Costa Rica Restricts Investments in Electricity

An editorial in Nacion.com describes the limitation imposed by the law on the investment of private capital in electricity generation as "a cap on development" .

Monday, August 15, 2011

Private companies are not allowed to build plants of over 50 MW of capacity. When an investment is made with a view to exploiting the plant for its entire lifetime, without a transfer to state power company ICE, the limit drops to 20 MW. There is a ceiling of 30% of the national installed capacity imposed on private enterprises as a whole.

The current regulations limit of course, the development of electricity generation and foreign investment. It also imposes limits on the size of the infrastructure that in a couple of decades will pass into the hands of the ICE, operating as a disincentive to development in general, which is inevitably linked to increases in electricity consumption.

It is impossible to make sense of so many self-imposed limitations, especially when the ICE is maintaining, in accordance with current legislation, the role of monopoly buyer and distributor, to the relief of those with pro-state sensibilities. The country could make good use of all energy produced, but it is worth pointing out that the circumstances of the global economy will intensify competition for foreign investment.



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