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 business sector states that the $53 million debt that the government has with the energy distribution company is preventing them from being able to pay generators, jeopardizing supply.
From a statement issued by the Salvadoran Association of Industrialists (ASI):
BUSINESS ASSOCIATIONS WARN OF A CRISIS IN THE ELECTRICITY SECTOR IF THE GOVERNMENT DOES NOT PAY THE SUBSIDY
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.
The plan is to implement longer terms in contracts and release energy and power demand from large customers.
The Energy Plan 2015-2020 presented by the National Secretariat of Energy in Panama is broken down into two main parts: first, the Short-Term Operational Plan 2015-2019, where proposals for the period are detailed, and second, the National energy Scenarios Plan 2015-2020, including projections of fuel prices and other energy sources and demand estimates, expected changes in the energy matrix and the future role of private companies in the energy system.
On October 20th and 21st entrepreneurs from the region will gather together in Panama City to discuss issues such as the electricity market rules, new and renewable energy projects.
From a statement issued by the International Symposium on Energy:
This year the 8th. International Symposium on Energy seeks to promote spaces for reflection on energy issues, to help analyze the performance and limitations of developing new projects, build consensus, define the options for the energy market and, finally, develop a social impact using the media.
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.
An announcement has been made that solar energy projects that negotiated contracts with the state run power company and begin operating before July 31 will receive an incentive of $0.03 per KW / h.
For renewable energy the price is, according to the National Energy Company (ENEE) is $11.4 KW / h, marginal cost, added to which is the 10% incentive and now on top of this would be added the additional $0.03 for generators operating during the next three months. In total for these companies the price KW / h would be at $15.54.
The private sector will be asking the government to implement a differentiated rate for electricity companies in order to avoid losing competitiveness against the rest of the region.
In light of the governments refusal to reduce electricity rates, the private sector has proposed the creation of a lower differentiated rate for users who consume more than 150 Kw / h per month, which are mostly companies.
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 productive sector has indicated that the savings generated by the reduction in the price of oil should be applied to energy tariffs.
Although this proposal is gaining strength in the context of falling oil prices, the private sector and had actually raised the idea last year. It is expected that later this month it will be once again taken to the Bureau of Energy Sector in order to cover the $ 202 million in debt generated from loans for the subsidy, and to conduct a review of the electricity tariff.
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."
The Ministry of Environment in Costa Rica is considering raising the ceiling on the amount of energy private generators are allowed to produce above the current 15%, but these companies are demanding the elimination of the ceiling and free competition.
Private power generation companies are opposed to pricing and limits that are imposed on the participation and sale of power in the country, and consider it a "discriminatory act".
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