Guatemala's new PEG-6 electricity tender , aimed at contracting up to 600 MW of firm demand , raises questions about the economic risks that developers will have to assume.
Under a hypothetical scenario of a twelve-month delay in the start of supply, a 100 MW project could accumulate penalties of USD 13.5 million , while other requirements pose challenges for investment, access to credit and competition among bidders.
“I believe that the greatest risk is the one that cannot be quantified, and in PEG-6 it is concentrated in the duration of the period during which the penalties for delay are generated,” said Edgar Grotewold de León , a lawyer and notary specializing in energy law, in dialogue with Energía Estratégica .
It is worth remembering that the Bases, approved by Resolution CNEE-344-2026 of October 5 , establish contracts of up to 15 years, with the start of supply planned for May 1, 2032. Of the total volume, 450 MW correspond to new plants and 150 MW to existing facilities.
The contract sets penalties of USD 7500 per MW of Guaranteed Power awarded for each month of delay during the first six months , which increase to USD 15000 per MW between the seventh and twelfth month .
Although these amounts were already included in PEG-5, a modification in the wording of the new contractual model opens the possibility that they may continue to apply even after a plant is ready to operate.
Clause Five allows the distributor to set the formal start date up to one quarter after the date communicated by the successful bidder, while clause 6.9 establishes that fines are generated until the effective start of the supply.
Under a literal interpretation of both provisions, a power plant could continue to accumulate penalties for an additional three months, even if it was already in a position to supply electricity , unlike the application criteria known in previous tenders.
“If those three months correspond to the first six months of delay, the rate is USD 7,500 per megawatt per month and represents USD 2.25 million. If the delay has already exceeded six months, the rate is USD 15,000 per megawatt per month and represents USD 4.5 million,” the specialist explained, using a 100 MW project as a reference.
Given this difference between the current wording and previous practice, it was considered essential that the Bidding Board specify which criterion will prevail to determine when the economic sanctions cease.
Could the offers become more expensive?
The tender establishes a Bid Sustainability Guarantee of USD 30,000 per MW of maximum Guaranteed Capacity offered , which is subsequently replaced by a Pre-Operational Guarantee. This latter guarantee must be increased by USD 20,000 per MW awarded for each Critical Event not met.
These obligations are in addition to the expenses associated with maintaining letters of credit, contingencies for possible delays, and the resources needed to sustain the construction schedule.
According to Grotewold, some of these costs can be incorporated into the bid price, although the need to submit competitive proposals limits how much can be passed on. The situation becomes more complex when companies must consider scenarios whose economic impact they cannot determine with certainty.
“The developer can choose a higher margin or refrain from bidding,” he warned.
Another aspect that investors will have to evaluate is the provision that allows the contract to be terminated immediately, without a period for rectification, when the winning bidder fails to meet the scheduled financial closing date .
The measure, inherited from PEG-5, includes a penalty equivalent to twelve months of Guaranteed Power multiplied by the Power Price.
“The contract thus sets a date for obtaining financing that depends, in turn, on the bankability of the contract itself,” the lawyer pointed out.
Although the document allows the transfer or encumbrance of collection rights in favor of creditors and the use of assets as collateral, the conclusion of a direct agreement with the financier is at the discretion of the distributor , which may influence the risk assessment by the credit entities.
In addition, extensions of Critical Events due to force majeure situations require that these be verified and accepted by the distributor, without the specialist identifying a specific response time in the clauses analyzed.
A new ban could exclude experienced companies
Among the new features compared to PEG-5 is a restriction that applies to bidders, subsidiaries and entities directly or indirectly related that have failed to comply with contracts awarded in previous open tenders .
Its scope could compromise business groups that operate through different companies, even when the questioned background corresponds to a different company than the one that intends to compete.
“Nor is a threshold of severity established, nor a maximum age of the events, nor whether the breach must have been remedied, declared or have led to termination,” Grotewold pointed out.
Consequently, a broad interpretation could prevent a company from submitting a proposal for a previously penalized delay, even if it did not lead to contract termination.
The restriction is especially relevant because it constitutes a non-rectifiable requirement , the verification of which leads directly to the rejection of the offer.
“The groups that have hired the most are the most likely to have had some breach in the broad sense of the text,” he argued.
To assess the barriers to entry, PEG-6 requires a net worth of USD 35 million for 100 MW bids and USD 85 million for 200 MW proposals , in addition to a non-refundable payment of USD 25,000 to obtain the Terms and Conditions.
In a market subject to these requirements, widespread application of the prohibitions could reduce the number of competitors, especially among established developers. This, in turn, would potentially decrease the pressure on award prices, although it is not yet possible to estimate the extent of this effect.
The pending definitions before submitting bids
Given this scenario, Grotewold recommends that interested parties submit written requests for clarification to the Bidding Board, as only formal responses and addenda are valid for preparing proposals.
Among the main points to be resolved, it identifies the exact moment when penalties cease, the scope of the grounds for exclusion, and the consequences of failing to comply with certain pre-operational obligations .
It also considers it necessary to clarify the criteria by which distributors will qualify Firm Energy, defined in the Bases by a plant factor of at least 90%, as well as the differences between the thresholds for identifying final beneficiaries established in different sections of the agreement.
These clarifications are relevant because, once the contract is signed, the successful bidder acknowledges having reviewed the Terms and Conditions and accepted that they are adequate to fulfill their obligations , without the possibility of claiming increases due to omissions in that evaluation.
In this way, controversies that are not resolved before the submission of proposals could be transferred to the execution of the projects, when the companies have already assumed their economic and legal commitments.