By Peninsula 360 Press [P360P] with information from Radio Progreso
The National Electric Energy Company of Honduras (ENEE) is on the verge of bankruptcy. It pays $990 million annually to private generators, which represent about 70 percent of its operating budget, and has an accumulated deficit of $2.3 billion.
This was reported by Radio Progreso, which highlighted that while the State generates each kilowatt at 2 cents of a dollar, the private sector pays more than 12 cents: it is the second most expensive energy in Central America, only below Nicaragua.
In order to find out which companies with political or family ties, or even with drug trafficking, tend to benefit from these lucrative contracts or why the State has allowed this multimillion-dollar debt to accumulate, Radio Progreso has produced a special report to answer these questions.
Thus, through an exhaustive investigation of the mechanisms and business and family networks that are behind the contracts with the State, this special report reveals who profits from the energy production that makes up companies and financial maneuvers to try to hide their real names.
The reports highlight that in Honduras there are three business groups that make the most profits from private energy production: Grupo Terra, owned by businessman Fredy Nasser; Grupo Iresa and Lufu Quessa, linked to companies owned by members of the Larach and Kafie families; and commercial companies in which members of the Canahuati family have shares. Every year, ENEE must pay these three groups a total of 642.1 million dollars.
According to the media outlet, selling energy to the State is not a crime as long as the law is respected, but in Honduras the institutions have been vulnerable to the influence of business elites, politicians and even people linked to drug trafficking.
The result is that the State pays more than it needs to and companies make more profits at the cost of putting ENEE into debt and bringing it to the brink of bankruptcy.
The State does not have the capacity to produce the energy that the country needs, which is why it is forced to hire private companies. Juan Carlos Rodríguez, coordinator of the Patriotic Fuel Coalition, said that the problem lies in the conditions under which this service is contracted, since it is not governed by market values and, furthermore, because government administrations have never seen the strengthening of state generation as a strategic development mechanism.
According to Rodríguez, to get ENEE out of the crisis, it would be enough to review private contracts and strengthen state energy: "remember that ENEE's hydroelectric plants produce the cheapest energy, which is around 2 cents per kilowatt generated, while at the private level it is paid at 12 cents. This helps us to balance the high rate of private generators and help lower it for the end user."
ENEE began buying private energy in the 1990s, but from 2007 onwards, contracting costs became more expensive due to reforms that encouraged a shift in the matrix towards energy production with renewable resources, through tax exemptions, bonus payments and generation prices, which cannot be assumed by the state-owned company. Businessmen, politicians and people linked to drug trafficking, such as trusted executives of “Los Cachiros”, who also became energy suppliers, benefited from this.
Mario Rubén Zelaya, an energy specialist, explained that the State's policy was to "pay more per kilowatt hour to private generators, which is irrational." Zelaya regretted that, in Central America, ENEE is the only state-owned electricity company with a deficit.
Economist Claudio Salgado explained that, given ENEE's inability to pay for the private energy it contracts, the State has to "ask for loans to pay the generators. These loans will be paid by the people through taxes and high energy rates."
A shared responsibility
All energy contracts go through the National Congress, but they must first be signed by the ENEE management, analyzed by the Electric Energy Regulatory Commission (CREE) and ratified by the Executive Branch. It is a shared responsibility, the media said.
Relatives of public officials signed energy contracts while they were in office, violating the State Contracting Law. This is the case, among others, of the former vice president of the National Congress, Gladis Aurora López.
According to audits by the Superior Court of Accounts (TSC), a large part of the generation contracts have been signed in violation of the law; in the case of photovoltaic energy, they were signed at the highest price in Central America.
In 2018, the International Monetary Fund (IMF) concluded that contracts with private companies should be reviewed as an essential condition for the financial rescue of ENEE. This review was unsuccessful because the companies did not agree to lower generation costs.
Following the IMF's recommendations, President Juan Orlando Hernández created an intervention commission, led in the first instance by the Minister of the Revenue Administration Service (SAR), Miriam Guzmán, who reported that there are currently 98 high-cost contracts that are financially drowning ENEE.
He added that to save the company from its financial deficit, it would be necessary to recover technical and non-technical losses and renegotiate contracts with the generators: “the cost of generation is very high, Honduras needs to become competitive.” ENEE pays more than 495 million dollars a year to thermal companies alone.
According to sources consulted, most energy contracts approved by Congress are never socialized, are not discussed and the way in which they were negotiated is unknown. Even so, the State continues to go into debt with million-dollar loans to pay private generators.
Radio Progreso pointed out that the pieces that make up this special are a public information service that details the network of those behind this business and how they obtain energy contracts.
To consult the reports, you can access the following site https://radioprogresohn.net/ or give click here.
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