Mendoza to Take Case to Supreme Court Over USD 1.36 Billion in Los Nihuiles Hydroelectric Royalties
Following national recognition of the province's right to 100% of hydroelectric royalties, Mendoza announced it will amend the lawsuit currently pending before the Supreme Court to claim what it considers were improperly paid over decades. Additionally, the new Los Nihuiles concession will seek to increase investments, energy generation, and revenues for Mendoza.
Mendoza is now entering a new phase in the historic dispute over Los Nihuiles hydroelectric royalties.
After the national Government recognized the Province's right to receive 100% of royalties going forward, Governor Alfredo Cornejo announced that Mendoza will move forward before the Supreme Court to claim the amounts it considers were improperly distributed in prior years.
Mendoza's announcement to continue litigation over royalties not received by the province and that were collected by La Pampa.
The provincial estimate places this claim at approximately USD 1.36 billion.
"We will request an amendment to our lawsuit at the Court to be able to collect the prior royalties," Cornejo stated.
The provincial lawsuit originally contemplated two issues: that Mendoza be recognized as holder of 100% of the royalties and that funds that, according to the provincial position, were improperly distributed with La Pampa be restored.
The first of these claims has already received a favorable response from the national Government.
Now the discussion over the second begins.
"In that lawsuit we asked for two things. First, that they recognize us as entitled to 100%, and second, that they pay us what is owed. Today the national Government is recognizing our 100% of royalties," the governor explained.
A claim spanning decades of royalties
Mendoza's position targets the 50% of royalties the Province was required to share for years with La Pampa from hydroelectric generation of the Los Nihuiles system.
The Minister of Energy and Environment, Jimena Latorre, confirmed that the Province will continue through legal channels to attempt to recover these resources.
"We will continue the legal route to claim retroactively what was paid incorrectly, that 50% owed to us from all those years when we were forced to share royalties from our resources with another province," she stated.
The legal discussion stems from a central distinction for Mendoza: the interprovincial character of the Atuel River is one thing, and the hydroelectric exploitation that allows energy generation is another.
The provincial position maintains that the power plants, infrastructure, gradient, and investments that make this generation possible are located in Mendoza.
"Royalties are nothing more than compensation for a resource that belongs to all Mendocinos," Latorre stated.
And she added that the exploitation does not depend solely on water being available.
"The mere fact of having the right to let water pass does not generate rights over what the exploitation of these resources means," she explained.
The other development: a concession to produce more
The judicial announcement was not the only new development.
The provincial Government also linked the new royalties scheme to the upcoming concession of the hydroelectric system, which will have as one of its main objectives increasing investment and raising energy production.
Mendoza's equation is direct: if the new concession achieves generating more energy, the royalty base that will remain entirely in the Province will also increase.
"Greater investment means greater production; greater production means better resource utilization; and better resource utilization means higher royalty collection," Latorre summarized.
Royalties represent 12% of the energy sales value.
For the provincial Executive, this makes infrastructure investment a central element of the new phase.
"Without greater investment, we have no possibility of generating more energy," the minister warned.
The process also includes the need to recover infrastructure from the complex, including Nihuil II and Nihuil III power plants, which were affected by a severe storm.
Royalties channeled back to infrastructure
The Government seeks to ensure that revenue increases the hydroelectric system can generate are reinvested in public infrastructure.
Latorre compared this strategy to how Mendoza used compensation from Industrial Promotion.
"Mendoza decided to put those funds to work, allocate them to infrastructure that generates economic development," she stated.
That model, she explained, allowed financing of highways, electric transport lines, and works linked to water resource utilization.
The objective is to replicate that logic with royalties.
"That increased revenue ultimately results in better services and better use of those resources for the core functions of a provincial State, such as health, security, and education," she stated.