Energy: Law Reformed in Nicaragua

After the National Assembly modified the Law for the Promotion of Electricity Generation with Renewable Sources and its reforms, clean energy generators will be able to negotiate the lowering of current prices and in exchange they will receive five additional years of tax exemption.

Wednesday, September 9, 2020

The initiative, urgently submitted by President Daniel Ortega, exposes the voluntary negotiation process being carried out with electricity generators from renewable sources for the benefit of the Nicaraguan population and the country's economic sectors, the National Assembly reported.

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The incentive offered to renewable energy generators to negotiate downward the current prices, consists of granting five additional years of exemption from the payment of Income Tax (IR) and the final minimum IR payment.

For Representative Walmaro Gutierrez, president of the Production, Economy and Budget Commission, this reform will allow "... a significant reduction in the rate of electric energy, which is a demand of all sectors of the country and will have a significant impact on the pockets of Nicaraguans, as well as on industry, commerce, and the agricultural sector, among others."

Laprensa.com.ni reviews that "... the reform motivates clean energy generators to voluntarily negotiate at current prices Power Purchase Agreements (PPAs), so that the new agreed prices do not exceed the ceiling of 6.5 cents per kWh."

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More on this topic

Tax Exemptions for Renewable Energy

December 2017

Until 2023 renewable energy projects in Nicaragua may opt for the exemption of import duty on machinery and equipment, VAT, income tax and municipal taxes.

The National Assembly approved a reform proposed by the Ortega administration to extend the term of tax benefits for energy generation projects with renewable sources. The law established that the maximum period to opt for exemptions was January 2018, but now they will remain in place until January 2023.

Renewable Energy Tax Incentives Extended Until 2023

November 2017

In Nicaragua, the Ortega administration is proposing to extend tax benefits for energy generation projects using renewable sources for another five years.

Continuing with the strategy of promoting energy generated from renewable sources, the government is proposing extending tax incentives for these types of projects, as it did in June 2015. At that time, the benefits were extended until January 2018. 

Nicaragua: Price of Renewable Energy

September 2015

Considering the decline in oil prices a draft law states that prices on contracts for renewable energy generation must be lower than the price of thermal energy.

The proposed amendment to the Energy Stability Law aims to ensure that the price contracted with renewable generators is always less than the price of thermal power generation.

Nicaragua: Tax Incentives for Renewable Energy

May 2015

The Executive has submitted a reform bill to extend tax benefits for investments in renewable energy projects until January 2018.

Among the tax incentives that exist for investment in renewable energy is exemption from the "... Import Custom Duties (DAI), Value Added Tax (VAT) and Income Tax (IR). "

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