The plan to reduce subsidies on electricity tariffs could be executed within four years, between 2018 and 2022, and in coordination with the business sector.
The Ortega administration's plan is to start with revision of the current subsidy schemes and develop a strategy to reduce them gradually.
Bayardo Arce Castaño, adviser of Economic and Financial Affairs at the Presidency, explained: "...The IDB is going to lend us $65 million to make progress in the regulation of the electricity sector.The idea is that this reorganization take place between 2018 and 2022.It is not that tomorrow or the first of January of 2018 the subsidy will be removed or the rate lowered or raised, it is not like that.This is a four-year affair. "
The approved law states that 25.2% of the savings caused by the reduced oil bill will be used to repay the debt of the electricity sector.
From a statement from the National Assembly of Nicaragua:
Deputies to the National Assembly approved this December 13, an amendment to the Law on Variation of the Consumer Electricity Rate, Law 898, which states in Article 4 that of the savings in the electricity tariff due to slumps in the price of bunker fuel, 55.5% will be allocated towards reducing energy rates for residential consumers consuming more than 150 kwh per month.
Industrialists in Costa Rica are opposed to the appeal lodged by deputies against the presidential decree that prevented the rise of 72% in the price of LP gas and 35% in bunker fuel.
From a statement issued by the Chamber of Industries of Costa Rica:
The Chamber of Industries of Costa Rica said that nullifying the presidential decree on Sector Policy, as several Deputies want to do, will affect employment.Last week, deputy Luis Alberto Vasquez Castro and other lawmakers presented an appeal to the Constitutional Court against the decree by President Luis Guillermo Solis of January, a decree that prevented the ARESEP from changing the methodology of fuel prices.This presidential decree, put an end to the disproportionate increase in the price of Liquefied Petroleum Gas (LPG), 72%, and bunker fuel, 35%, which are key materials for the industrial sector.
After lowering the country's sovereign debt rating, the ratings agency also lowered the rating for the electricity company, anticipating difficulties in collecting payments from the Salvadoran government subsidies.
From the press release by Fitch Ratings:
Fitch Ratings-Monterrey-14 July 2015: Fitch Ratings has downgraded AES El Salvador Trust II's (AES El Salvador) foreign and local currency Issuer Default Ratings (IDRs) to 'B+' from 'BB' and revised the Rating Outlook to Stable from Negative. In addition, Fitch has downgraded the company's USD310 million senior unsecured notes due 2023 to 'B+/RR4' from 'BB'.
From July 1st the Energy Compensation Fund will be eliminated and users who demand the most power will pay actual market rates.
From a statement issued by the National Authority for Public Services (ASEP):
Electricity rates corresponding to the second half of 2015 will not be raised, according to the Authority of Public Services (ASEP), the entity that performs a calculation every six months to establish the tariff schemes to be applied in Panama, once the companies EDEMET, EDECHI and ENSA publish their tariff schedules.
The business association of Chiriquí has asked for an adjustment in the prices of electricity, considering that this province and Bocas del Toro generate 60% of the energy produced in the country.
From a statement issued by the Chamber of Commerce, Industry and Agriculture of Chiriqui (CAMCHI):
The meeting on the rise in electricity prices realized held with Roberto Meana, director general of the Authority for Public Services (ASEP), along with representatives from the various productive sectors at the Chamber of Commerce, Industries and Agriculture of Chiriqui (CAMCHI ), the governor of the province of Chiriqui, Hugo Mendez and representatives of the Board of the Hospital Materno Infantil Jose Domingo De Obaldia, developed an extensive debate which brought up interesting proposals to mitigate the impact of rising energy costs in the region, taking into account that between Chiriqui and Bocas del Toro 60% of the country's electricity is produced.
Electricity distribution companies will receive about $300 million less in state subsidies leading them to foresee an increase in rates which will affect the productive sector.
The State will compensate only the Chiriqui electricity distribution company (Edechi) with $27 million and the electricity distribution company Metro-West (Edemet) with $38 million, ceasing to give subsidies to the company Ensa.
The formulas that determine the prices of products sold by the monopoly which is the state run oil company contain factors that create subsidies for gas and asphalt consumers at the expense of gasoline and diesel consumers.
An article published in Nacion.com reports on the results of an investigation into the calculation of consumer prices of automotive fuel, which states that since August 2008 changes have been put into effect to the formulas determined by the Regulatory Authority for Public Services (ARESEP), harming "... consumers of diesel and gasoline, who pay more per liter than the asphalt companies and gas users who save millions from the lower prices."
Photovoltaic projects will have a special incentive of three cents per kilowatt-hour (kWh), which is on top of the 10% established by the Law on the Promotion of Electricity Generation using Renewable Resources.
Elheraldo.hn reports that "... The diversification of the energy matrix is not any way to get out of the financial crisis for the National Electric Power Company.
At a cost of $475 million to state coffers, the Panamanian government has decided to freeze electricity rates for the remainder of the year, and make the upward adjustment in January 2015.
The government decided that the subsidy on electricity rates will remain until at least January 2015.
The measure "... will have a strong impact on the state. They will eventually spend $475 million in energy subsidies by the end of 2014 ...
The subsidy amounted to 25% of consumers bills, and its progressive elimination will mean increased costs for businesses, especially those in the industrial sector.
The change in the allowance applies from July 1st and will only affect customers consuming up to 200 kWh per month, including both residences and businesses.
According to a statement from the Ministry of Economy and Finance (MEF) reported by Prensa.com, "...
The Government is evaluating offers by El Salvador and Guatemala for the supply of 80 MW needed to meet local demand.
The option of importing power from neighboring countries is conditional on the capacity constraints in power transmission lines.
The Minister of Economy and Finance, Frank De Lima said "together with Empresa de Generación Eléctrica (EGESA) an analysis is being made of increasing purchases of power from Central American countries such as El Salvador and Guatemala, among others."
El Salvador's public debt up to May 2013 totaled $13.429 billion, representing 53.8% of gross domestic product in the country.
Eleconomista.net reports that "As of May this year the public debt of El Salvador, as a proportion of gross domestic product (GDP) amounted to 53.8%, representing a total of $13.4294 billion. That means that for every dollar the Salvadoran economy produces, slightly more than half is debt. "
In 1999, government spending on subsidies was $13 million, a figure which has multiplied 30 times, reaching $471 million in 2012.
In an event organized by the Salvadoran Chamber of Consulting Firms (Camsec) and the Union of MSMEs, union president, Jorge Daboub, revealed that while in 1999 the country spent $13 million on payments of subsidies, specifically for liquefied gas oil, by 2012 they had increased to $458 million, which represents an increase of 3523.1%.
The Executive Hydroelectric Commission of the Lempa River (CEL) will transfer this amount to finance subsidies for electric energy consumers using up to 200 kW.
The committee informed the Legislative Assembly of this in a letter sent recently. The disbursement will be made in the first three months of the year.
An article on the website of La Prensa Grafica reports that "the CEL contributed $109.2 million to the Executive last year in order to be used for subsidy payments to the people affected."