Honduras has finally succeeded in placing $250 million in bonds to be used to help pay down its debt to private energy providers, but first it had to sweeten the offering. As of July, 2014, Honduras had a debt of $355 million with private power producers.
Honduras's state energy company, Empresa Nacional de Energia Electrica (ENEE) pays private companies for power generation. That's not to say it doesn't generate power as well, but it generates far less that the country uses. It must therefore buy power from the Central American power grid, or pay private companies to generate the needed power in Honduras. Until recently, it has primarily paid private companies to generate the the rest.
Specifically, ENEE generates a maximum of 2567 Gigawatt hours (GWh) of electricity (about 39%), while private producers generate a maximum of 3992 GWh (61 %). Most of ENEE's generation is hydroelectric, which cannot produce full output in drought years like Honduras has seen over the last several years.
Furthermore, until this year ENEE, courtesy of a law passed by the Honduran Congress, subsidized the first 250 Kilowatt hours (KWh ) of power used by poor households to make it essentially free. While the percentage of poor households has varied through time, its not dropped below 54% during the time this subsidy was in place and is currently around 63%. This policy encouraged increased electrical usage in the houses that were on the electrical grid, and it was only terminated in 2015.
ENEE owns the power grid in Honduras, but lacks the funding, technical skills, and equipment to properly maintain it so that measured loss in the power grid is sometimes over 25%. Loss is the difference between the power placed on the grid, and that paid for by customers. El Salvador has a 13% loss rate, Guatemala a 7% loss rate, and Nicaragua a 19% loss rate. Only about 10% of the loss is due to the transmission network itself; the rest is due to illegal connections and billing errors. ENEE historically has not disconnected users for non-payment, nor does it have the equipment to track electrical losses in particular circuits and thus know about illegal electrical connections. ENEE also has trouble getting customers to pay for electricity.
With the private power producers, ENEE has typically had contracts where it paid for the petroleum used to generate the power, and then paid another $0.06 to $0.20 per KWh to buy the generated power.
Its the above practices that drove ENEE deep into debt with the private power generators. In 2013 Honduras sold $215 million in ENEE bonds principally to help pay off its debt with private energy providers. Last August, Honduras attempted to place a further 5,268.8 million lempiras ($250 million) in bonds with a fixed interest rate of 10.5% but only was able to sell abut $34 million (728 million lempiras). Marlon Tabora, the President of the Honduran Central Bank, said that the market found the offered interest rate too low.
The sale results announced today were for a a different financial instrument, inflation indexed bonds of 5 and 10 years, some at 4% above inflation, and some at 4.5% above inflation. Honduras had averaged an inflation rate of 6.41% in November 2014.
Showing posts with label ENEE. Show all posts
Showing posts with label ENEE. Show all posts
Thursday, January 1, 2015
Thursday, January 23, 2014
ENEE to be privatized
At the very end of its term, the out-going Congress in Honduras passed a law Monday mandating that no later than June, 2015, the Empresa Nacional de Energia Electrica must be taken private.
Well, semi-private.
The law has two main thrusts. It first creates the Comision Reguladora de Energia Electrica (CREE) a commission to regulate the newly created electricity marketplace in Honduras.
CREE will be situated in the Superministry of Strategic Planning, but the law designs it to be semi-independent, with its own budget and technical resources. It will be charged with setting up a free market electricity marketplace for Honduras.
The legislation enables private companies to build competing transmission and distribution systems. Emil Hawit, current head of ENEE, says that this energy marketplace will result in lower electricity prices for Hondurans
The new law also mandates that the Empresa Nacional de Energia Electrica be broken up into three private companies: one charged with competing in the power generation market, one charged with running the current power transmission system and electrical grid, and a third overseeing the distribution of power to customers.
Each company will be given its own shares, but the government will continue to own all the shares for at least the next 30 years. Current ENEE employees will be assigned to one of the three companies based on their duties.
Much of Honduras's high electricity price is based on the ridiculous energy contracts ENEE signed with Honduran power generators, contracts that had ENEE buying all of the fuel oil used to generate power, and still paying a premium for the power generated with that oil.
Hawit did allow that Hondurans will have to pay the real price for electricity, suggesting that the new law might also end subsidies for light users: people with low energy consumption.
So on the macro-level, costs may come down; but with private companies and shareholders expecting profits, there may well be greater impact on the most vulnerable users of electricty.
Welcome to the world the Hernández administration wants to promote: the rush by the outgoing congress to pass legislation before the more diverse legislative body comes in is giving us a much more transparent view of his vision than anything he or his transition team has had to say.
Well, semi-private.
The law has two main thrusts. It first creates the Comision Reguladora de Energia Electrica (CREE) a commission to regulate the newly created electricity marketplace in Honduras.
CREE will be situated in the Superministry of Strategic Planning, but the law designs it to be semi-independent, with its own budget and technical resources. It will be charged with setting up a free market electricity marketplace for Honduras.
The legislation enables private companies to build competing transmission and distribution systems. Emil Hawit, current head of ENEE, says that this energy marketplace will result in lower electricity prices for Hondurans
The new law also mandates that the Empresa Nacional de Energia Electrica be broken up into three private companies: one charged with competing in the power generation market, one charged with running the current power transmission system and electrical grid, and a third overseeing the distribution of power to customers.
Each company will be given its own shares, but the government will continue to own all the shares for at least the next 30 years. Current ENEE employees will be assigned to one of the three companies based on their duties.
Much of Honduras's high electricity price is based on the ridiculous energy contracts ENEE signed with Honduran power generators, contracts that had ENEE buying all of the fuel oil used to generate power, and still paying a premium for the power generated with that oil.
Hawit did allow that Hondurans will have to pay the real price for electricity, suggesting that the new law might also end subsidies for light users: people with low energy consumption.
So on the macro-level, costs may come down; but with private companies and shareholders expecting profits, there may well be greater impact on the most vulnerable users of electricty.
Welcome to the world the Hernández administration wants to promote: the rush by the outgoing congress to pass legislation before the more diverse legislative body comes in is giving us a much more transparent view of his vision than anything he or his transition team has had to say.
Thursday, December 26, 2013
Renewable Power Down in Honduras
Despite having increased its installed base of renewable energy generation sources, Honduras is actually getting proportionally less energy from renewable sources than it previously was.
The result of this lower generation has been roving blackouts all across Honduras this year. This comes despite policies of the Lobo Sosa administration.
In 2010 they approved 47 renewable energy projects, with a combined generation capacity of 750 megawatts. Only four of those projects have actually broken ground to begin construction, and only one, a small hydroelectric project generating 12 megawatts, is actually operating.
In 2010, Honduras generated 6,744.3 gigawatt hours of power, split as follows:
From 2010 to 2013, Honduras saw a slight increase in installed capacity, from 1610 megwatts to 1734.9 megawatts. That's a 124.9 megawatt increase, nearly all of it because of a single wind power farm, Cerro Hule (102 megawatts), coming on line.
There was a slight increase in biomass generation by 2013 as well, from an installed capacity of 91.4 megawatts to 105.5 megawatts, primarily from sugar cane processing.
By installed capacity, in 2010 renewable sources represented 38.4% of the generating capacity of Honduras. In 2013 that had risen to 43.7% of installed capacity, as the director of SERNA reported earlier this year.
But despite representing almost 44% of the generating capacity, renewable installations actually generated only 40% of the power produced in Honduras this year.
Why was this?
There was an overall drop in power generation in Honduras between 2010 and 2013. In 2010, Honduras generated 6744.3 gigawatt hours of power. In 2013, it generated 5898.8 gigawatt hours, a decrease of 845.5 gigawatt hours.
The good news is that wind power and biomass generation increased.
The bad news is that everything else decreased. Oil-fired plants generated 22 gigawatt hours less electricity in 2013 versus 2010.
The biggest drop in generation came from hydroelectric.
In 2010 hydroelectric plants generated 44.8% of the power used in Honduras. In 2013, only 33.7% of the power generated in Honduras came from hydroelectric, a drop of 11%. Total hydraulic generation dropped by nearly a third, from 3083.3 gigawatt hours in 2010 to 1999.1 gigawatt hours in 2013. Part of this is due to mismanagement of the El Cajón dam, built on the Comayagua River in the 1980s.
The amount of water in its reservoir has been lowered to reduce pressure on the dam, which is reportedly leaking more than 2000 liters per second through cracks that threaten to flood the turbine room. Reduced water pressure means reduced production of electricity.
Another factor contributing to this decrease in hydroelectric generation is drought. Much of the southern half of the country has been experiencing a multi-year drought.
The renewable energy strategy of ENEE places a higher emphasis on hydroelectric projects than any other form of renewable energy. The majority of the 47 renewable energy projects approved in 2010 were hydroelectric projects, mostly small.
Honduras is at continuing risk for drought going forward, according to climate change maps.
Other types of renewable power would seem like better options for the future, and would lower the confrontations caused with local people-- often rural farmers, and in many cases indigenous people.
Unfortunately, when Honduras strikes out into renewable energy, it is just as likely to grant contracts to companies with no expertise.
So the hydroelectric projects that can be done with local resources keep on coming. But the power generated does not.
The result of this lower generation has been roving blackouts all across Honduras this year. This comes despite policies of the Lobo Sosa administration.
In 2010 they approved 47 renewable energy projects, with a combined generation capacity of 750 megawatts. Only four of those projects have actually broken ground to begin construction, and only one, a small hydroelectric project generating 12 megawatts, is actually operating.
In 2010, Honduras generated 6,744.3 gigawatt hours of power, split as follows:
- 3,449.6 gigawatt hours (52%) from oil fired plants
- 3,080.3 gigawatt hours (44.8%) from hydraulic generation
- 142.1 gigawatt hours (2.1%) from biomass
- 22.1 gigawatt hours (0.3%) from imported power
From 2010 to 2013, Honduras saw a slight increase in installed capacity, from 1610 megwatts to 1734.9 megawatts. That's a 124.9 megawatt increase, nearly all of it because of a single wind power farm, Cerro Hule (102 megawatts), coming on line.
There was a slight increase in biomass generation by 2013 as well, from an installed capacity of 91.4 megawatts to 105.5 megawatts, primarily from sugar cane processing.
By installed capacity, in 2010 renewable sources represented 38.4% of the generating capacity of Honduras. In 2013 that had risen to 43.7% of installed capacity, as the director of SERNA reported earlier this year.
But despite representing almost 44% of the generating capacity, renewable installations actually generated only 40% of the power produced in Honduras this year.
Why was this?
There was an overall drop in power generation in Honduras between 2010 and 2013. In 2010, Honduras generated 6744.3 gigawatt hours of power. In 2013, it generated 5898.8 gigawatt hours, a decrease of 845.5 gigawatt hours.
The good news is that wind power and biomass generation increased.
The bad news is that everything else decreased. Oil-fired plants generated 22 gigawatt hours less electricity in 2013 versus 2010.
The biggest drop in generation came from hydroelectric.
In 2010 hydroelectric plants generated 44.8% of the power used in Honduras. In 2013, only 33.7% of the power generated in Honduras came from hydroelectric, a drop of 11%. Total hydraulic generation dropped by nearly a third, from 3083.3 gigawatt hours in 2010 to 1999.1 gigawatt hours in 2013. Part of this is due to mismanagement of the El Cajón dam, built on the Comayagua River in the 1980s.
The amount of water in its reservoir has been lowered to reduce pressure on the dam, which is reportedly leaking more than 2000 liters per second through cracks that threaten to flood the turbine room. Reduced water pressure means reduced production of electricity.
Another factor contributing to this decrease in hydroelectric generation is drought. Much of the southern half of the country has been experiencing a multi-year drought.
The renewable energy strategy of ENEE places a higher emphasis on hydroelectric projects than any other form of renewable energy. The majority of the 47 renewable energy projects approved in 2010 were hydroelectric projects, mostly small.
Honduras is at continuing risk for drought going forward, according to climate change maps.
Other types of renewable power would seem like better options for the future, and would lower the confrontations caused with local people-- often rural farmers, and in many cases indigenous people.
Unfortunately, when Honduras strikes out into renewable energy, it is just as likely to grant contracts to companies with no expertise.
So the hydroelectric projects that can be done with local resources keep on coming. But the power generated does not.
Monday, March 4, 2013
Another Questionable Power Deal?
On February 12 Emil Hawit, the head of the National Electric Company (ENEE in Spanish), and Porfirio Lobo Sosa signed a letter of intent with the Spanish company Isofotón, to construct a 50 megawatt photovoltaic power station in Honduras.
The powerplant is supposed to be expandable to 150 megawatts. The investment needed to make this happen is estimated at $200 million dollars. The location of the proposed power plant was not announced, but is said by the press to be somewhere in the south of the country in Choluteca. Hawitt told El Heraldo
Hmm...model cities initiative in Choluteca. That should sound familiar to our readers. Choluteca is one of the three locations mentioned in every discussion of model cities in Honduras.
Isofotón is a privately owned company and as such releases no financial information. The Affirma Business Group owns 80 percent, and a Korean company called TOPTEC owns the other 20 percent. TOPTEC, a specialist in industrial automation, reportedly already has an office in Honduras.
But Isofotón is in financial hot water. According to PV Magazine, which covers photovoltaic markets, it is contemplating bankruptcy filings. It has told Spanish government officials that it has begun negotiations to refinance its debt. A Madrid law firm has set up a web page soliciting Isofotón's creditors to represent their interests in insolvency proceedings against Isofotón.
In 2009, Isofotón's sales dropped 83%. It had three different CEOs in less than a year. Then in 2010 it was acquired by Affirma Energy Engineering and TOPTEC. Its profits have dropped from a high of 10 million euros to less than 5 million this year. Meanwhile in Spain Isofotón has responded to three days of protests by its employees threatened with layoffs by announcing that on March 5 it will release the terms under which it will lay off 380 of its 600 Spanish employees.
It is currently building a manufacturing plant in Toledo, Ohio, scheduled to open in July, and in February partnered with China National to acquire minority share in Tianjin Lishen Battery Co. to build solar panels in China. At the same time as Isofotón announced the Honduras deal, it announced a new partnership to build a photovoltaic manufacturing line and polysilicon plant in Kazakhstan.
Isfotón CEO Angel Luis Serrano told Bloomberg:
As with other proposed investments in power generation in Honduras, this deal seems rocky from the start. Where will this $200 million investment in Honduras come from?
Reading between the lines, Isofotón is depending on the Honduran government to act as intermediary and connect it with either governmental, NGO, or private money interested in actually investing in the project. It does not have access to the funding to build the plant on its own. We aren't quite in the position of concluding this is another questionable power deal-- but we certainly can raise the question: is this another deal doomed to fail?
The powerplant is supposed to be expandable to 150 megawatts. The investment needed to make this happen is estimated at $200 million dollars. The location of the proposed power plant was not announced, but is said by the press to be somewhere in the south of the country in Choluteca. Hawitt told El Heraldo
"they've been working on locating the right place and gave me the required information in meetings held at ENEE."Juan Orlando Hernandez told Congress that an important agreement had been signed for the construction of a solar power plant in the south of the country as part of the reborn model cities initiative.
Hmm...model cities initiative in Choluteca. That should sound familiar to our readers. Choluteca is one of the three locations mentioned in every discussion of model cities in Honduras.
Isofotón is a privately owned company and as such releases no financial information. The Affirma Business Group owns 80 percent, and a Korean company called TOPTEC owns the other 20 percent. TOPTEC, a specialist in industrial automation, reportedly already has an office in Honduras.
But Isofotón is in financial hot water. According to PV Magazine, which covers photovoltaic markets, it is contemplating bankruptcy filings. It has told Spanish government officials that it has begun negotiations to refinance its debt. A Madrid law firm has set up a web page soliciting Isofotón's creditors to represent their interests in insolvency proceedings against Isofotón.
In 2009, Isofotón's sales dropped 83%. It had three different CEOs in less than a year. Then in 2010 it was acquired by Affirma Energy Engineering and TOPTEC. Its profits have dropped from a high of 10 million euros to less than 5 million this year. Meanwhile in Spain Isofotón has responded to three days of protests by its employees threatened with layoffs by announcing that on March 5 it will release the terms under which it will lay off 380 of its 600 Spanish employees.
It is currently building a manufacturing plant in Toledo, Ohio, scheduled to open in July, and in February partnered with China National to acquire minority share in Tianjin Lishen Battery Co. to build solar panels in China. At the same time as Isofotón announced the Honduras deal, it announced a new partnership to build a photovoltaic manufacturing line and polysilicon plant in Kazakhstan.
Isfotón CEO Angel Luis Serrano told Bloomberg:
We want to increase manufacturing capacity and that will happen in the United States, China and Latin America rather than in our plant in Spain.Its Latin American presence is limited. In addition to Honduras, Isofotón signed a memorandum of understanding with the government of the state of Yucatan in Mexico for a 150 megawatt photovoltaic generation plant to be built starting in 2014.
As with other proposed investments in power generation in Honduras, this deal seems rocky from the start. Where will this $200 million investment in Honduras come from?
Reading between the lines, Isofotón is depending on the Honduran government to act as intermediary and connect it with either governmental, NGO, or private money interested in actually investing in the project. It does not have access to the funding to build the plant on its own. We aren't quite in the position of concluding this is another questionable power deal-- but we certainly can raise the question: is this another deal doomed to fail?
Wednesday, June 27, 2012
Westport Out
Westport Finance LLC has finally been acknowledged by Emil Hawit, head of ENEE as not having complied with the contract. He will therefore take the legal steps to terminate the contract.
Hawit found that there was no electricity emergency, as had been declared when the contract was rushed through; that repairs to the transmission lines more than mitigated the losses they were seeing. He said that even after the contract with Westport was signed, the company was never in compliance with it. The only step they took was to pay the bond required by the contract, and they did not heed the instructions contained in the contract about how to do that, or do so in the time stipulated by the contract; The bond was returned to them.
Hawit told El Heraldo:
Hawit found that there was no electricity emergency, as had been declared when the contract was rushed through; that repairs to the transmission lines more than mitigated the losses they were seeing. He said that even after the contract with Westport was signed, the company was never in compliance with it. The only step they took was to pay the bond required by the contract, and they did not heed the instructions contained in the contract about how to do that, or do so in the time stipulated by the contract; The bond was returned to them.
Hawit told El Heraldo:
We have arrived at a legal procedure which will rescind the contract with no liability to ENEE.
Thursday, May 10, 2012
Westport Energy Contract Update
This is an overdue update on one of the many dicey energy contracts that blossomed in the wake of the 2009 coup.
Back in November, 2011, the then-head of the Empressa Nacional de Energia Electrica (ENEE), Roberto Martinez Lozano entered into a contract with Westport Finance LLC, and Ira Ginsburg as its legal representative, for the installation of emergency power generation capacity totaling 100 megawatts for 16 years.
It was a lucrative contract for Mr. Ginsburg, if carried out, and he stood to make a ton of money. Martinez Lozano said Westport Finance LLC was backed by the Finnish energy equipment company Wartsila. Westport Finance LLC is run out of Ira and Carla Ginsburg's home in Westport, CT. The full contract is available on ENEE's web site here.
Shortly after the contract was signed, approved by Congress, and published per Honduran law, Martinez Lozano was dismissed as head of ENEE. It turned out that Martinez Lozano had lied about one of the steps necessary for the contract to be approved by ENEE prior to its submission to Congress. The contract was never properly approved by a majority of the directors of ENEE when a quorum was present. To date it still has not be properly approved.
When contacted in February, 2012 by a blogger in Westport, CT, Ginsburg said:
Yikes. Westport Finance LLC was founded in 2009, and began negotiating for a Honduran energy contract in its first year of business? Was that pre- or post- coup, we wonder?
Westport Finance missed every milestone in the contract, and appears to have done nothing since the signing. The new head of ENEE, Emil Hawit, told the press on April 23 that Westport Finance LLC had attempted to file the financial guarantee with the Honduran government, but it was returned because it didn't meet the legal requirements: it didn't follow the template attached to the contract.
Hawit also told the press on that day that sometime prior to April 23 he had notified Westport Finance LLC in writing of their non-compliance. Under the terms of the contract, Westport has until one month after notification to begin remediating all the non-compliant issues, and if they do, up to two more months to come into full compliance with the terms of the contract. Otherwise, if Westport does not begin correcting its compliance, two months after notification, the contract is terminated.
As of today, there is no indication that Westport has done anything to come into compliance with the contract terms. Depending on when, exactly, Hawit notified them that their contract was non-compliant, the one-month clock should be getting close to running out. It should be an interesting couple of weeks.
Back in November, 2011, the then-head of the Empressa Nacional de Energia Electrica (ENEE), Roberto Martinez Lozano entered into a contract with Westport Finance LLC, and Ira Ginsburg as its legal representative, for the installation of emergency power generation capacity totaling 100 megawatts for 16 years.
It was a lucrative contract for Mr. Ginsburg, if carried out, and he stood to make a ton of money. Martinez Lozano said Westport Finance LLC was backed by the Finnish energy equipment company Wartsila. Westport Finance LLC is run out of Ira and Carla Ginsburg's home in Westport, CT. The full contract is available on ENEE's web site here.
Shortly after the contract was signed, approved by Congress, and published per Honduran law, Martinez Lozano was dismissed as head of ENEE. It turned out that Martinez Lozano had lied about one of the steps necessary for the contract to be approved by ENEE prior to its submission to Congress. The contract was never properly approved by a majority of the directors of ENEE when a quorum was present. To date it still has not be properly approved.
When contacted in February, 2012 by a blogger in Westport, CT, Ginsburg said:
Politics in Honduras are unique. My contract is in full force and effect. The Minister of Energy's problems pre-date the negotiation of my deal, in 2009; they go back several years. Honduras is ruled by an oligarchy of three families. They own 100 percent of power generation and all the newspapers. The fact that a power company from outside the country came in -- they don't like that.
Yikes. Westport Finance LLC was founded in 2009, and began negotiating for a Honduran energy contract in its first year of business? Was that pre- or post- coup, we wonder?
Westport Finance missed every milestone in the contract, and appears to have done nothing since the signing. The new head of ENEE, Emil Hawit, told the press on April 23 that Westport Finance LLC had attempted to file the financial guarantee with the Honduran government, but it was returned because it didn't meet the legal requirements: it didn't follow the template attached to the contract.
Hawit also told the press on that day that sometime prior to April 23 he had notified Westport Finance LLC in writing of their non-compliance. Under the terms of the contract, Westport has until one month after notification to begin remediating all the non-compliant issues, and if they do, up to two more months to come into full compliance with the terms of the contract. Otherwise, if Westport does not begin correcting its compliance, two months after notification, the contract is terminated.
As of today, there is no indication that Westport has done anything to come into compliance with the contract terms. Depending on when, exactly, Hawit notified them that their contract was non-compliant, the one-month clock should be getting close to running out. It should be an interesting couple of weeks.
Friday, March 16, 2012
ONYX Withdraws From Honduras
ONYX Services and Solutions, the Colorado-based company, announced today that it is withdrawing from its contract with ENEE to install a 22 megawatt solar farm on Roatan.
This contract was signed October of last year, and called for ONYX to supervise the installation of 18.5 megawatts of solar power, later increased to 22.5 megawatts.
The company is just walking away from the contract.
Their press statement claims the political, regulatory, and financial situation in Honduras presents an unfriendly environment to alternative energy projects.
At the same time, they say they are continuing small solar projects on Roatan, which calls into question their explanation.
What happened?
Longtime readers of this blog will recall that when it was announced in October of last year, we called this contract into question because of a lack of expertise in installing solar power in ONYX, a lack of financial backing to carry out such large projects, and a lack of employees.
We noted at that time that the company's own statements to the SEC were about running banking ATM networks in upstate New York, not solar power.
So while it is convenient for ONYX-- which did not have the financial resources to carry out its part of the contract-- to portray Honduras as an unfriendly environment for their business, we would suggest that if you follow the money, there was never any reason to expect ONYX to be able to complete their end of the bargain.
This contract was signed October of last year, and called for ONYX to supervise the installation of 18.5 megawatts of solar power, later increased to 22.5 megawatts.
The company is just walking away from the contract.
Their press statement claims the political, regulatory, and financial situation in Honduras presents an unfriendly environment to alternative energy projects.
At the same time, they say they are continuing small solar projects on Roatan, which calls into question their explanation.
What happened?
Longtime readers of this blog will recall that when it was announced in October of last year, we called this contract into question because of a lack of expertise in installing solar power in ONYX, a lack of financial backing to carry out such large projects, and a lack of employees.
We noted at that time that the company's own statements to the SEC were about running banking ATM networks in upstate New York, not solar power.
So while it is convenient for ONYX-- which did not have the financial resources to carry out its part of the contract-- to portray Honduras as an unfriendly environment for their business, we would suggest that if you follow the money, there was never any reason to expect ONYX to be able to complete their end of the bargain.
Thursday, February 2, 2012
ENEE Can Sure Pick 'EM
The Empresa Nacional de Energía Eléctrica (ENEE) can sure pick its partners for generating electrical energy in Honduras.
In October, 2011 ENEE decided to partner with ONYX Services and Solution to build an 18 Megawatt solar electric generation facility on Roatan. We blogged about it here. At the time we noted that the company until six months prior to the contract with ENEE had listed its business as running a network of installed ATM machines, and that at the time ENEE awarded the contract, ONYX Services and Solutions had no solar installations either underway or completed. A strange choice to partner with, right?
An astute reader of our blog just alerted us to the news that on January 27, 2012, the Securities and Exchange Commission of the United States announced it was suspending trading of the company's stock. It stated:
That's one ENEE partner.
There's also news about Westport Finance LLC and its emergency power contract for 100 Megawatts. In light of the questions raised about the lack of any visible compliance with the terms of the contract ENEE has with Westport Finance LLC, the head of ENEE, Roberto Martínez Lozano was forced to make public statements that only raised further questions. There's also an investigation underway by the Tribunal Superior de Cuentas and the Public Prosecutor's Anti Corruption office.
Six days ago we found out the ENEE board of directors might not have actually approved the contract before Martinez Lozano sent it on to the Executive Branch for approval. That would be a violation of the Honduran law of government contracting procedures.
Next, three days ago, Martinez Lozano told the press that Westport Finance LLC had not paid the contractually required performance bond of $1.3 million, because of an arrangement he had made with them. What he said was
ENEE has an arrangement!! Well, then why bother to have a contract when you've just voided the protections it provides the government of Honduras? More soberly, this is also is a violation of the Honduran law of government contracting. If the money is there and waiting, why not have them pay it and comply with the contract? Perhaps it has something to do with what we found out six days ago?
We found out three days ago that ENEE hasn't complied with its part of the contract either. Under the terms of the contract, ENEE is responsible for helping Westport Finance LLC obtain the necessary permits. All of this to be done within 60 days of the contract signing. Yet, that date has come and gone with nothing being done. Roberto Cuellar, head of Secretaria de Recursos Naturales y el Ambiente (Serna), where environmental permits come from, says no application has been filed by anyone.
Incompetence? Corruption? Any way you look at it, there's sure to be more information coming out on ENEE and both of its partners here.
In October, 2011 ENEE decided to partner with ONYX Services and Solution to build an 18 Megawatt solar electric generation facility on Roatan. We blogged about it here. At the time we noted that the company until six months prior to the contract with ENEE had listed its business as running a network of installed ATM machines, and that at the time ENEE awarded the contract, ONYX Services and Solutions had no solar installations either underway or completed. A strange choice to partner with, right?
An astute reader of our blog just alerted us to the news that on January 27, 2012, the Securities and Exchange Commission of the United States announced it was suspending trading of the company's stock. It stated:
The Commission temporarily suspended trading in the securities of ONYX because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, the company’s business projects and prospects.In a press release about the suspension ONYX claimed not to have any communication from the SEC giving any reason for the suspension. So here's what ONYX says about its business and prospects in its latest 10Q filing with the SEC:
The Company derives its revenue from surcharge revenue and inter-exchange revenue. Surcharge fees are added fees which the Company charges the ATM user for dispensing cash. Inter exchange fees are fees charged between banks for transferring money. The Company all of the Surcharge Fees and receives a portion of the Inter exchange fees as income. The Company recognizes the net fees received as revenues.And later:
The Company had total Revenue for the Three Months Ended October 31, 2011 of $2,142. This reflects a decrease of $4,169 or 66% when compared to the total revenue of $6,311 for the Three Months Ended October 31, 2010. This change is primarily attributed to a decrease in the number of transactions on the system.
As of October 31, 2011, we had total current assets of $70,258 and total current liabilities of $481,923 which results in working capital deficit of $411,665.See any mention of solar installations there? There are none. Yet, since November they've been issuing press releases every week, if not several times a week, about how wonderful their solar business is and how its moving forward and they'll be buying 25% of their Chinese partner, Optimum Solar, any day now. With what, one is left to wonder. Did I mention that they only have $7, 298 in actual cash on hand?
That's one ENEE partner.
There's also news about Westport Finance LLC and its emergency power contract for 100 Megawatts. In light of the questions raised about the lack of any visible compliance with the terms of the contract ENEE has with Westport Finance LLC, the head of ENEE, Roberto Martínez Lozano was forced to make public statements that only raised further questions. There's also an investigation underway by the Tribunal Superior de Cuentas and the Public Prosecutor's Anti Corruption office.
Six days ago we found out the ENEE board of directors might not have actually approved the contract before Martinez Lozano sent it on to the Executive Branch for approval. That would be a violation of the Honduran law of government contracting procedures.
Next, three days ago, Martinez Lozano told the press that Westport Finance LLC had not paid the contractually required performance bond of $1.3 million, because of an arrangement he had made with them. What he said was
"We have an arrangement with Westport and Wartsila; they're ready to pay it when we tell them."
ENEE has an arrangement!! Well, then why bother to have a contract when you've just voided the protections it provides the government of Honduras? More soberly, this is also is a violation of the Honduran law of government contracting. If the money is there and waiting, why not have them pay it and comply with the contract? Perhaps it has something to do with what we found out six days ago?
We found out three days ago that ENEE hasn't complied with its part of the contract either. Under the terms of the contract, ENEE is responsible for helping Westport Finance LLC obtain the necessary permits. All of this to be done within 60 days of the contract signing. Yet, that date has come and gone with nothing being done. Roberto Cuellar, head of Secretaria de Recursos Naturales y el Ambiente (Serna), where environmental permits come from, says no application has been filed by anyone.
They haven't done it, nor have they presented any application.In light of all the controversial statements by Martinez Lozano, Congress has called him to testify before them on all of the above on February 15, 2012, and Ricardo Alvarez, head of Lobo Sosa's National Party, has called on Congress to invalidate the contract.
Incompetence? Corruption? Any way you look at it, there's sure to be more information coming out on ENEE and both of its partners here.
Friday, January 27, 2012
Energy Contracts or Energy?
When is an emergency not an emergency?
Westport Finance LLC is a curious company that won an "emergency" no-bid contract for electrical generating equipment and installation from the Empresa Nacional de Energia Electrica (ENEE) via Contract and Decreto 218-2011, published November 24, 2011 in La Gaceta.
Westport Finance is owned by Ira Ginsburg and his wife, Carla. Mr. Ginsburg's sole expertise is putting together financing for projects, not in supplying electricity or building generation facilities. He claims to be affiliated in some way with Wartsila, a Finnish builder of oil and natural gas generation equipment. We wrote about the contract back in November.
Under the terms of the contract Westport Finance LLC was supposed to have the first phase of generating equipment, some 50 Megawatts, up and running 60 days after the publication of the contract in La Gaceta.
So what, if anything, has Westport done to date?
Our gentle readers will not be surprised to hear that nothing has been done in Honduras since the contract was published. Westport has not imported or installed any power generation equipment of any kind.
One is reminded of Luis Larach's statement from Tim Johnson's reporting for McClatchy :
The contract also spells out how and where the new generating plants are to be connected to the national power grid. It in turn, requires Westport to post a bond for $1, 350, 000, which was due 15 days after the contract took effect. That would have been on December 9, 2011. In theory Westport is also subject to a $100/Megawatt/Month fine for delays, a further $5000/month from January 24, 2012 forward. Westport was also responsible for soliciting the necessary environmental approvals, as well as the departmental and municipal approvals necessary, within the first 60 days of the contract.
So Westport is in default on the second milestone. Did they find funding and pay the bond to meet the first milestone? Is the contract even still in effect?
So much for the "emergency" declared by Porfirio Lobo Sosa (PCM-064-2011) and the discriminating choice of corporate partners by ENEE.
Westport Finance LLC is a curious company that won an "emergency" no-bid contract for electrical generating equipment and installation from the Empresa Nacional de Energia Electrica (ENEE) via Contract and Decreto 218-2011, published November 24, 2011 in La Gaceta.
Westport Finance is owned by Ira Ginsburg and his wife, Carla. Mr. Ginsburg's sole expertise is putting together financing for projects, not in supplying electricity or building generation facilities. He claims to be affiliated in some way with Wartsila, a Finnish builder of oil and natural gas generation equipment. We wrote about the contract back in November.
Under the terms of the contract Westport Finance LLC was supposed to have the first phase of generating equipment, some 50 Megawatts, up and running 60 days after the publication of the contract in La Gaceta.
So what, if anything, has Westport done to date?
Our gentle readers will not be surprised to hear that nothing has been done in Honduras since the contract was published. Westport has not imported or installed any power generation equipment of any kind.
One is reminded of Luis Larach's statement from Tim Johnson's reporting for McClatchy :
In a sign of money laundering, he said, "unknown companies are winning bids of huge infrastructure projects like highways and bridges, and no one knows where the money is coming from."The problem here is likely that Westport Finance LLC stated to ENEE that they could install generators in 2 months at their own cost. The contract states:
Sixty (60) days after it comes into effect, the lessor (Westport) is obliged to install 50 Megawatts in total, of generating plants based on diesel (bunker) distributed in 4 of the five sites indicated in the following manner: one of 15 MW located in the city of La Entrada, Copan; another of 15 MW in Sesenti, Ocotepeque, another of 10 MW in the Coyoles Central substation and another of 10 MW in the city of Catacamas, Olancho, being responsible for the operation and maintenance of the same for a period of 12 months....
The contract also spells out how and where the new generating plants are to be connected to the national power grid. It in turn, requires Westport to post a bond for $1, 350, 000, which was due 15 days after the contract took effect. That would have been on December 9, 2011. In theory Westport is also subject to a $100/Megawatt/Month fine for delays, a further $5000/month from January 24, 2012 forward. Westport was also responsible for soliciting the necessary environmental approvals, as well as the departmental and municipal approvals necessary, within the first 60 days of the contract.
So Westport is in default on the second milestone. Did they find funding and pay the bond to meet the first milestone? Is the contract even still in effect?
So much for the "emergency" declared by Porfirio Lobo Sosa (PCM-064-2011) and the discriminating choice of corporate partners by ENEE.
Saturday, December 31, 2011
Whither Free Speech
It is customary at the end of each year for some Hondurans to construct paper maché, wood, and fabric figures of the bad things that happened that year and burn them, to symbolically kill all the bad of the current year and usher in the good of the next year. Normally these would be filled with fireworks: rockets, mortars, and firecrackers, but this year there's a complete ban on fireworks, so they'll reportedly be stuffed with paper, grass, and other combustible materials.
It's New Years Eve and a weekend, so the reporters stayed close to home this year (coverage: El Heraldo, El Tiempo, La Tribuna, and La Prensa, and international press coverage in EFE and Univision.). Here's what Hondurans in Tegucigalpa want to leave behind.
One figure is a Transit Police vehicle with the bodies of Rafael Alejandro Vargas Castellanos and Carlos David Pineda Rodriguez thrown carelessly in the back.
Another is a tank driven by Porfirio Lobo Sosa and ENEE boss Roberto Martin Lozano with text that calls into question the final thermo-electric generation deal. To quote one of the creators,
Still another is a figure of a police officer, in a uniform and orange colored official vest donated by a police officer disgruntled by the corruption, holding up a sign that says "A Bribe or Your License".
Another figure is an assassin standing before a tree labeled, the "Tree of the Poor". "This is the assassin, we have to kill him so that he won't kill more people," said the creator.
The owners of an upholstery shop constructed a figure of a man and a woman riding a red motorcycle. They want to protest the new law that restricts who can be a passenger on a motorcycle.
The creators of the Transit Police Car report receiving death threats:
It's New Years Eve and a weekend, so the reporters stayed close to home this year (coverage: El Heraldo, El Tiempo, La Tribuna, and La Prensa, and international press coverage in EFE and Univision.). Here's what Hondurans in Tegucigalpa want to leave behind.
One figure is a Transit Police vehicle with the bodies of Rafael Alejandro Vargas Castellanos and Carlos David Pineda Rodriguez thrown carelessly in the back.
Another is a tank driven by Porfirio Lobo Sosa and ENEE boss Roberto Martin Lozano with text that calls into question the final thermo-electric generation deal. To quote one of the creators,
"They have been cruel to the people of Honduras with the increases in the cost of electricity....It's a government that has the people on their knees, and they cannot do anything to get out of poverty."
Still another is a figure of a police officer, in a uniform and orange colored official vest donated by a police officer disgruntled by the corruption, holding up a sign that says "A Bribe or Your License".
Another figure is an assassin standing before a tree labeled, the "Tree of the Poor". "This is the assassin, we have to kill him so that he won't kill more people," said the creator.
The owners of an upholstery shop constructed a figure of a man and a woman riding a red motorcycle. They want to protest the new law that restricts who can be a passenger on a motorcycle.
The creators of the Transit Police Car report receiving death threats:
The figures were almost done; we had them outside the house but mysteriously the (figure of) the driver of the patrol car disappeared. Another day, around 6 pm as we were finishing up the final touches, someone shot at us from a moving car."This morning, Police officers came by and confiscated all the figures related to police corruption. The commander of the National Police, José Ricardo Ramirez del Cid, ordered that the Police "not retain the figures", noting that:
The people have a right to protest. I call on all the police, and we are talking here about an order, that they let people protest; we do not have a reason to be offended; we are subject to criticism. If we have committed errors we'll try to fix them.So far, not sign of anyone returning the confiscated figures.
Tuesday, November 1, 2011
Fly by Night Contracts for Electricity
Generally, if you're a Honduran government agency you await authorization before you sign a contract for a major purchase, and you follow government guidelines for how to negotiate such a contract; but not the Empresa Nacional de Energia Electrica (ENEE). They're special, apparently.
In the latest in what appears to be a series of contracts with US companies with no apparent expertise or established track record in the energy sector, Roberto Martinez Lozano, Director of ENEE, signed a contract on September 14 (contract 057-2011) with Ira L. Ginsburg of Westport Financial LLC for up to 100 megawatts of electricity from diesel or bunker oil fired generators, with a contract duration of 15 years.
Ira Ginsburg has extensive experience in putting together the financing for projects both in Latin America and other parts of the world. Some of these have been energy projects, including a 305 megawatt deal under the administration of Mel Zelaya. But all he does is line up financing. That's his expertise.
From his Linked-In profile we know he is a member of the Wartsila group on Linked-In. Wartsila, you might remember, is the Finnish energy company ENEE suggested it would be buying this generating capacity from. So one question is, why is the contract with Ira Ginsburg?
But while this is curious, it's not the most serious problem with this contract.
The contract was signed on September 14. Lozano wasn't approved to seek a contract for this power until September 28. He committed the government of Honduras to a contract for which he had no authority, with a financial company that has 3 employees and $96,000 in assets, not a company that has generation equipment or expertise.
There are several other problems with the contract, which should have conformed to the emergency decree passed on September 28.
First, the emergency decree only authorized the purchase of this power for 12 months. The contract Lozano signed obligates Honduras to buy it for 15 years!
The contract calls for installing an additional 24.7 megawatts capacity in Puerto Cortes, a region not covered by the emergency decree, in a plant which has been sold to another company for conversion to coal generation!
Still another problem is that the emergency decree calls for the government to pay 9.99 cents per kilowatt of installed capacity, while the contract calls for a payment to Westport Financial of 15 cents per kilowatt. Over its 15 year life, this no bid contract will cost the Honduran government $340 million.
There is an emerging pattern of questionable contracts here. ENEE also recently contract for an 18.5 megawatt solar power farm on Roatan with Onyx Service and Solutions, Inc., a company that until this August listed its chief business as running a network of banking ATM machines, and has never installed a solar power farm anywhere in the world.
All of this has come to light in the last few days because the contract was finally submitted to Congress for their authorization. In order for the contract to be in effect in Honduras, Congress must vote to authorize it. La Prensa reports there is fierce opposition to it in both the Liberal Party and National Party congressional delegations
It stinks of corruption or incompetence at the highest levels in ENEE.
In the latest in what appears to be a series of contracts with US companies with no apparent expertise or established track record in the energy sector, Roberto Martinez Lozano, Director of ENEE, signed a contract on September 14 (contract 057-2011) with Ira L. Ginsburg of Westport Financial LLC for up to 100 megawatts of electricity from diesel or bunker oil fired generators, with a contract duration of 15 years.
Ira Ginsburg has extensive experience in putting together the financing for projects both in Latin America and other parts of the world. Some of these have been energy projects, including a 305 megawatt deal under the administration of Mel Zelaya. But all he does is line up financing. That's his expertise.
From his Linked-In profile we know he is a member of the Wartsila group on Linked-In. Wartsila, you might remember, is the Finnish energy company ENEE suggested it would be buying this generating capacity from. So one question is, why is the contract with Ira Ginsburg?
But while this is curious, it's not the most serious problem with this contract.
The contract was signed on September 14. Lozano wasn't approved to seek a contract for this power until September 28. He committed the government of Honduras to a contract for which he had no authority, with a financial company that has 3 employees and $96,000 in assets, not a company that has generation equipment or expertise.
There are several other problems with the contract, which should have conformed to the emergency decree passed on September 28.
First, the emergency decree only authorized the purchase of this power for 12 months. The contract Lozano signed obligates Honduras to buy it for 15 years!
The contract calls for installing an additional 24.7 megawatts capacity in Puerto Cortes, a region not covered by the emergency decree, in a plant which has been sold to another company for conversion to coal generation!
Still another problem is that the emergency decree calls for the government to pay 9.99 cents per kilowatt of installed capacity, while the contract calls for a payment to Westport Financial of 15 cents per kilowatt. Over its 15 year life, this no bid contract will cost the Honduran government $340 million.
There is an emerging pattern of questionable contracts here. ENEE also recently contract for an 18.5 megawatt solar power farm on Roatan with Onyx Service and Solutions, Inc., a company that until this August listed its chief business as running a network of banking ATM machines, and has never installed a solar power farm anywhere in the world.
All of this has come to light in the last few days because the contract was finally submitted to Congress for their authorization. In order for the contract to be in effect in Honduras, Congress must vote to authorize it. La Prensa reports there is fierce opposition to it in both the Liberal Party and National Party congressional delegations
It stinks of corruption or incompetence at the highest levels in ENEE.
Thursday, September 22, 2011
Buy High, Sell Low
ENEE, the Empresa Nacional de Energia Electrica, the state owned electric company of Honduras, knows how to drive a business into bankruptcy: buy electricity at horrendously high rates, and sell it for less to the consumers in Honduras.
Seriously, this is the ENEE business plan: to lose money.
Prices were set with the goal of subsidizing the cost of electricity for the poor, here defined by how much electricity they consume in a month.
Prices were reset higher in 2008 during the Zelaya administration, and at that time ENEE was authorized to charge an energy cost surcharge on top of the usage charges. The subsidy for the poor was expanded into higher usage tiers.
At this point, no one in Honduras is paying the actual cost of electricity, not businesses, not the wealthy, not the poor. Somehow what started out as subsidy for the poor got expanded to everyone. Is it any wonder ENEE runs at a loss?
Blackouts are once again common in Honduras, especially in the area around San Pedro Sula, in the western part of the country, in the central part around Yoro, and in Olancho. This is because domestic production of electricity is insufficient to meet demand, and the distribution system in the country is incapable of distributing the excess production in other parts of the country to the parts that lack electricity.
This was entirely expected and preventable.
The electricity shortage was the subject of a 2007 US Embassy study, as well as a 2010 World Bank one. Both predicted Honduras would need more power than is generated in the country by 2011, and accurately predicted how much more power was needed.
Many of the neighboring Central American countries produce excess electricity. ENEE cannot buy this excess production because the interconnects linking its distribution system to those of its neighbors are inadequate and outdated.
ENEE is under government orders not to buy any additional electricity produced by bunker oil or diesel generating plants.
Yet, earlier this year it placed a request for bids for 50 megawatts of so called "thermal" power. At the time it received bids costing $0.34/KWh to $0.54/KWh. Roberto Martinez Lozano, manager of ENEE, rejected all the offers then as being too expensive.
Now Martinez Lozano wants to buy electricity at $0.50/KWh, and wants to sign a contract at that rate for the next two years.
Who gains?
The Finnish firm Wartsila, which offered the electricity at $0.16/KWh, as long as the government of Honduras buys and transports the fuel. At current market prices that raises the cost to ENEE to around $0.48-50 KWh.
ENEE sells this electricity back to businesses and consumers for less than it pays for it.
According to the US Embassy, in 2007 ENEE paid about $0.14 KWh and sold electricity for an average of $0.08 KWh.
Nearly 25% of electricity is not paid for, compared with a Central American average of 15%. Only about 10% of that total is transmission line loss. The remainder is due to billing errors, illegal connections, and fraud.
Seriously, this is the ENEE business plan: to lose money.
Prices were set with the goal of subsidizing the cost of electricity for the poor, here defined by how much electricity they consume in a month.
Prices were reset higher in 2008 during the Zelaya administration, and at that time ENEE was authorized to charge an energy cost surcharge on top of the usage charges. The subsidy for the poor was expanded into higher usage tiers.
At this point, no one in Honduras is paying the actual cost of electricity, not businesses, not the wealthy, not the poor. Somehow what started out as subsidy for the poor got expanded to everyone. Is it any wonder ENEE runs at a loss?
Blackouts are once again common in Honduras, especially in the area around San Pedro Sula, in the western part of the country, in the central part around Yoro, and in Olancho. This is because domestic production of electricity is insufficient to meet demand, and the distribution system in the country is incapable of distributing the excess production in other parts of the country to the parts that lack electricity.
This was entirely expected and preventable.
The electricity shortage was the subject of a 2007 US Embassy study, as well as a 2010 World Bank one. Both predicted Honduras would need more power than is generated in the country by 2011, and accurately predicted how much more power was needed.
Many of the neighboring Central American countries produce excess electricity. ENEE cannot buy this excess production because the interconnects linking its distribution system to those of its neighbors are inadequate and outdated.
ENEE is under government orders not to buy any additional electricity produced by bunker oil or diesel generating plants.
Yet, earlier this year it placed a request for bids for 50 megawatts of so called "thermal" power. At the time it received bids costing $0.34/KWh to $0.54/KWh. Roberto Martinez Lozano, manager of ENEE, rejected all the offers then as being too expensive.
Now Martinez Lozano wants to buy electricity at $0.50/KWh, and wants to sign a contract at that rate for the next two years.
Who gains?
The Finnish firm Wartsila, which offered the electricity at $0.16/KWh, as long as the government of Honduras buys and transports the fuel. At current market prices that raises the cost to ENEE to around $0.48-50 KWh.
ENEE sells this electricity back to businesses and consumers for less than it pays for it.
According to the US Embassy, in 2007 ENEE paid about $0.14 KWh and sold electricity for an average of $0.08 KWh.
Nearly 25% of electricity is not paid for, compared with a Central American average of 15%. Only about 10% of that total is transmission line loss. The remainder is due to billing errors, illegal connections, and fraud.
Wednesday, August 25, 2010
Money, money money...
There, got your attention?
We have been arguing for more than a year now that the coup d'etat of June 28 and its continuing aftermath were not ideological-- unless the ideology involved is capitalism.
The forces behind the coup were shown to be a cadre of business-owners in early analyses by Leticia Salomon and other Honduran scholars. Resistance to a living wage and to union contracts was only the most visible evidence of this direction of the de facto regime, continuing in the Lobo Sosa administration. Government agencies charged with protecting the environment were converted after the coup into rubber stamps for developments damaging to sensitive ecological zones, and even to the health of the Honduran people.
The fingerprints of this shift back to favoring business interests of a small elite are also found all over concessions of rights for power generation, even if it is hard to connect the dots due to an almost total absence of real reporting in mainstream Honduran and foreign news media.
Yesterday, El Libertador published a formal statement by the Frente de Resistencia about the "harmful contracts for renewable energy" granted to "the golpista oligarchy". The contracts in question are for thermal generation of electricity. The Honduran National Congress has, according to this report, approved the concession of more than 50 watersheds for this purpose to private companies.
One of the main arguments against these contracts, advanced by the Sindicato de Trabajadores de la Empresa Nacional de Energía Eléctrica (STENEE), the union of the national electrical workers, is that the contracts for ENEE to buy the energy produced guarantee an overly high price: reportedly 12 US cents per kilowatt hour, far above the previously negotiated price of 5 US cents per kilowatt hour.
Unlikely to be a coincidence, on August 25, El Heraldo published an interview with Honduran businessman Fredy Násser of the energy development enterprise Grupo Terra. The theme of the article: there is a reason why they haven't invested in "clean energy" in Honduras, they would love to, and they have lots of investment funding from the Banco Centroamericano de Integración Económica (BCIE), the German Development Bank, and the Dutch Development Bank. Násser was among the businessmen singled out by Leticia Salomon in her analyses of the business interests behind the coup of June 28, 2009.
El Libertador claims that the concessions for energy generation rely on forged signatures of mayors of affected towns, and thus that they were "negotiated" without consultation of the citizenry. One of the hallmarks of the Zelaya administration was a push for citizen participation, and one of the counter forces against that administration was a desire to return to a system in which representatives without accountability speak for the people.
So, the Frente calls for mobilization to
Rigoberto Cuellar, the Secretary of Natural Resources in the Lobo Sosa government, defended the new contracts, saying his ministry will ensure that the contracts will be the least expensive possible and environmentally sensitive. He stated firmly that the entire process of letting contracts adhered completely to the requirements of the law. The one thing absent from his public statements: any comment on how, or whether, the proposed new energy facilities have been discussed with the local communities.
But, as Fredy Násser would argue,
The only way out of poverty? or the only way to "generate wealth"?
We have been arguing for more than a year now that the coup d'etat of June 28 and its continuing aftermath were not ideological-- unless the ideology involved is capitalism.
The forces behind the coup were shown to be a cadre of business-owners in early analyses by Leticia Salomon and other Honduran scholars. Resistance to a living wage and to union contracts was only the most visible evidence of this direction of the de facto regime, continuing in the Lobo Sosa administration. Government agencies charged with protecting the environment were converted after the coup into rubber stamps for developments damaging to sensitive ecological zones, and even to the health of the Honduran people.
The fingerprints of this shift back to favoring business interests of a small elite are also found all over concessions of rights for power generation, even if it is hard to connect the dots due to an almost total absence of real reporting in mainstream Honduran and foreign news media.
Yesterday, El Libertador published a formal statement by the Frente de Resistencia about the "harmful contracts for renewable energy" granted to "the golpista oligarchy". The contracts in question are for thermal generation of electricity. The Honduran National Congress has, according to this report, approved the concession of more than 50 watersheds for this purpose to private companies.
One of the main arguments against these contracts, advanced by the Sindicato de Trabajadores de la Empresa Nacional de Energía Eléctrica (STENEE), the union of the national electrical workers, is that the contracts for ENEE to buy the energy produced guarantee an overly high price: reportedly 12 US cents per kilowatt hour, far above the previously negotiated price of 5 US cents per kilowatt hour.
Unlikely to be a coincidence, on August 25, El Heraldo published an interview with Honduran businessman Fredy Násser of the energy development enterprise Grupo Terra. The theme of the article: there is a reason why they haven't invested in "clean energy" in Honduras, they would love to, and they have lots of investment funding from the Banco Centroamericano de Integración Económica (BCIE), the German Development Bank, and the Dutch Development Bank. Násser was among the businessmen singled out by Leticia Salomon in her analyses of the business interests behind the coup of June 28, 2009.
El Libertador claims that the concessions for energy generation rely on forged signatures of mayors of affected towns, and thus that they were "negotiated" without consultation of the citizenry. One of the hallmarks of the Zelaya administration was a push for citizen participation, and one of the counter forces against that administration was a desire to return to a system in which representatives without accountability speak for the people.
So, the Frente calls for mobilization to
defend in a permanent way our natural resources, that should be developed under public policies with participation and direct benefit for the communities. Only under this procedure can we support clean energy projects.
Rigoberto Cuellar, the Secretary of Natural Resources in the Lobo Sosa government, defended the new contracts, saying his ministry will ensure that the contracts will be the least expensive possible and environmentally sensitive. He stated firmly that the entire process of letting contracts adhered completely to the requirements of the law. The one thing absent from his public statements: any comment on how, or whether, the proposed new energy facilities have been discussed with the local communities.
But, as Fredy Násser would argue,
it is necessary to generate wealth and the spaces necessary to develop opportunities for our people. The governments have to realize that this is the only way out of poverty.
The only way out of poverty? or the only way to "generate wealth"?
Wednesday, August 11, 2010
Closing the deal.....
Yesterday the Lobo Sosa government failed to close a deal with the International Monetary Fund for standby funding for the government of Honduras for the next 18 months. This was an important test of the government's political capital as well as its economic capital, and it failed.
So why did the deal fall through at the last minute? The newspaper El Tiempo reported today that the IMF wants to be sure the Lobo government continues sound fiscal policies into the next year by examining its budget proposal in September.
The first negotiations between the IMF and the Lobo Sosa government began in March with a visit where the IMF reviewed the fiscal plans of the government. Among their suggestions, made in a public press release, was that the government needed to contain spending, especially the spending on salaries of public employees. The IMF also recommended that the government strengthen the finances of public institutions such as ENEE and Hondutel, strengthen the government pension plan, and improve the financial situation of the cities.
In response the government passed a set of new taxes, quite unpopular with business, but supposedly designed to have minimal impact on the poor.
It also started a new program financed by government bonds, that gives 10,000 lempiras to poor families. It has had to pay these piecemeal as its cash reserves are quite low and the market for government bonds could not absorb the full cost in a single offering. A new bond offering for $26 million towards this program was being offered by the government today.
Another response, however, weakened the Instituto Nacional de Jubilaciones y Pensiones de los Empleados Publicos del Poder Ejecutivo (INJUPEMP). The Secretary of Finances determined that the fund had over 1000 million lempiras it could invest, and decided to use those funds to retire the debt of the government Electric Company (ENEE) which buys electricity from private power plants that generate electricity using bunker oil. These plants are mostly owned by Honduran businessmen.
Honduras needs the standby agreement to finance budget shortfalls and to fund emergencies. In light of its failure to secure the agreement on this visit of the IMF, the government had to try to put a good face on its failure. All it could seem to find to brag about was there was an agreement that in the next year there would be no new taxes.
The lack of an IMF agreement highlights the failure of the Lobo government to completely unlock international finances. Instead, it has had to issue bonds backed by INJUPEMP funds, and others backed by the money owed to Petrocaribe to finance normal government spending. For now, the international financial community is keeping Honduras broke.
Friday, August 6, 2010
Political economy of Honduras: 1990s-2009 (Part 3 of 4)
Economist Miguel Cáceres Rivera and historian Sucelinda Zelaya set the stage for understanding the political economic crisis that led to the coup d'Etat of 2009 in their discussions of economic transformations in the early twentieth century and under the military dictatorships of the 1960s-1970s.
We enter the recent period with a transformed landscape: migration of rural farmers to cities where they became the labor force and reserve labor pool for industry, in parallel with surprisingly successful rural movements to take land from larger land owners and put it into production, creating demand for products of industry from a laboring farming population, all under the auspices of a military linked comfortably to the new industrial class, bypassing the traditional elites of the two party system.
Third crisis
Cáceres and Zelaya identify a third "crisis of reproduction" starting in the 1990s, in both rural and urban sectors throughout the country. They identify three root causes:
First, employment growth was insufficient;
second,
and third,
Or to simplify it: even in the face of limited employment, the State budget was based on regressive taxes that differentially affected poorer Hondurans , while state economic policies and the holding of business in the hands of a small group of individuals allowed the maintenance of price policies that benefited the wealthy business class at the direct expense of the working class.
Cáceres and Zelaya characterize these policies as "decimating" the potential of families to purchase goods, leading to a contraction in demand and thus in new job creation in industry, which in the second crisis had assumed a much greater role in the economy. They note that one-third of the employment-seeking young emigrated in search of work during this period. The remittances sent back by these individuals, they write, postponed the "eruption of the crisis" while providing yet another source of income for the banks controlled by the small wealth/political elite, which charged high service fees for transfers.
Meanwhile, the Honduran state inherited external debt from the reform era which led to increases in taxes and currency devaluation. "It was assumed that devaluation would stimulate a greater export production that would increase income in dollars" needed to pay the international debt. This led directly to government encouragement of increased export agriculture and the development of the maquilas, export sweatshops operated by multinational corporations. In the analysis of Cáceres and Zelaya, the government extracted from the general population the funds to pay debt that was accumulated to benefit the industrial business class in the earlier crisis, a "transfer of income equivalent to the amount of the debt and interest" from the working classes to the business class.
Devaluation of the lempira "is another state action of the same nature that increased the income of the exporters and the banks". They note that this came "at the cost of the equivalent reduction in purchase capacity" due to inflation that affected the working class, campesinos and self-employed service-sector workers, micro- and small-businesses, and professionals with secondary and university education. This "transfer of income" deteriorated the living conditions of families and made precarious the survival of business, and their ability to generate jobs. Businesses faced very high interest rates on loans, imposed by banks due to the high rate of inflation spurred by devaluation of which, the authors note, the banks themselves were actually beneficiaries.
Further contributing to the crisis was disinvestment in HONDUTEL, the phone company, and ENEE, the electrical company, opening up opportunities for the private enterprise elite to exploit the demand for these services.
The economic crisis "led to a crisis of faith in the political parties and the State, that have been very useful for the growth of the business elite and the functioning of a new axis of accumulation". The growth of political parties stalled, increasing more slowly than the voting-age population. About half of the population of Honduras, they say, has no party affiliation. As we covered extensively in the run-up to last November's election, abstentionism had reached about half the population of eligible votes.
The growth of maquilas, banks, cell phone companies, and electrical companies, and of non-traditional agricultural exports,
This elite, the authors argue, arose from the solutions of the first two crises they discussed. Further, they write,
We enter the recent period with a transformed landscape: migration of rural farmers to cities where they became the labor force and reserve labor pool for industry, in parallel with surprisingly successful rural movements to take land from larger land owners and put it into production, creating demand for products of industry from a laboring farming population, all under the auspices of a military linked comfortably to the new industrial class, bypassing the traditional elites of the two party system.
Third crisis
Cáceres and Zelaya identify a third "crisis of reproduction" starting in the 1990s, in both rural and urban sectors throughout the country. They identify three root causes:
First, employment growth was insufficient;
second,
the continuing and growing extraction of income from the rest of the social classes on the part of the business elite by means of mechanisms such as devaluation, the monopolistic management of fuel prices, and the oligopsonistic management of the prices of electricity, mobile phone service, and high interest rates;
and third,
a constant and progressive exaction of income from the population by the State by means of taxes in general and the sales tax and tax on fuels in particular.
Or to simplify it: even in the face of limited employment, the State budget was based on regressive taxes that differentially affected poorer Hondurans , while state economic policies and the holding of business in the hands of a small group of individuals allowed the maintenance of price policies that benefited the wealthy business class at the direct expense of the working class.
Cáceres and Zelaya characterize these policies as "decimating" the potential of families to purchase goods, leading to a contraction in demand and thus in new job creation in industry, which in the second crisis had assumed a much greater role in the economy. They note that one-third of the employment-seeking young emigrated in search of work during this period. The remittances sent back by these individuals, they write, postponed the "eruption of the crisis" while providing yet another source of income for the banks controlled by the small wealth/political elite, which charged high service fees for transfers.
Meanwhile, the Honduran state inherited external debt from the reform era which led to increases in taxes and currency devaluation. "It was assumed that devaluation would stimulate a greater export production that would increase income in dollars" needed to pay the international debt. This led directly to government encouragement of increased export agriculture and the development of the maquilas, export sweatshops operated by multinational corporations. In the analysis of Cáceres and Zelaya, the government extracted from the general population the funds to pay debt that was accumulated to benefit the industrial business class in the earlier crisis, a "transfer of income equivalent to the amount of the debt and interest" from the working classes to the business class.
Devaluation of the lempira "is another state action of the same nature that increased the income of the exporters and the banks". They note that this came "at the cost of the equivalent reduction in purchase capacity" due to inflation that affected the working class, campesinos and self-employed service-sector workers, micro- and small-businesses, and professionals with secondary and university education. This "transfer of income" deteriorated the living conditions of families and made precarious the survival of business, and their ability to generate jobs. Businesses faced very high interest rates on loans, imposed by banks due to the high rate of inflation spurred by devaluation of which, the authors note, the banks themselves were actually beneficiaries.
Further contributing to the crisis was disinvestment in HONDUTEL, the phone company, and ENEE, the electrical company, opening up opportunities for the private enterprise elite to exploit the demand for these services.
The economic crisis "led to a crisis of faith in the political parties and the State, that have been very useful for the growth of the business elite and the functioning of a new axis of accumulation". The growth of political parties stalled, increasing more slowly than the voting-age population. About half of the population of Honduras, they say, has no party affiliation. As we covered extensively in the run-up to last November's election, abstentionism had reached about half the population of eligible votes.
The growth of maquilas, banks, cell phone companies, and electrical companies, and of non-traditional agricultural exports,
defines and places in relief a new axis of accumulation that implies a concatenation of agricultural, industrial and tertiary investments that the business elite manages and on which is supported its present economic and political power.
This elite, the authors argue, arose from the solutions of the first two crises they discussed. Further, they write,
It is the elite that in the process of strengthening its economic hegemony created the present crisis.
Sunday, March 21, 2010
Trouble in Honduras' Korean Embassy
As we have been monitoring the process of setting the Lobo Sosa administration into place, we have been tracking political appointments, including those of ambassadors. As in the US, these diplomatic posts are places where you can see the strings connecting the elected government to the unelected one. Until now, while these have interested us, they have not been particularly newsworthy.
Well, that just changed. Joong Ang Daily, an English-language Korean paper, just published an article confirming what the Honduran press was reporting:
But another article in yesterday's El Heraldo, while burying it deep in a story purportedly about US demonstrations asking for continuation of Temporary Protected Status for Hondurans, has a slightly different take on what happened, describing it as part of a pattern:
When the appointment was announced, it was characterized by the The Korea Times as a "surprise":
So why was this appointment ever floated? Joong Ang Daily quotes Kang as saying
Another report from The Korea Times gives the widely-repeated personal background on the appointment:
Beyond the enlightenment this attempted appointment yields on the colorful background of Lobo Sosa, what does this tell us about Honduras today?
The Korea Times wrote that the designation of Kang "was an expression of friendship to Korea by the Honduran President, diplomats say, while it was also taken as a well-received surprise in Korea as a success story of a Korean immigrant overseas."
South Korea is an important economic partner for Honduras. In the latest year for which data are available on South Korean government websites, 2006, Korean imports from Honduras totaled $23 million and its exports to Honduras reached $139 million. At the time, the South Korean government estimated that about 470 Koreans lived in Honduras.
According to the South Korean Ministry of Foreign Affairs and Trade website, from 1991 to 2007 South Korea provided more than $11 million in aid to Honduras, $6 million in the form of loans, with another $5 million in loans then pending disbursement.
The $6 million loan reported as completed was for a major power grid expansion project, the kind of infrastructure work that has been subject to cronyism and corruption in other cases, and that even if handled entirely legally, tends to enrich the owners of Honduran construction companies and major businesses.
Approved for funding by South Korea in 1998, the project for which this loan was intended was the subject of Decreto 15-2001 published in La Gaceta on April 17, 2001, ratifying the original congressional resolution 14-99 of 1999. As is common with such loans, the contract required Honduras to purchase the necessary goods and services from South Korea (allowing up to 20% of the funds to be used for purchases from other countries). In addition, materials for the project were exempted from import duties and taxes.
The full publication of the loan agreement on August 30 of 2001 (Decreto 112-2001) includes an Annex specifying that the project would support building 611.4 km of primary and secondary electrical wiring to provide electrical service to 177 rural communities in 12 of the 18 Departments of Honduras, with work to be carried out by ENEE, the national energy company.
So there is much more at stake in diplomatic relations with South Korea than simply recognition of an immigration success story. And the most telling sentence in all the news coverage of this now canceled appointment is Kang's quotation of Lobo Sosa:
Well, that just changed. Joong Ang Daily, an English-language Korean paper, just published an article confirming what the Honduran press was reporting:
The Honduran government has withdrawn its request to the Korean government to approve Korean-born Kang Young-shin to be the next Honduran ambassador to Seoul.Joong Ang Daily attributes the change to a conflict with basic Honduran law:
A diplomatic source here said Honduras cited “issues with local law” as the main reason to withdraw the request....Honduran media, however, identify the problem as South Korean law, which does not permit a Korean citizen to represent a foreign government. These reports imply that either South Korea did not recognize the assumption of Honduran citizenship by Kang, or that she maintained her Korean citizenship in parallel with Honduran citizenship.
Under Honduran law, a naturalized citizen isn’t allowed to represent Honduras in his or her native country.
But another article in yesterday's El Heraldo, while burying it deep in a story purportedly about US demonstrations asking for continuation of Temporary Protected Status for Hondurans, has a slightly different take on what happened, describing it as part of a pattern:
A little more than 50 days after the Porfirio Lobo Sosa government was installed, friendly countries have not approved the ambassadors named by the new administration. On the contrary, the responses that Lobo Sosa has obtained are negative. Such is the case of South Korea, which denied its blessing on the ambassador proposed by the government of Lobo Sosa, for being a citizen born in that country, although she has Honduran nationality.
When the appointment was announced, it was characterized by the The Korea Times as a "surprise":
Incumbent Honduran Ambassador to Korea Rene Francisco Umana Chinchilla told The Korea Times Sunday the news was unexpected.... Umana Chinchilla heard the news over the weekend through a Korean media outlet, raising suspicions over a lack of communication between the embassy in Seoul and the new government in Tegucigalpa, the country's capital.
So why was this appointment ever floated? Joong Ang Daily quotes Kang as saying
“President Lobo is very knowledgeable about Korea, appreciates Koreans’ work ethic and promptness, and probably named me [as the ambassador] to build stronger ties with Korea” ...“When I told him over the phone I’d take the job, he said, ‘I trust you.’”
Another report from The Korea Times gives the widely-repeated personal background on the appointment:
Kang graduated from a teachers' university in Seoul and worked as an elementary school teacher before moving to Honduras in 1977 when her husband took a position as a professor at its military academy. She became naturalized as a Honduran citizen in 1987....Kang had previously run a private Taekwondo Institute with her husband, now deceased. Kang was asked by Honduran President Porfirio Lobo Sosa, who was once her Taekwondo student, to represent Honduras to Korea.
Beyond the enlightenment this attempted appointment yields on the colorful background of Lobo Sosa, what does this tell us about Honduras today?
The Korea Times wrote that the designation of Kang "was an expression of friendship to Korea by the Honduran President, diplomats say, while it was also taken as a well-received surprise in Korea as a success story of a Korean immigrant overseas."
South Korea is an important economic partner for Honduras. In the latest year for which data are available on South Korean government websites, 2006, Korean imports from Honduras totaled $23 million and its exports to Honduras reached $139 million. At the time, the South Korean government estimated that about 470 Koreans lived in Honduras.
According to the South Korean Ministry of Foreign Affairs and Trade website, from 1991 to 2007 South Korea provided more than $11 million in aid to Honduras, $6 million in the form of loans, with another $5 million in loans then pending disbursement.
The $6 million loan reported as completed was for a major power grid expansion project, the kind of infrastructure work that has been subject to cronyism and corruption in other cases, and that even if handled entirely legally, tends to enrich the owners of Honduran construction companies and major businesses.
Approved for funding by South Korea in 1998, the project for which this loan was intended was the subject of Decreto 15-2001 published in La Gaceta on April 17, 2001, ratifying the original congressional resolution 14-99 of 1999. As is common with such loans, the contract required Honduras to purchase the necessary goods and services from South Korea (allowing up to 20% of the funds to be used for purchases from other countries). In addition, materials for the project were exempted from import duties and taxes.
The full publication of the loan agreement on August 30 of 2001 (Decreto 112-2001) includes an Annex specifying that the project would support building 611.4 km of primary and secondary electrical wiring to provide electrical service to 177 rural communities in 12 of the 18 Departments of Honduras, with work to be carried out by ENEE, the national energy company.
So there is much more at stake in diplomatic relations with South Korea than simply recognition of an immigration success story. And the most telling sentence in all the news coverage of this now canceled appointment is Kang's quotation of Lobo Sosa:
'I trust you.’
Saturday, February 13, 2010
Corrupting the Public Record: Gacetazo
It started simply enough; on January 22, 2010, edition 32,120 of the Honduran La Gaceta was published. La Gaceta is the official publication of the Honduran government. It is published daily by the Empresa Nacional de Artes Gráficas (ENAG), 16 pages long, and contains the laws, resolutions, and decrees of the Honduran government that have been approved for publication. For congressional laws and presidential decrees, this is the last step in making them legal and placing them in effect.
This year on January 13, the National Congress passed a law, 207-2009 (also referred to as decree 293-2009), that allocated the rights to build, administer, and maintain a dam and reservoir in Nacaome, Department of Valle, Honduras. This contract for 25 years was allocated to the Italo-Honduran consortium, Compania Eléctrica Nacaome, Sociedad Anonima (ENASA), and was pushed through Congress supported by the de facto regime's Secretary of Transportation (SOPTRAVI), José Rosario Bonano, also responsible for hundreds of road contracts that are now being reviewed for irregularities. The building of the dam, and its use to supply water for drinking and irrigation was to be financed by the Italian government, while the turbines and machine room for generation of 30 megawatts of electricity were to be financed by the Spanish government.
So on the morning of January 22, when edition #32120 of La Gaceta was printed, this was pending legal business needing to be published.
Except that particular morning, there were two different editions of La Gaceta, both numbered #32120.
A mere twenty copies contained a copy of law 207-2009, making it official. These 20 copies were delivered to a representative of ENASA, for which they paid 20,000 lempiras, according to a receipt filed with ENAG.
The other 580 copies delivered to subscribers did not include Decreto 207-2009.
To be legally published, Martha Alicia García, the current director of ENAG, says that the text of a law must come from the Executive office with a signature of the Minister of Government. An order to publish must be issued by the director of ENAG, and it must then go through the production process, be reviewed for errors, and be published. This usually takes at least 24 hours.
The decree allocating the contract for the administration and maintenance of the Nacaome dam and reservoir was passed by the National Congress and, in theory, approved at the last cabinet meeting of the de facto government, the night of January 21.
However, there appears to be no signed order by the Minister of Government or from the de facto President ordering the publication of the decree, nor is there a signed order from the director of ENAG ordering its publication, nor did it take the normal 24 hours to get it into production. The decreto, in theory approved around dinner time, was then published in a special edition of La Gaceta, with copies all given to a representative of the consortium that benefitted, for which they paid 20,000 lempiras, less than 12 hours later!
The Assistant Director of ENAG, José Everaldo Robles, said such payments are normal and this one was based on the additional pages that were needed to print the law, at a rate of slightly more than 1,000 lempiras per page. While he did not find it suspicious that there were two editions, one with the law and one without, but he was concerned that the one with the law was of limited circulation. Martha Garcia, the Director of ENAG, agrees that it is usually the group that benefits that pays for the pages necessary to publish the decree that grants them the benefit.
The allocation of the rights to build the dam and generation equipment was questioned almost immediately, on January 23, by the National Electric Company's Employee's Union (STENEE in Spanish) who felt the National Electric Company (ENEE) should build and operate the facility. Multiple investigations, by Congress, by the Public Prosecutor, by the National Electric Company, and others, have all begun, with a scapegoat, the ex-Minister of SOPTRAVI, clearly in their sights. Edition #32120 of La Gaceta has been officially annulled. All of the laws and decrees published in either version of edition #32120 of La Gaceta have been put in limbo until they can be republished.
The administrator of the file room where the negatives of the pages of each edition of La Gaceta are filed has disappeared after asking for permission to take a leave of absence, along with the keys for the file room. The ex-President of Congress, Jose Alfredo Saavedra, under whose leadership the Congress approved supposedly approved the decreto in question, disclaims any knowledge saying he only oversees the discussion, not its content.
When we say that the de facto regime exploited their months in office to enrich themselves and those behind the coup, we expect the evidence to be obscured and the tracks hard to follow. Not that there will be a paper trail a mile wide documenting insider deals and corruption so clearly.
This year on January 13, the National Congress passed a law, 207-2009 (also referred to as decree 293-2009), that allocated the rights to build, administer, and maintain a dam and reservoir in Nacaome, Department of Valle, Honduras. This contract for 25 years was allocated to the Italo-Honduran consortium, Compania Eléctrica Nacaome, Sociedad Anonima (ENASA), and was pushed through Congress supported by the de facto regime's Secretary of Transportation (SOPTRAVI), José Rosario Bonano, also responsible for hundreds of road contracts that are now being reviewed for irregularities. The building of the dam, and its use to supply water for drinking and irrigation was to be financed by the Italian government, while the turbines and machine room for generation of 30 megawatts of electricity were to be financed by the Spanish government.
So on the morning of January 22, when edition #32120 of La Gaceta was printed, this was pending legal business needing to be published.
Except that particular morning, there were two different editions of La Gaceta, both numbered #32120.
A mere twenty copies contained a copy of law 207-2009, making it official. These 20 copies were delivered to a representative of ENASA, for which they paid 20,000 lempiras, according to a receipt filed with ENAG.
The other 580 copies delivered to subscribers did not include Decreto 207-2009.
To be legally published, Martha Alicia García, the current director of ENAG, says that the text of a law must come from the Executive office with a signature of the Minister of Government. An order to publish must be issued by the director of ENAG, and it must then go through the production process, be reviewed for errors, and be published. This usually takes at least 24 hours.
The decree allocating the contract for the administration and maintenance of the Nacaome dam and reservoir was passed by the National Congress and, in theory, approved at the last cabinet meeting of the de facto government, the night of January 21.
However, there appears to be no signed order by the Minister of Government or from the de facto President ordering the publication of the decree, nor is there a signed order from the director of ENAG ordering its publication, nor did it take the normal 24 hours to get it into production. The decreto, in theory approved around dinner time, was then published in a special edition of La Gaceta, with copies all given to a representative of the consortium that benefitted, for which they paid 20,000 lempiras, less than 12 hours later!
The Assistant Director of ENAG, José Everaldo Robles, said such payments are normal and this one was based on the additional pages that were needed to print the law, at a rate of slightly more than 1,000 lempiras per page. While he did not find it suspicious that there were two editions, one with the law and one without, but he was concerned that the one with the law was of limited circulation. Martha Garcia, the Director of ENAG, agrees that it is usually the group that benefits that pays for the pages necessary to publish the decree that grants them the benefit.
The allocation of the rights to build the dam and generation equipment was questioned almost immediately, on January 23, by the National Electric Company's Employee's Union (STENEE in Spanish) who felt the National Electric Company (ENEE) should build and operate the facility. Multiple investigations, by Congress, by the Public Prosecutor, by the National Electric Company, and others, have all begun, with a scapegoat, the ex-Minister of SOPTRAVI, clearly in their sights. Edition #32120 of La Gaceta has been officially annulled. All of the laws and decrees published in either version of edition #32120 of La Gaceta have been put in limbo until they can be republished.
The administrator of the file room where the negatives of the pages of each edition of La Gaceta are filed has disappeared after asking for permission to take a leave of absence, along with the keys for the file room. The ex-President of Congress, Jose Alfredo Saavedra, under whose leadership the Congress approved supposedly approved the decreto in question, disclaims any knowledge saying he only oversees the discussion, not its content.
When we say that the de facto regime exploited their months in office to enrich themselves and those behind the coup, we expect the evidence to be obscured and the tracks hard to follow. Not that there will be a paper trail a mile wide documenting insider deals and corruption so clearly.
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