Honduran power reform ‘will take time’

“The structural overhaul of the electricity market [in Honduras] is critical and represents a cornerstone in the authority’s economic program. Because of its complexity, this will take time and be gradual,” according to Leonardo Villar, the IMF’s executive director for the Central American nation.

The comment is part of the multilateral’s latest country report, which highlights that “while institutional reforms will put the electricity sector on a sound footing over the medium term, they will likely have no immediate impact on [state power company] Enee's cash flow.”

Enee's financials show that the company posted a net loss of 225mn lempiras (US$9mn) in May and a net loss of 2.21bn lempiras in the first five months of 2019, compared with a net loss of 1.16bn lempiras in May 2018 and a loss of 3.58bn lempiras in Jan-May last year.

The IMF attributes Enee's financial situation to below-cost tariff setting, large electricity losses and high generation costs, amid increasing oil prices and growing debt with private generators.

Finance minister Rocío Tábora said in recent days that funds to restructure Enee's debt with power producers would not be released if the generators did not “cede, give something.” The government said that Enee's deficit is around 67bn lempiras (US$2.74bn).

She added that although power regulator CREE is updating rates, the government has subsidies for residents that consume less than 300kWh.

The government’s power reform also includes strengthening the watchdog, establishing a dispatch center, and separating Enee into T&D and generation units, as well as increasing loss reduction by stepping up efforts to combat theft and fraud, and upgrading infrastructure.

The IMF report is available here.

In related news, Enee and distributor Empresa Energía Honduras launched the operations of a US$14mn integrated commercial management system (InCMS) which replaced an IBM 390 platform that managed Enee’s client database for more than 30 years.

“This is an historic day, since with this technological innovation not only the measurement and billing processes will be transparent, but the quality of customer service will be improved by optimizing data processing times,” said Enee manager Jesus Mejía.

“This platform will give us the corresponding alerts when there are abrupt alterations in any invoice of a client, the user will be able to have information about their consumption behavior online and will be able to receive responses to their claims in a shorter time, they will not have to wait 45 days to be resolved.”

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