Nicanet - The Nicaragua Network

Nicaragua Network Hotlines for February 28, 2007

News topics covered in this Hotline include:

Topic 1: Adjustments to the National Budget reach the Assembly

Minister of Public Finance Alberto Guevara has presented amendments to the 2007 budget to the Economic Committee of the National Assembly reflecting the priorities of the new government. This will increase the budget submitted by the previous government by US$42.8 million, even though the Sandinista government is cutting costs by $US48.3 million by reducing high-level government salaries and a significant 10% cut in the presidency's operational budget.

The adjustments in the budget clearly reflect the priorities of President Daniel Ortega campaigned on such as guaranteeing free public education, better public health services and contributing to the eradication of poverty. The new budget proposal will include an increase of US$7 million to the Health Ministry which will now have US$223 million dollars to work with. The Ministry of Education's new budget will be US$216 million, almost double the budget under the Bola�os government. US$10.3 million has been assigned to the new Small Production Incentives Initiative, which is part of the Zero Hunger plan that the Agriculture and Forest Ministry (MAGFOR) will administer. There are also US$6.8 million for subsidies to government entities ENEL, Enacal, and the Postal Service, and US$22.4 million in debt service for the Inter-American Development Bank.


Return to top.

Topic 2: Shipment of 60,000 barrels of Venezuelan fuel arrives in Nicaragua

 Trade agreements between Nicaragua and Iran, Venezuela and Taiwan are now before a special committee of the National Assembly. After 30 days they will be voted on by the entire legislature. The framework for Nicaraguan integration into the Bolivarian Alternative for the Americas (ALBA) will be one of the principal documents reviewed by this committee.

Venezuelan President Hugo Chavez and Nicaraguan President Daniel Ortega also met in Caracas on Feb. 23 to analyze the advances made in the bilateral energy and social cooperation agreements in the ALBA. This meeting focused on 15 points of cooperation (Venezuela-Nicaragua) which includes 10,000 barrels of petroleum daily, US$20 million in agricultural loans, receipt of the electrical generators and the cancellation of US$30 million in bilateral debt.

As part of the agreements; on February 24 a shipment of 60,000 barrels of fuel arrived at the Port of Corinto. The estimated cost of the shipment is US$260 million and consists of 50,000 barrels of diesel and 10,000 barrels of gasoline. The government owned petroleum company Nicaraguan Petroleum (PETRONIC) will be in charge of storage and distribution of this shipment along with Venezuelan-Nicaraguan company Alba Petroleum of Nicaragua (ALBANIC). According to official sources, within the next 30 days another shipment will arrive consisting of 250,000 gallons of liquid gas and 200,000 cylinders and industrial ovens to be distributed among the general population.


Return to top.

Topic 3: Attorney General revokes concessions to Canadian held company


Due to a “breach of contract” the Nicaraguan Attorney General revoked concessions for geothermal energy exploitation given to Polaris Energy Nicaragua S.A. (PENSA), a subsidiary of the Canadian company Polaris Geothermal Inc. (PGI). One of the principal investors in PENSA is Ervin Krugger, President of the Superior Council for Private Enterprise (COSEP) which watches out for the interests of Nicaragua's big corporations. Krugger negotiated the original contract for PENSA which had the exclusive rights to exploit geothermal energy in the San Jacinto Tizate region, located to the Northwest of Managua. Nicaragua's many volcanoes make this renewable energy source a key to ending the country's dependency on oil burning electricity generating plants.

The state owned Nicaraguan Electric Company (ENEL) gave the rights to PENSA en December of 1999 to operate the power plant for San Jacinto Power SA. The contract established that the government would buy 16 megawatts for the price of 5.95 cents per kilowatt/hour. In exchange the government would provide in-kind investments for the equivalent of US$26 million. According to the Attorney General, PENSA never followed through on its part and it wasn’t until July 2005 that the first plant was up and running, producing only 7 megawatts of the 16 agreed upon.

ENEL supports the ruling by the Attorney General according to Ernesto Martinez, Executive Director of ENEL. Ervin Krugger and his brother, the two principal investors in PENSA, have yet to make any official comments on the ruling.


Return to top.

Topic 4: New electric generators installed but not a single volt produced


Eight of the 32 promised Venezuelan electric generators have arrived in Nicaragua and been installed in the Las Brisas electric plant owned by Generadora Electrica Central S.A. (GECSA). Each generator has the capacity to produce 15 megavolts per hour of electricity. However, the privatized foreign electric distribution company, Union Fenosa, has yet to purchase any power claiming that they need a contract. Nicaragua has had chronic electricity shortages for the past year due to Union Fenosa's failure to buy enough generated electricity, widely thought to be a deliberate tactic to force higher electric rates.

ENEL Executive Director Ernesto Mart�nez stated that they still have not calculated the exact price of production with these new generators, but estimates that a megavolt should cost between US$120-140. Currently Union Fenosa is buying from 17 to 35 megavolts a day from Guatemala and has stated that it is willing to start buying from ENEL instead of Guatemala but that there is no still no contract.

Agustin Jarquin, vice-president of the Energy and Infrastructure committee of the National Assembly, stated that the plants are to provide energy when there is an energy deficit and therefore need no contract. For Nicaragua they represent an answer for emergencies with the goal of diminishing black outs.

Return to top.

Topic 5: Nicaraguan government asks for TPS extension from Florida Senator


Nicaragua has requested the support of Senator Bill Nelson (D-FL) to extend the Temporary Protection Status (PTS) which would benefit 4,111 Nicaraguans who immigrated to the US due to the destruction of hurricane Mitch in 1998. A request was made by Foreign Minister Samuel Santos along with Vice President Jaime Morales, who was also in the meetings with Nelson, during his short visit to Nicaragua before heading to Costa Rica, Ecuador and Peru. The meeting between Santos, Morales and Nelson also focused on the issues of trade, production, education, health and the “war on drugs.”

The TPS, which gives Nicaraguan immigrants permission to reside in the US, expires in July 2007. According to El Nuevo Diario, Nelson stated that the extension seemed appropriate and that it would allow the immigrants to return to Nicaragua gradually.

Return to top.


 This hotline is prepared from the Nicaragua News Service and other sources. To receive a more extensive weekly summary of the news from Nicaragua by e-mail or postal service, send a check for $60.00 to Nicaragua Network, 1247 E St., SE, Washington, DC 20003. We can be reached by phone at 202-544-9355.