions. For Duro Felguera, this litigation could exacerbate its financial difficulties, especially in a context where the company is already facing economic challenges both domestically and internationally. The amount claimed by Sonelgaz is significant and could have lasting effects on Duro Felguera’s operations.
