Honduras secures multilateral loan for power overhaul

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Friday, December 12, 2014

Honduras' government has secured multilateral financing to support power sector reform.

IDB approved a US$130mn loan to advance efforts to improve financial sustainability and operational efficiency.

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"The power sector, one of the pillars of the country's economic development, currently faces a number of challenges, including lack of a clear definition of its operating and regulatory institutions' structures, as well as insufficient resources, which have pushed it to the brink of financial unsustainability and affected service quality, triggering fiscal, development and competiveness concerns," the regional lender said in a statement.

IDB highlights that state power company Enee's technical and non-technical losses reach 10% and 21%, respectively. Bill collection is another hurdle for Enee with past-due accounts estimated as equivalent to 3.2 months of billing, adds the bank.

Latest Enee financials reveal the company in October saw losses widen to 992mn lempiras (US$47mn) from 485mn lempiras a year earlier.

In recent days, the World Bank approved a US$55mn fiscal sustainability and enhanced social protection development policy credit which also will help strengthen Enee.

During a presentation at the presidential palace, Enee manager Roberto Ordónez highlighted efforts to improve company financials.

These include the renegotiation of supply contracts with thermoelectric generators that will save 1.7bn lempiras over three years; review of contracts with renewable energy suppliers that have yet to begin operations; and installing meters, improving management systems and reorganizing work crews.

And some 55mn lempiras/month will be saved after it was discovered that 2,200 of Enee's 4,724 employees did not have assigned tasks.

Authorities also look to engage private operators for T&D envisioned under a new power framework law which came into effect in July.