US Energy Giant AES Faces Lawsuit Over Alleged Monopoly Abuse in Panama's LNG-To-Power Market

A significant legal case has emerged as Panamanian firms Sinolam LNG Terminal, S.A. and Sinolam Smarter Energy LNG Power Co. have initiated a lawsuit against the AES Corporation and its partners. Filed in the Circuit Court for Arlington County, Virginia, the lawsuit accuses AES of executing a long-term scheme designed to monopolize the rapidly growing liquefied natural gas (LNG)-to-power market in Panama.

Allegations of Collusion and Market Manipulation

According to the accusations outlined in the complaint, AES and its partners, including InterEnergy Holdings (UK) Limited, allegedly coordinated efforts to eliminate Sinolam from competition in the burgeoning energy sector. These allegations suggest that AES employed coercive tactics, misused confidential information, and wielded improper influence over regulatory bodies in order to manipulate the market.

Sinolam contends that it had legitimately secured the required licenses, power purchase agreements, and commitments necessary to establish a substantial LNG power plant and terminal in Colon, Panama. These initiatives were aimed at capitalizing on Panama's developing role as a pivotal LNG hub for Central America, especially following the expansion of the Panama Canal.

However, the lawsuit claims that AES perceived Sinolam's growing capabilities as a threat. As detailed in the complaint, when Sinolam resisted pressures to withdraw its terminal project or accept unfavorable conditions that would make it reliant on AES’s infrastructure, AES’s strategy shifted toward exclusion rather than fair competition.

InterEnergy's Alleged Role in the Scheme

The legal documents further allege that InterEnergy became involved in the conspiratorial scheme after accessing confidential information from Sinolam under a non-disclosure agreement. Allegedly, instead of providing investment into Sinolam's projects, InterEnergy utilized this sensitive information to collaborate with AES on a new joint venture, thereby ousting Sinolam's interests in the market and adversely affecting its customers.

This strategic partnership is claimed to have led to the removal of one of Sinolam's key customers, which rendered valuable long-term contracts practically worthless. The complaint suggests that this conduct led to a massive erosion of anticipated economic value, amounting to billions of dollars in losses for Sinolam.

Government Influence and Regulatory Bias

Compounding the allegations of unfair business practices, Sinolam argues that AES leveraged political connections to gain undue regulatory advantages, such as quick approvals for AES-related projects while simultaneously revoking Sinolam’s licenses. The complaint highlights the troubling dynamic of AES's influence over the Panamanian government, especially considering that the government itself is a significant shareholder in AES Panama S.R.L.

Over the years, AES purportedly utilized its high-level government relationships to systematically pressure Sinolam, resulting in the eventual cancellation of Sinolam's power generation license by Panamanian authorities. As a consequence, AES now maintains control over both significant LNG-powered plants in Panama, as well as the country's only operational LNG terminal. This maneuvering effectively extinguished viable competition in Panama, while granting AES considerable sway over energy supply across Central America and the Caribbean.

Legal Claims and Demands for Justice

The legal action includes ten specific claims of misconduct, such as tortious interference with contracts, civil conspiracy, and violations of state law. Sinolam is pursuing over $4 billion in compensatory damages along with any other legal remedies deemed appropriate.

Sinolam's CEO, Kenneth Zhang, remarked, “This case is about protecting competition and the rule of law. We have invested hundreds of millions, complied with all regulations, and played fairly. What we outline is a tactic by established players, supported by their government allies, to eliminate competition rather than simply competing based on merits. The repercussions impact not only our company but also the consumers in Panama and neighboring nations, who now face inflated energy costs.”

About Sinolam

Sinolam LNG Terminal, S.A. and Sinolam Smarter Energy LNG Power Co. specialize in energy infrastructure, particularly in the realm of LNG-to-power solutions for emerging markets. Their projects are engineered to enhance energy reliability while also promoting access to competitively priced clean natural gas in Panama and beyond.