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 US$990 million annually to private generators, which represents about 70 percent of its operating budget, and has an accumulated deficit of US$2.3 billion.
This was reported by Radio Progreso, which pointed out that while the State generates each kilowatt at 2 cents on the dollar, the private sector pays more than 12 cents: it is the second most expensive energy in Central America, only behind Nicaragua.
With the idea of finding out which companies with political or family ties, or even with drug trafficking, usually benefit from these lucrative contracts or why the State has allowed the accumulation of such millionaire debts, Radio Progreso has made a special report to answer these questions.
Thus, through an exhaustive investigation of the mechanisms and business and family networks behind the contracts with the State, this special reports on those who profit from energy production that make 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 greatest 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 companies in which members of the Canahuati family have stakes. Each year ENEE must pay these three groups a total of US$642.1 million.
According to the media, selling energy to the State is not a crime as long as the law is respected, but in Honduras the institutional framework has 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 and the companies obtain more profits at the cost of indebting ENEE and bringing it to the brink of bankruptcy.
The fact is that the State does not have the capacity to produce the energy that the country needs, that is why it is obliged to contract private companies. Juan Carlos RodrÃguez, coordinator of the Coalición Patriótica de los Combustibles, stated 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 RodrÃguez, to get ENEE out of the crisis it would be enough to review the private contracts and strengthen state energy: "let us remember that ENEE's hydroelectric plants produce the cheapest energy, which is around 2 cents on the dollar per kilowatt generated, while at the private level it is paid at 12 cents. This helps us to balance the high tariffs of the private generators and help lower them for the end user".
ENEE began to buy private energy since the 90s, but since 2007, the contracting costs became more expensive due to reforms that encouraged the change of the matrix towards energy production with renewable resources, through tax exemptions, payment of bonds and generation prices, which cannot be assumed by the state. This benefited businessmen, politicians and people linked to drug trafficking, such as trusted executives of "Los Cachiros", who also became energy suppliers.
Mario Rubén Zelaya, specialist in energy issues, explained that the State's policy was: "to pay more per kilowatt hour to private generators, which is irrational". Zelaya regretted that, at the Central American level, ENEE is the only state-owned electric company with a deficit.
For his part, 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 tariffs".
A shared responsibility
All energy contracts go through the National Congress, but before that they must be subscribed by ENEE's management, analyzed by the Electric Energy Regulatory Commission (CREE) and ratified by the Executive Power. It is a shared responsibility, the media pointed out.
Relatives of public officials signed energy contracts while they were in office, in violation of 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), most 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.
The International Monetary Fund (IMF) concluded, in 2018, that contracts with private companies should be revised as an unavoidable condition for the financial rescue of ENEE. That review was unsuccessful because the companies did not agree to lower generation costs.
Following the IMF's recommendations, President Juan Orlando Hernández created an auditing commission, headed 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 choking ENEE.
And he added that in order to save the company from the financial deficit it would be necessary to recover the technical and non-technical losses, and to renegotiate the 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 the thermal companies alone.
According to sources consulted, most of the energy contracts approved in Congress are never socialized, are not discussed and the way in which they were negotiated is unknown. Even so, the State continues to get into debt with millionaire loans to pay private generators.
Radio Progreso pointed out that the pieces that make up this special are a public information service that unravels the network of those behind this business and how they get their hands on energy contracts.
To consult the reports, you can access the following site https://radioprogresohn.net/ or give click here.
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