A Spanish Company Required To Pay 413 Million Euros To “Sonelgaz”

New details have emerged in the case of the Spanish company “Duro Felguera” in Algeria, concerning its stalled project to build a combined cycle power plant in Djelfa province. It was revealed that the attempt to transfer the project to a consortium of Chinese companies failed, which led the company to face an official demand to pay compensation of 413 million euros to “Sonelgaz”.

This has plunged the company into a suffocating financial crisis that threatens its existence, amidst warnings of its approaching bankruptcy.

This situation was revealed through a lengthy report containing a restructuring plan sent by “Duro Felguera” days ago to creditors in Spain and the Madrid Financial Markets Authority “CNMV”.

The report stated that the ongoing dispute with Algeria has become the biggest obstacle to its new rescue plan, through which it seeks to restructure its debts and avoid collapse.

The same report confirms with documents that the company was unable to transfer the Djelfa project contract to the Chinese group “Power China”, after the Algerian party refused to transfer the works. The company now faces international arbitration that may oblige it to pay the full compensation, i.e., 413 million euros, at a time when its financial reserves allocated for this file do not exceed 100 million euros.

In a related context, “Duro Felguera” stressed that the commitments related to the Djelfa project have become burdensome and impossible to fulfill, announcing its intention to terminate the concluded contracts unless an amicable settlement is reached with Algeria.

However, Spanish economic sources confirmed that the Algerian government has repeatedly rejected any settlement that would reduce the amount due, which further complicates the company’s position, as it also faces pressure from creditor banks.

The company’s data included in the rescue plan indicates that the two Spanish banks “Santander” and “Sabadell” are holding financial guarantees worth 55 million euros related to the Algerian project, which will not be released until an agreement is reached with “Sonelgaz”. These guarantees are also essential to enable the company to compete for new contracts, making the resolution of the dispute with Algeria a crucial condition for its continued existence.

To avoid bankruptcy, the rescue plan sent to the Spanish Financial Markets Authority included a proposal for creditors to write off 100% of bank debts, and to reschedule the government loan granted by the Spanish rescue fund SEPI, amounting to 120 million euros, with new terms extending until 2035. However, this plan remains contingent on the approval of the European Union to reduce interest rates, which has not yet been achieved.

The plan also includes halving the number of employees, reducing capital to compensate for losses, and restructuring the contribution of the Mexican owning group, “Prodi”, which pledged to inject 10 million new euros and provide 15 million euros in guarantees to save the company’s activities in the fields of energy, engineering, mines, and green hydrogen.

According to Spanish media, although the company faces other disputes in countries such as the UAE, Venezuela, Morocco, and Chile, with total claims exceeding 980 million euros, the Algerian case remains the most complex and impactful on its financial future.

This is because the final ruling in the Djelfa case may determine whether “Duro Felguera” will be able to continue, or will join the list of Spanish companies that have fallen under the weight of debt and failed foreign projects.