Nicanet - The Nicaragua Network

Nicaragua Network Hotlines for June 19, 2007

News topics covered in this Hotline include:

Topic 1: Electricity crisis grows worse

Blackouts increased June 12 due to an energy deficit upwards of 130 megavolts, now that several energy generating companies lowered their production. A spokesman for Union Fenosa explained that the crisis is due to several energy generating companies that are not producing energy or are not producing at full capacity. He said that Union Fenosa has plans to purchase 40 megavolts in Guatemala, at a price of US$170 per megavolt per hour. He also announced that 25 more megavolts will be imported as soon as a contract with Guatemalan companies Econo-Energy and Excenergía is signed.

On June 13, Union Fenosa announced its plan to ration electricity nationwide for up to eight hours a day after two major blackouts that left half a million consumers without electricity. The fact that they actually have a plan will come as a surprise to many, especially in Managua, who have been without power for 10 hours a day and sometimes lasting more than 24 hours for weeks. According to Minister of Energy and Mines, Emilio Rappaccioli, the main cause of this power crisis is the lack of investment from private and state capital in this sector and the lack of maintenance of the generating plants. Rappaccioli said that since June 5, the capacity available in Nicaragua is 430 megavolts, which has increased to 468 megavolts due to the daily purchase of 18 megavolts in the Central American market.

President Daniel Ortega received energy generation plants from Venezuela at the beginning of his term; however these 60 megavolts of production have not been sufficient to end the deficit.

Rappaccioli announced that as of June 21, the government will begin distributing 1,600,000 energy-saving light bulbs to substitute incandescent bulbs. They will be distributed at low prices by companies that are affiliated with the Nicaraguan Institute of Social Security, as well as through the police and army, for a period of two months.

The government has not rejected the possibility of declaring a power emergency situation due to the worsening of the energy crisis. On June 18, Union Fenosa said it will increase energy imports in order to diminish the electricity rationings in Nicaragua. However they alerted rate payers that in spite of the increased imports of electrical energy, coming from the Central America market, the power deficit surpasses 60 megavolts per hour per day. That deficit is nearly 13% of the national demand. Blackouts will continue for up to 7 hours a day.

Union Fenosa was fined US$2.46 million on June 11 by the Direction of Consumer Defense of the Ministry of Public Works, the Economy, Industry and Commerce (MIFIC) for failing to comply with judgments in favor of 850 consumers. Union Fenosa argued that it does not recognize MIFIC as an agency to regulate consumer complaints, and that according to electrical industry law, consumers must go before the Nicaraguan Institute of Energy (INE) with their claims. However, in 2006 MIFIC reports an instance in which the Supreme Court ruled that if Union Fenosa did not pay a fine in 15 working days, the sanction would be doubled; however, the terms would only apply if the electrical company resorts to the Supreme Court’s protection.


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Topic 2: IMF “turns the screws”

La Prensa headlined last week that the International Monetary Fund (IMF), which has been negotiating a new agreement with the Nicaraguan government for several months now was “beginning to turn the screws,” adding that the IMF was imposing its conditions in a third statement to the government. As readers of this space know, the IMF has been turning the screws on Nicaragua for some time now. Central Bank President Antenor Rosales said at a meeting of business people that the IMF would not recognize as legitimate the parts of a government economic and financial plan that deal with the social goals proposed by the administration of President Daniel Ortega.

“That’s what they told us yesterday,” Rosales stated on June 13. The goals that the IMF recognizes, he said, are those that can be measured and that reflect the economic growth of the country. Nevertheless, Rosales denied that this meant the government would have to change its economic program. “We will push this economic and financial program ahead with or without the IMF,” he said. This is an example of precisely why IMF prescriptions have been such a disaster for most people in Latin America. The economic theories they fanatically adhere to are incomplete due to the fact that they leave out the value of a child’s education, a parent’s health, and the value of a standing tree.

The IMF also rejected the government’s proposal to reduce the rate of growth in the country’s foreign exchange reserves to 2.1% of total money in circulation in the country. The government and the IMF had already locked horns over this when the government first proposed the increase of only 2.1%. The IMF maintained that the amount in reserve should be calculated based on the value of three months of imports as was done by the Bolaños administration. Presidential economic advisor Bayardo Arce, however, said that the government’s proposal was “on the same wave length as the manual of the IMF itself.”

Arce also revealed that the IMF had approached the government with the proposal to let the country’s currency float with a free exchange of córdobas for dollars. Central Bank President Rosales said that officials and economists he had consulted agreed that conditions did not exist in Nicaragua for such measures.

On June 14, the Central Bank president was scheduled to fly to Washington to begin another round of negotiations. Business groups that met with Rosales agreed that he had taken a good step in informing them about the government’s economic strategy.


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Topic 3: Government reports on property disputes to US embassy

The government of Nicaragua has again had to carry out the humiliating exercise of reporting to the US ambassador on progress in resolving property disputes of so-called US citizens. The late and unlamented Sen. Jesse Helms sponsored the Helms Amendment that the president of the United States must annually certify that progress is being made to resolve the claims of US citizens. Without this “waiver” US aid to Nicaragua would be automatically cut off.

By far the majority of the cases are Nicaraguans who later became naturalized US citizens. The disputes are over property confiscated in the early 1980’s, in most cases justifiably so, from those who committed human rights violations as part of the Somoza dictatorship, and from those who mortgaged their properties and then left the country taking the money with them. Cases where property was illegitimately confiscated were mostly resolved years ago. The new government has paid US$6.3 million to U.S. citizens who had property confiscated during the Sandinista revolution, said Attorney General Hernán Estrada.

Estrada met June 12 with US Ambassador Paul Trivelli to give the report. Estrada said that during Daniel Ortega’s presidency, they have been managed to solve 85 U.S. citizens’ claims cases. Since 1990, at least 27 laws have been passed to try to end the property disputes, but part of the problem is that Nicaraguans continue to gain US citizenship in order to add their dispute to the list of unresolved complaints.


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Topic 4: Nicaragua-Taiwan Free Trade Agreement held up

The Free Trade Agreement between Nicaragua and Taiwan has been delayed because supposedly the Nicaraguan government does not have the US$5,000 for publication of the agreement in the official newspaper La Gaceta, a requirement for the agreement’s legalization. Official publication is the final step for the Free Trade Agreement to have the force of law.

The ambassador of Taiwan in Nicaragua, Ming-ta Hung, revealed that they “have heard from their government official friends” in the Ministry of Public Works, Economy, Industry and Commerce (MIFIC), that are no funds for the publication of the text. He said that their Embassy does not have the funds either. This is, of course, a diplomatic minuet to give Nicaragua time to figure out how it can restore normal relations with China while keeping lucrative trade and aid deals with Taiwan. Taiwan moved aggressively in Central America a number of years ago to buy friends who would support in the United Nations its efforts to break away from China. China and Nicaragua had close relations in the 1980s which the government is now trying to refresh without hurting its business relations with Taiwan.

MIFIC Spokesperson Horacio Brenes said during the inauguration of the Seventh International Convention of Exportable Products (ExpoApen 2007) that the commercial strategy of Nicaragua is to maintain relations with all countires of the world where there are business opportunities and rejected the allegation that China is pressuring the government to break relations with Taiwan. Ambassador Ming-ta Hung also expressed confidence that the diplomatic and commercial relations between his country and Nicaragua will continue like they have during the past 16 years.

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Topic 5: Catholic Church wants to reclaim the old Cathedral of Managua

The church will ask President Daniel Ortega to return the old Cathedral of Managua so that it is under the administration of the church, said Archbishop of Managua Monsignor Leopoldo Brenes. It was built in 1931 and heavily damaged by the earthquake of 1972. The area was expropriated in 1973 by Anastasio Somoza Debayle to prevent reconstruction on the unstable soil above a major fault line. The cathedral is considered unsafe to enter in its current condition.

Monsignor Brenes said in other countries many churches that are historical monuments are under the administration of the Church, as is the case in Costa Rica “where a church was constructed and was damaged by an earthquake, it continued under the [administration of the] Church.” In March 2004 the then president of Mexico, Vicente Fox offered aid to restore the old Cathedral of Managua. The architectural beauty of the Cathedral of Santiago made an impression on Fox. Today, the old Cathedral still awaits its restoration. Recently, the director of the Institute of Culture confirmed the existence of financing to restore the cathedral and use the church for cultural activities.

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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 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. 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.