Guatemala's Open Tender 1-2026 will require generators to incorporate a contractual risk structure into their bids, imposing greater demands on the winning bidder than on distributors. The difference lies in the number of grounds for non-compliance, the deadlines for remediation, the handling of insolvency, and the obligation to continue supply in the event of payment delays.
The call for bids was authorized so that the country's main distributors can contract power and energy from August 2026 , with the purpose of covering around 300 MW pending allocation in the PEG-5 and meeting new needs linked to the growth of demand.
These conditions are compounded by the reduction of the initial supply period, which went from nine to six months. The contractual design can directly impact prices, guarantees, working capital, and the financial coverage that participants will need to consider.
In his analysis of the bases, Edgar Rigoberto Grotewold de León , lawyer and notary of Estudio Jurídico Edgar R. Grotewold and Nexo Energético, identified four central differences in the treatment of non-compliance.
“ Less explored so far is the asymmetry that the model Supply Contract itself establishes between the causes of non-compliance applicable to the Awardee and those applicable to the Distributor ,” Grotewold warned.
The specialist linked these conditions to the structure of the economic proposal and the distribution of risks during contracts that, in some cases, could extend for the six seasonal years contemplated in the call for proposals .
Six grounds for the generator and four for the distributor
The first difference arises from the quantity and nature of the events that may constitute a breach. Section 11.2 of the Supply Contract lists six scenarios applicable to the awarded party, included in subsections (a) to (f).
Section 11.3, for its part, establishes four grounds for the distributor, included between subsections (a) and (d).
“ The network of circumstances that can place the generator in default is, by simple count, broader than that which applies to the party calling the process ,” the lawyer and notary stated.
This scheme requires the bidder to assess a broader range of contingencies that could trigger contractual measures. These include unavailability of the Guaranteed Capacity, insolvency, and other obligations subject to specific remediation periods .
The second asymmetry appears in the procedural requirements necessary for a fault to be recognized as a breach event.
For the distributor's non-payment to constitute grounds for termination of the contract, the debt must exceed two overdue invoices. The winning bidder must also give prior notice of their intention to terminate the contract and wait an additional 30 days if the situation remains unresolved .
“ The standard that must be exceeded for the Distributor to be in breach is, in fact, more demanding than the one that applies to the Awardee ,” Grotewold argued.
The grounds applicable to the generator do not include an equivalent requirement for prior notice. Some, such as the lack of availability of Guaranteed Power or certain insolvency events, do not contemplate a period for rectification , while those that do establish a period of 20 days.
The distributor thus has greater procedural barriers and more time before formally falling into default , while the awarded company faces shorter periods or the immediate activation of some grounds.
Insolvency and mandatory continuity of supply
The contract also addresses the insolvency of the parties differently. For the winning bidder, the concept is developed through a detailed enumeration of legal and financial situations.
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Section 11.2 includes the imposition of a trustee, administrator, liquidator or receiver; bankruptcy proceedings; suspension of payments; dissolution or liquidation; and general assignment for the benefit of creditors.
It also includes a written threat to suspend operations and a clause that allows for the consideration of any event with similar effects under applicable law.
“ The same legal risk receives a completely different degree of detection depending on which contractual party is involved ,” said the representative of the Edgar R. Grotewold Law Firm and Nexo Energético.
For the distributor, however, insolvency is expressed in a single proposition, without the same case-by-case development or an analogy clause .
The difference with the greatest operational effect is found in section 11.6 , which regulates the continuity of supply during the correction periods.
In the event of an event that could constitute a breach by the distributor, the awarded party may not interrupt the delivery of the Guaranteed Power or the electricity until a minimum of 30 days have elapsed since the corresponding notification .
“ The practical consequence is that the generator remains obligated to produce and deliver energy for the entire month it may take to remedy a payment default ,” Grotewold explained.
The provision transfers to the generator the financial risk of continuing to operate without receiving the corresponding payment , while maintaining its commitments to production, purchase of inputs, operation, maintenance, financing and compliance with the market.
The contractual model does not incorporate a reciprocal limitation that conditions the distributor's actions in the same way in the event of a failure by the awarded party.
“ The contract does not include a reciprocal restriction that limits the Distributor in the event of a breach by the Awardee ,” the specialist pointed out.
For participants, this condition could require larger contingency margins, liquidity reserves, or risk premiums in preparing their proposals.
The effect also extends to the bankability of projects, because financial entities and investors usually evaluate the correspondence between the obligations, the termination mechanisms, the deadlines for correction and the exposure to counterparty risk .
The tender incorporates other factors that modify the bidders' planning. The first information meeting, held on July 22 , confirmed that the supply period for the current seasonal year has been reduced from nine to six months.
The Bidding Committee also indicated that the Bid Guarantee may be replaced by another instrument during its validity , in accordance with the conditions established in the process.
Generators must combine the technical and commercial analysis of the required supply with a detailed legal review of the obligations they will assume throughout the contractual term.
“ These four asymmetries, viewed together and replicated in the rules governing subsequent tenders, warrant that bidders accurately assess the contractual risk they are assuming before structuring their financial offer ,” Grotewold concluded.
Open Tender 1-2026 will allow Guatemala to move forward in contracting the power and energy that were not covered in PEG-5. The participation of generators and the values presented will also depend on how they quantify the contractual conditions, the correction periods, and the obligation to maintain supply in the event of certain payment defaults.