What to do about Union Finosa

Submitted by fyl on 8 November, 2006 - 11:33.

Union Finosa, a Spanish multinational corporation, currently has the sole-source contract for distribution of electricity in Nicaragua. This contract was a result of mandated privatization of much of government infrastructure (by the IMF).

Note that Union Finosa does not generate electricity. They buy electricity (primarily from ENEL). They only are responsible for distribution.

For a number of reasons which include increasing fuel prices, low rainfall, old and sometimes unreliable generation facilities, limited cross-border intertie lines and electricity theft by consumers; services have been unreliable.

What should Nicaragua do to address this problem?

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Impact fees

Submitted by Former NL Member on 9 November, 2006 - 09:41.

In the US, when large commercial developments are master permitted, the developer pays an impact fee to bring utilities in, and passes that along to the property buyers.

The big Rancho Santana type developments will, I'm sure, use far more electricity per house than the average Nicaraguan house, so if these developments aren't paying to have the utilities brought to the site, that's the only fair way to get it done.

Rural electrification has been done all over the world, for examples to follow. What is the demand for electricity on remote farms, where the've learned to do without it? Do they want electrical power, and how will they pay for it?

Looking for this answer

Submitted by fyl on 9 November, 2006 - 10:17.

In some of the areas where I have been--that is, visiting family or friends of family--they didn't have electricity. In these areas there would be no TV reception (a valley in the middle of Miraflor, for example) and I don't think they plan on buying a vacuum cleaner. So, the practical use would be some lights at night and a radio.

Lights at night seem to be a combination of flashlights, candles and occasionally a kerosene lamp. Radios are battery operated. One pulpuria or bar might have a generator--mostly to keep the beer cold.

The people don't have capital to support running in electricity. They probably do have the money to pay for minimal usage as they would no longer need to buy batteries, kerosene and candles. But, at such low consumption levels, that will never pay off the costs of running in the lines.

I have been looking into an alternative. I bought a package made in China about five years ago that consisted of 45W of solar panels, a charge controller and one 12V, 20W florescent light. In other words, just add battery and you have a system. It works fine but it cost $400.

I am negotiating with a company now to get samples of a new system over here to check out. Similar except it has two lights and an output to power a radio. The cost should be quite a bit lower.

If it works out I feel that the next step is to get find a way to finance the systems. That could be a bank interested in small loans or it could be through government loans. Hopefully the money would be available because of the decrease in costs of running rural lines to these low-demand areas.

Small scale options

Submitted by cjtowerman on 9 November, 2006 - 16:51.

In Honduras the trusted "car battery" is often the answer. Works fairly well for some things, a very limited "some". Drawback? Carrying it and the others miles down the road or on the bus for a recharge. About 5 years ago some guy tried a program using a human power crank devices (sorry, I do not recall him name nor that of the product) to power direct small things or recharge small batteries. You could insert a an l-arm and crank it, or attach the device to a driver wheel, powered by a bicycle tire with the bike on a stand kinda like an exercise bike design. It has a gearbox but such a device has obvious drawbacks. Nothing came of it, mostly because people tend to break and or not maintain it, so it has a short life span. There are currently cheap(er) battery-less devices around in the markets, mostly flashlights and radios. Solar has never worked here, not even the solar oven. Mostly due to theft and and a lack of care, or a willingness to try to repair almost anything with a hammer (or a rock, or whatever, if the hammer cannot be found). I wish things solar had a better chance here in Honduras, but they do not seem to. As far as I know, 2 of the 4 solar outfits in Tegus have gone under in the last 2 years. Not sure what became of their large inventories.

It has to "just work"

Submitted by fyl on 9 November, 2006 - 20:23.

I agree that as soon as you add the "needs to be maintained" you have a problem. For example, the "use the battery until it is dead" approach kills batteries quickly.

Thus, the trick is a system consisting of the panels and a controller that also runs the equipment. If the batter gets very low the controller shuts stuff off preventing the battery from being damaged.

While sealed batteries cost most they are also a "you don't need to do anything" piece of the equation. We'll see but I think there is potential for the right system.

.

Submitted by FNLM on 9 November, 2006 - 13:56.

One of the other problems which Fenosa faces involves the communities that do have powerlines, yet are charged minimal amounts. For instance, my family in Reparto Schick, and las jaguitas are charged flat rates. The bills are about 75 cordobas a month.

Now in one household they have 2 televisions a full size fridge and a large freezer, stereo system, plenty of lights, fans etc. They have more in their house than in my house, and it runs most of the time.

Granted in my home I have only been paying without construction going on about 150 cords and 250 cords with construction per month, due to the discount that is on our bill, and our house is metered and completely legal.

I suppose for what we have running in our home, in a neighborhood like yours or Huehuete Bob's it may be closer to $80 - $100 a month, just a guess.

If 75% of the country is impoverished, Fenosa or the government can't continuously give Discounts or flat rates to this percentage of the country, there is a lot of money being lost.

As you get into the more rural areas, off on the dirt roads, I have seen plenty of powerlines up, and plenty of ilegal ones as well.

That's what I was thinking, too

Submitted by Former NL Member on 9 November, 2006 - 10:22.

To hell with the grid, and government power over the individual. A solar system for a farm house is perfect.

There will be someone somewhere who will finance it, hopefully with no strings attached. Go for it!

Consumer Theft

Submitted by carina_cisneros on 8 November, 2006 - 20:55.

That aspect should not be underestimated in any alaysis. It is so prevelant that it might be hard to calculate in a broad estimate. It is not hard to find thieves especially large ones. With employee salaries what they are it is usually cost effective to looks for and find the people and rectify the situation as best as is possible. I think they have a better chance of fixing it ifs the government takes over again than if not. In parts of Honduras near me using new meters in new locations has increased reveneue 165-260% in some locales. And, some outages which were thought to be from overuse were sometimes not from that at all but from people shorting the systemwide trying to tap into for free by splitting older meters (which was easier on the old ones). It is unclear right now how long the "improvement" will last though. People can get creative when something can be free!

I never thought that I would say something like this.

Submitted by Jack Davies on 8 November, 2006 - 20:33.

You know that I believe that Private Enterprise can do anything better than the government but in the case of Electricity distribution in Nicaragua I believe the government should take over the task. They should compensate Union Fenosa for the little investment that they have made in Nicaragua and kick them out. The government can then install power lines into areas that are not economically feasible for Fenosa to do and they can make sure that the wires are big enough and local installations are up to code.

They are now paying Union Fenosa a bonus to make up for any stolen electricity and unpaid bills which is why they just ignore them, they are getting paid anyway. The government could use the money saved to crack down on the stealing and do a better job of collecting outstanding accounts.

Whether or not Union Fenosa remains in control laws should be passed to allow private individuals to be paid for any surplus electricity that they return to the grid. We have been doing that for quite a while in California and it works.

Nicaragua gets some of its electricity from geothermal sources. Incentives should be given and a better rate paid to companies that are willing to tap into all this latent power. The same thing goes for wind power and power produced by burning vegetation such as sugar cane. With a stable friendly government and better policies to induce investment Nicaragua could be selling power to the rest of Central America instead of buying oil to run diesel generators.

The Challenge

Submitted by buddyruff89102 on 8 November, 2006 - 21:02.

The government produces the union fenosa distributes figure it out.

Union Fenosa

Submitted by Alra on 8 November, 2006 - 20:25.

To stabilize the electrical power supply in Nica., the first priority should be, to take the power generating and/or purchasing, the power operating, distribution, maintenance, design/engineering and construction, away from private enterprise speculators such as Union Fenosa and return it to the state.

The state officials, are accountable to the citizenry, while private enterprise is accountable to the bottom line.

Without normalizing the electrical supply, there's no progress in any other area.

When does the IMF mandate for privatization ends?

Al

You have it all wrong Alra

Submitted by Jack Davies on 8 November, 2006 - 23:08.

Union Fenosa generates NO power itself. The government generates almost all of the electricity. Fenosa does buy a small quantity from a private geothermal source but they don't pay enough in my opinion to encourge more production.

Union Fenosa is simply the distributor. They put up the poles and string wire to those areas that they think will generate revenue.

It should be the other way around. Private companies can supply cheaper electricity and the government should distribute it.

Union Fenosa generates NO power. The government generates lnmost all of it. Union Fenosa does buy a small percentage from private geothermal sources but they don't pay enough to encourage more.

Union Fenosa is simply the distributor.

Union Fenosa Does not generate Power

Submitted by Alra on 9 November, 2006 - 20:37.

It purchases/buys it.

My blog says: "Take the Power generating and/or purchasing......etc away from private speculators such as Union Fenosa"

Your blog reads: "Union Fenosa does buy a small percentage from private geothermal sources"

The actual situation: Union Fenosa has an ongoing contract(amongst others)with the Polaris-San Jacinto Tizate geothermal plant that is located in the Dept. of Leon, to purchase/buy electrical power and the UF's requiremet is to have The Polaris Geothermal plant to generate 66MW to meet the local electrical needs.

Any power in excess of 66MW can be sold in the open market.

Are there any sweet deals cooking between the U.F. and Polaris?

You can get Info. at www.polarisgeothermal.com also check The Momotombo Power Co. a subsidiary of Omar International at www.ormat.com

Note: Power Generating

Power Distribution

Power operating and Maintenance

Power Design and Construction

Are designated names that are/were used within the structure of the Dept. of Water and Power, here in L.A. Other similar names are used throughout the power industry.

Al

JD

Submitted by toms on 9 November, 2006 - 18:04.

What you say here is what was done in Port and the problems have been a lot less...

Lyin' Farmer John Wayne

The problem can be

Submitted by GranadaSherif on 8 November, 2006 - 12:17.

divided into 3 distinct issues:

1. Generation; need more facilities, updated facilities etc.. No matter what the technology is, there is a need to generate more.

One solution suggested by a group of students as part of a post graduate program in Operations Research/ Management Sciences in my University days in Canada working with Manitoba Hydro, was decentralized generation, meaning allowing individual homes to generate power (Solar, Wind, etc.) and self sustain, and feed the excess into the grid...possible here and with a relatively small investment by potentially a new type of a Generation company...

Another important Government measure will be to remove IVA and Duties on imports of alternative Power Generation equipment including Solar, wind, wave, etc...

2. Poverty, Culture and law enforcement... One part of The problem of theft is poverty... This is a much bigger issue, but can potentially be reduced by decentralized generation.

Also enforcement of laws and handing down some judgements against thieves, will go a long way to curb it...

Many people here who can afford to pay their bills choose not to. This is a problem of culture in many cases rather a problem of poverty.

3. Distribution... While the UF has generally pissed a lot of people off, i I know the the power problem was always there even back in 1998. Even then Managua, Bluefields, and other regions were plagued by power shortages and brown out.. So the problem is not UF (even though their attitude sucks and the consumers need some form of Ombudsman and an effective way to deal with consumer complaints)

Having said that i think Ortega will probably deal with UF by either cancelling their contract and offer it up for new Bids or forcing some major policy changes (namely the way they deal with customers)... I do not think he will nationalize distribution again and risk upsetting relationships with the IMF.

There was the COPALAR

Submitted by Nicabuff on 8 November, 2006 - 21:23.

There was the COPALAR project that was about to be launched, whatever happened with that. I realize that it's a medium term project but it was start. Apparently the Sandinistas tried to build it with Belorussian help in the 1980's. This time they can build it with the resources appear to be willing.

Regarding the FENOSA question. It would look horrible if the government kicked the company out, such rash decisions will scare investors immediately, especially coming from a Sandinista government.

The generators of electricity should distribute the energy. If a generator happens to be the government, it should be an autonomous entity with no partisan interests and highly competent.

Copalar

Submitted by Jack Davies on 12 November, 2006 - 15:30.

The Copalar project feasibility studies were done in the seventies but was deferred because of the wars in the seventies and eighties. They tried to restart the studies in the nineties.

Copalar is the largest of 12 projects studied. If completed it would flood part of the basin of the Rio Grande of Matagalpa, 21 of the rivers that feed it and the surrounding valleys.

There would be 4 dams built. The largest almost 1km wide and 200 meters high in Blunt Dog. The reservoir would cover an area half the size of Lake Managua.

It is supposed to generate twice as much energy as Nicaragua presently uses. The energy would be fed into the Siepac grid that connects similar projects from Panama to Mexico.

Bolanos and Vincente Fox have already signed an agreement in 2003. The consortium is called HydroCopalar and it is composed of Projects and Planning of Mexico, VOIT of Switzerland, and Siemans of Germany.

Siepac involves:

el Pan-American Bank of Development (BID), the Spanish Government, six Central American State businesses and the Spanish company Endesa.

Meetings have been carried out on Copalar among representatives of the National Assembly, officials of the Nicaraguan Institute of Territorial Studies (Ineter), the mayor of Paiwas and the neighboring mayors of White River and Matiguás, but all behind closed doors.

My personal comments:

In Guatemala they built the large Chixoy dam 20 years ago and only compensated the people displaced with the assessed property value. That is not good enough in my opinion.

A similar environmental mess was also made at El Cajón in Honduras.

In a country like Nicaragua where there is so much potential for other energy sources such as geothermal, wind and solar I don't think that it is necessary or desirable to carry out a project that would cover so much good farm land and displace so many people.