Production Costs and the Future of Investments

The high energy tariffs paid in Costa Rica compared to other countries in the region and the effects of the monopoly that exists in electricity generation are threats to the local economy and future investments.

Tuesday, November 12, 2019

The alarms about production costs in the country went off weeks ago, after Vicesa, a company dedicated to the manufacture of glass products, announced in mid-October the dismissal of 254 employees working at the Cartago plant. The company reported that it made the decision because of the fall in sales and the slowdown of the local economy.

The most compelling reason for Vicesa, a company that also has industrial operations in Guatemala, was that in Costa Rica it pays 47% more for electricity, compared to what it pays for electricity at its Guatemalan plant.

You may be interested in "Costa Rica: Electric Rate Reduction Announced"

Some businessmen believe that the monopoly of electricity generation, maintained by the Instituto Costarricense de Electricidad, is an obstacle to improving the prices currently paid.

Rolando Charpantier, manager of Vicesa, told Elobservadorcr.com that "... There comes a time when you can't stand up to state monopolies. According to my calculations, operating in the country meant paying 47% more expensive electricity. The situation is repeated in the case of the bunker, whose cost is 16% higher."

The article adds that "... The loss of competitiveness was ratified by the director of the Coalition of Initiatives for Development (Cinde), Jorge Sequeira, and the person in charge of the Special Economic Zone of Cartago, Silvia Hidalgo. Both agreed that the country offers bonuses such as the quality of human resources. But the cost of energy discourages the arrival of new companies and more investment from organizations already installed."

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