Solamon Energy Corp News

National Assembly in Nicaragua passes energy law amendments; paving way for additional solutions

Posted onMarch 20, 2012underIndustry News

(Managua) — On Feb. 23, the National Assembly amended the Law on Electrical Energy to authorize the National Energy Institute (INE) and the Ministry of Energy to seek financing to subsidize energy rates for consumers until 2016 when most of the country’s energy will be generated from renewable sources and the loan can be repaid from the savings.

That conversion from power generated by the burning of imported petroleum to hydroelectric, geothermal, wind, biomass, and solar power is well under way with 40% of Nicaragua’s energy currently coming from renewables. Last month, light bills went up 9% for those consumers who use more than 150 kilowatts per month and the government subsidized those who use less so that their bills did not go up.

However, INE President David Castillo explained that plans were for the rates to go up this month by an additional 6% which should have been 26% based on the recent increases in the price of oil. The approval of the amendments to the Energy Law will avert that rise. A likely source for zero interest financing for the subsidy will be ALBANISA, the joint Venezuelan–Nicaraguan company that imports oil from Venezuela.

Reaction from opposition politicians was negative while reaction from the business community was positive. National Assembly Deputy Luis Callejas said that the bill should have been sent to committee for discussion instead of passing as an urgent measure and the bill should have specified the amount to be borrowed. Businessman Cesar Zamora of AEI Nicaragua said that the measure guaranteed economic resources for the energy sector and does not go beyond what has been done in recent years while, in actuality, making more transparent the management of funds to finance energy payments.

Investors in the Tumarin hydroelectric project praised the measure. Marcelo Conde, president of Central Electric of Central America, the consortium that is carrying out the project expected to go on line in 2014, said, “The law is positive,” adding that the measure insures that the energy sector will remain healthy. Tumarin will dam the Rio Grande de Matagalpa and produce 253 megawatts of electricity after an investment of US$2 billion.

Courtesy: La Prensa, Feb. 24