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Latin America Investment News on Viva Tropical

Energy Rate in Nicaragua Might Boot Investors

Article Summary:

Nicaraguans are facing an energy rate hike of 20% or more which has advocacy groups screaming that the average citizen’s pocket will pay for the rise of energy costs and investors will driven away by high costs. Meanwhile government officials are saying the figure is dependent on if Venezuela will pay $ 108 million to maintain the service which is subsidized electricity in Nicaragua.

Against this shaded scenario is the Superior Council of Private Enterprise (COSEP) who insists that the Nicaraguan government must be responsible for payment if a rate increase is adopted, not Venezuela, or stand the chance to loose its footing as a choice of investors.

Original Article Text From La Prensa Nicaragua via Google Translate :

Boost Investment Scares
They are $ 600 million of private investment which would be in danger if there is not an increase of 20% in the cost of electricity.

 Along with that impact would be added the direct damage to the economy of average Nicaraguan family, because from all business sectors and plans are ready to make job cuts if there is an energy rate increase. And if that is not enough, the citizen’s pocket will pay for the rise of energy in two ways, consumer products and services.

Against this murky scenario is the Superior Council of Private Enterprise (COSEP) who insists that the Government must be responsible for the rise in the percentage if it adopted.

Between now and Friday morning Daniel Ortega’s government would make the official announcement of the increase in electricity tariff. A measure that will indicate if the private sector and consumer advocacy organizations were effective in helping to maintained even part of the rate.

Engineering calculations of the Nicaraguan Energy Institute (INE) and Ministry of Energy and Mines (MEM), indicate that the increase should be from 20.2 percent to cover the actual costs of generation and purchase of energy service delivery.

But the figure is subject to whether President Ortega that Venezuela gets 70 to pay $ 108 million to maintain service subsidized electricity in Nicaragua.

Jose Adan Aguerri COSEP president reiterated that the rise of 20.2 percent will push economic growth expected this year, it will leave “in a difficult situation the country competitively” to continue to attract investment.

Aguerri are reminded that $ 850 million in Foreign Direct Investment (FDI) projects captured in 2011, where most are running or prior to materialize in 2012.

COSEP says at least $ 600 million investment from private firms or unrelated to Venezuela with the Bolivarian Alternative for the Americas (Alba).

Aguerri was clear that if you are not careful in how it affects the cost structure of production in Nicaragua, just drive out investment.

As President of the Chamber for Fisheries, Armando Segura, said the plants will not stand finish and will have to reduce production shifts, which will result in unemployment.
Donald Tuckler, the poultry sector, confirms that the costs would be transferred to the sales price to the consumer of poultry meat.

David Castillo, executive director of INE, acknowledged that “reasonable” is a 10 percent rise in energy prices. But he said the way to cover the 10.2 percent differential which should increase the rate in Venezuela is to obtain financing for 70 million dollars. According to INE, if desired subsidize all the upside, the figure would be $ 108 million.
Although to avoid problems with the International Monetary Fund (IMF), Ortega Venezuela seeks to give him the resources under the same conditions as above, ie, without interest and within 30 years.

Those who are protected are consuming less than 150 kWh per month. Although it should allocate an additional $ 19 million to $ 38 million already provided in the General Budget of the Republic 2012.

The director of the Institute of Consumer Defense Institute (INDEC), Marvin Pomares, agrees with an increase of 10 percent and achieved no doubt that the loan Ortega of Venezuela.

As the Coordinator of the National Consumer Defense, Jorge Rooseess, that percentage would be considered to avoid negative political cost, but that any rate increase must be approved while three members of Board of Directors of INE periods have expired because their resolutions would be illegal.

Gustavo Porras, the “political commissars”
Meanwhile, Gustavo Porras, general secretary of the National Workers Front (FNT), said to be alert for producers and traders not to transfer the rise beyond the stipulations. According to him, there is often speculation on prices and profits of the subsidies have no effect.

Link to Original Article:

From La Prensa Nicaragua

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