Honduras: first diplomatic brush between the leftist government of Xiomara Castro and the US, over energy reform

The Government of Xiomara Castro sent a project to Congress for a structural reform of the electricity sector.

Photo: Deutsche Welle/JOHNY MAGALLANES/AFP/GETTY IMAGES / copyright

“Energy reform is critical for economic development. We are analyzing the energy proposal and as a written document we are concerned about the effect it will have on foreign investment and the independence of the energy regulatory agency,” the US ambassador to Honduras, Laura Dogu, wrote on Twitter this Tuesday (05.03.2022).

The comment was not well received by Foreign Minister Eduardo Enrique Reina. “Mrs. Ambassador. You have been received with open arms. The energy reform is urgent as a State, it fights an inherited situation of corruption and poverty”, he answered.

“We are concerned about your misguided opinion on domestic politics, which does not contribute to good relations with the US,” he also warned on the same social network.

Full diplomatic relations just resumed

Dogu took office on April 12, in the full resumption of diplomatic relations between the United States and Honduras, which had been maintained at the chargé d’affaires level since 2017.

The sending of an ambassador was interpreted by the new Honduran government, which took office on January 27, as a signal from the Joe Biden administration to strengthen relations with Castro.

The United States has made it clear that it supports the fight against drug trafficking and corruption in the country, and supports plans to contain the massive migration to its territory, from a country with 73 percent of its households in poverty.

“Public good of national security and human right”

Castro’s government sent a bill to Congress on Monday for a structural reform of the electricity sector, which includes reviewing contracts with thermal, wind and other generators to lower the price per kilowatt hour.

The project establishes that, “in the event that renegotiation is not possible, it is authorized to propose the termination of the contractual relationship and the acquisition by the State” paying the “fair value” of the plants.

The draft Special Law on Electric Power was presented this Tuesday in the Honduran Parliament, which indicated that the objective of the norm is “to guarantee the electricity service as a public good of national security and a human right of an economic and social nature.”

“leonine” contracts

Honduras has a demand of about 1,700 megawatts, of which more than 60 percent are generated by thermal plants that work with petroleum derivatives, which represents a very high bill for the country. A score of private generators supply 60 percent of this demand.

According to experts, previous governments negotiated “leonine” contracts with generators for the high prices at which they set the kWh, well above the prices of other Central American countries. Official deputies denounce irregularities in the approval of these contracts.

The Castro government promised a definitive solution to the problem because the state electricity company (ENEE), which buys energy from private generators to distribute it to some two million clients, has a debt of close to 3,000 million dollars with them.

rml (afp, efe)