Di Bella, G., 2012, “Lifting a Constraint on Growth: Achievements and Challenges of Nicaragua’s Electricity Sector”, IMF Working Paper (forthcoming), Washington D.C.
Government of Nicaragua (GON), 2009, “Ley de Reformas y Adiciones a la Ley No. 272, ‘Ley de la Industria Eléctrica’ y a la ley No. 554, ‘Ley de Estabilidad Energética’”, La Gaceta No. 91, (May), Managua.
Government of Nicaragua (GON), 2010, “Ley de Reforma a la Ley No. 661 ‘Ley para la distribución y el uso responsable del servicio público de energía eléctrica”, La Gaceta No. 147, (July), Managua.
Strand, J., 2011, “Low-level Versus High-Level Equilibrium in Public Utility Services”, Policy Research Working Paper No. 5723, The World Bank, Washington D.C.
Prepared by Gabriel Di Bella.
ECLAC (2010) includes a summary of electricity indicators in Central American countries. In particular, it shows that Nicaragua’s generation matrix compares unfavorably with that in other Central American countries. World Bank (2009a, 2009b) summarize cross-country experience in reducing non-technical losses.
Even though the distribution company acts as the recipient of the financing, the actual debtors are final consumers. The authorities announced that such financing would be long-term and at zero-interest; they also expressed that lower generation costs would be brought about by investment in electricity generation from renewable sources.
ENEL is the state-owned electricity generation company. ALBANISA, a bi-national company in which PDV Caribe (a subsidiary of Petroleos de Venezuela SA, PDVSA) owns 51 percent of the shares and PETRONIC (the Nicaraguan state-owned oil company) owns the remaining 49 percent, produces about 20 percent of electricity and imports about 90 percent of crude and oil derivatives coming into Nicaragua.
These include the expected paths for the price of oil, for technical and non-technical losses of distribution, and for ongoing and prospective investment in generation, among other variables.
The alternative scenario assumes that a number of planned investments in electricity generation from renewable sources become operational during the next five years, involving investment flows for about US$ 2 billion (30 percent of GDP). Concretely, about 102 MW of new geothermal projects, 118 MW of new wind-based projects, 20 MW of new biomass projects, and 266 MW of new hydroelectric projects are assumed to become operational by end-2016. This would increase the share of electricity produced from renewable sources from the current 30 percent to about 75 percent by 2020.
This is about equivalent to one standard deviation in oil prices for a 10-year period through 2017, as included in the WEO forecast.