Case study: The Tumarin hydroelectricity project, Nicaragua

The Copalar hydroelectric project that would have tapped the energy of the Río Grande of Matagalpa was first put forward during the days of the Somoza dictatorship. In 2006, the Nicaraguan government was close to giving approval, but its bill finally failed in the National Assembly for several reasons including opposition to the project within the local area and unwillingness on the part of legislators to impose such a huge commitment on future governments. No sooner had the Copalar project died with the end of the government of President Enrique Bolaños than the Tumarín project surfaced (in almost the same area) with the new government of President Daniel Ortega. Cynics suggested that Ortega had cancelled the Copalar project partly on environmental grounds, and then re-instated it with a new name, new funding and new specifications.[i]

Ortega’s July 2010 visit to Brazil elicited from Brazilian President Lula an offer of economic and commercial support aimed at reducing Nicaragua’s dependence on fossil fuels for energy generation. As Figure 4.1 shows, in 2009 70 per cent of Nicaragua’s electricity was generated by fossil fuels. As a result of the offer, Brazilian companies – the state utility Eletrobras and the Brazilian company CHC – are investing around US$800 million in the Tumarín project as well as supporting Nicaragua in developing two other hydroelectric plants.[ii]

In rapid time, the Tumarín project had gained approval from the National Assembly and by 2011 work on the access road to the dam had begun with a projected time of 2014 for the start of electricity production. The project is not without opposition, but the general public approval of the then new government’s attempts to take control of the energy crisis (referred to at the start of this chapter), the widespread disapproval of the role of Unión Fenosa (although hardly relevant to this case), the keen involvement of the Brazilian government and the perceived need for alternatives to fossil fuels served undermine the opposition.

One of the ways in which the Ortega government managed to reduce the effectiveness of the opposition was to offer the building of a new town, New Apawas, to house the 300 families who will be displaced by the dam and reservoir. Estimates of the number of people affected, however, generally vary upwards from this number, some including, appropriately, those who live downstream from the dam and whose livelihoods will be affected by the change in flow. Celia Contreras, an organiser with a local group, Casa de la Mujer (House of the Woman), says that “Ortega co-opted the coalition saying that Copalar wouldn’t go forward because of its environmental impact, but what he did was change it for Tumarín, saying the impact would be less. That’s a lie.”[iii] Perhaps another reason that the opposition has had little success is that the government’s Rural Electrification Programme has included the extension of existing distribution lines and the construction of small-scale hydroelectric projects, micro-generators and the installation of solar panels in isolated parts of the country.[iv]

[i] Benjamin Witte-Lebhar (undated) ‘Nicaragua: Energy-hungry country opts for large-scale hydro dam’,,%20ENERGY-HUNGRY%20COUNTRY%20OPTS%20FOR%20LARGE-SCALE%20HYDRO%20DAM.pdf?sequence=1 (accessed 09.08.11).
[ii] Gill Holmes (May – July 2010) Nicaragua Current Affairs Report to CODA International.
[iii] Op.cit. (Witte-Lebhar).
[iv] Radio La Primerisima (26 January 2010) cited in Nicanet Hotline, ‘Electricity extended to 11,311 rural homes in 2009; a total of 31,836 in three years’, Managua.

Construction of Tumarín 160 MW hydro project to start this summer

Nicaragua and the Brazilian companies Eletrobras and Queiroz Galvao through its representative company in Nicaragua Empresa Centrales Hidroeléctricas de Centroamérica have signed a concession agreement in which the Brazilian companies have agreed to start construction of the largest hydroelectric project in Nicaragua, the Tumarín hydro station, in mid-2014.

This is a positive development following years of uncertainty over the project due to the lack of agreement on the tariffs that would be set by the Brazilian company for electricity sales. Both sides have now reached an agreement on these rates but the details have not been disclosed.

Concession of the hydroelectric station Tumarín was granted in mid-2008 to the Brazilian companies. At that time the start date for its operation was projected for the end of 2012 and the planned investment was $500m for the generation of 160MW.

Taken from the newsletter of the Nicaraguan Embassy in Britain – 4th April 2014

Case study: energy privatisation in Costa Rica

Even in Costa Rica where at least 90 per cent production of electricity from renewable sources, the Costa Rican Electricity Institute (ICE) has been blamed for failing to invest in new sources of renewable energy, this leading “to the increase in reliance on fossil fuels to generate energy.”[i] In 2000, however, attempts to privatise the ICE sparked public protests and strikes on a huge scale, grand enough to force withdrawal of the proposed legislation. “Few argue that the services don’t need improvement, but opponents say the bill is too deeply tied to the personal financial interests of several political families.”[ii] Efforts to privatise the electricity generation sector disappeared from view for a few years, and from 2005 to 2007, the amount of power produced by thermal (fossil fuels-based) energy crept up from 3.5 to 8.2 per cent.[iii]

In February 2008, then President Oscar Arias announced his goal that Costa Rica would become carbon neutral by 2021. Since then, efforts to privatise have begun to re-surface, linked to attempts to increase the proportion of energy produced by renewable sources. Interestingly, the privatisation moves are also linked to attempts to promote small-scale energy generation. In March 2011, Arias’s successor, President Laura Chinchilla, issued a decree ordering ICE officials to promote small-scale power generation on the grounds that opening the electricity market to private companies would boost “the growth of small-scale power-producing businesses across the country.”[iv] Carlos Wahrman, an energy consultant, explains the thinking behind this move:

The Costa Rica Electricity Institute (ICE) has been designed to take on enormous endeavours, such as blasting mountains, building dams, flooding acres of land and changing landscapes. But ICE is totally unable to build small power generation plants because of its size. That’s where private initiative steps in.[v]

fenosa-3-guat-clip_image00224_thumb2-2Rather than an explanation, this sounds like questionable reasoning for privatisation, and it highlights the problems caused by large-scale electricity generation with its talk of blasting mountains and flooding acres of land. It also raises the question of why large companies or institutions are unable to work at the small-scale. Logically, it is easy to see why small companies may not be able to work at the large-scale; but there is no reason why large companies cannot work at the small-scale. With such feeble justifications it is not surprising that opposition to the privatisation promotion strategy is likely to rise again. As José María Villalta, a congressman for the Broad Front Party has said:

We have an electricity generation strategy that has worked almost flawlessly. The country has decided to take the path of renewable, cheap, environmentally friendly energies, and ICE has performed amazingly. The only people that would like to see energy competition under free-market rules are the ones who would [financially] benefit from it.[vi]

Indeed, in 2011 there was certainly some salivating within the business community that the privatisation of the ICE was likely in the near future, as a Business News Americas headline testified: “ICE seen likely to consider privatisation within next 5 years.”[vii] As a clear supporter of privatisation, President Laura Chinchilla and the business community are waiting only for the right moment when they consider they can gain approval for the ICE privatisation, but it is unlikely to occur without a fierce battle with a Costa Rican public that has managed to defeat the move once already and has been emboldened by victory in other battles such as a ban on oil exploration.

[i] Mike McDonald (4 September 2009) ‘Rising Energy Needs Prompt New Bill’, Tico Times, San José, Costa Rica.
[ii] Megan Stacy (19 April 2000) ‘Costa Rica: Strikes, marches force delay of privatisation’, Green Left Weekly, Australia, (accessed 24.07.11).
[iii] Ibid.
[iv] Rommel Téllez (15 April 2011) ‘Chinchilla Administration Furthers Push For Renewable Energy Sources’, The Tico Times, San José.
[v] Ibid.
[vi] Ibid.
[vii] Business News Americas (28 April 2011) ‘ICE seen likely to consider privatisation within next 5 years’, Business News Americas, (accessed 26.07.11).

Nicaragua hopes to run on 100% clean energy in six years

Nicaragua News Bulletin 11 May 2010 – May 2010

In an effort to reduce dependency on petroleum, Nicaragua’s Ministry of Energy and Mines (MEM) has set the goal of running entirely on renewable energy by 2016. Today, approximately 30% of Nicaragua’s energy comes from renewable sources (including geothermal, wind, hydroelectric, and biomass) while the other 70% comes from oil.

A number of projects (both public and private) are helping to change these percentages and make the Ministry’s goal a reality. Iceland’s International Development Agency will support growth within the geothermal sector with over US$4 million. Director Gil Paison said that the objective was to strengthen the capacity of Nicaragua’s central government and the ministries and agencies involved in the geo-thermal energy field.

Energy Minister Emilio Rappaccioli recently visited the geothermal project ran by Polaris Energy and Queiroz Galvao, a Brazilian company, at San Jacinto-Tizate. The companies are currently expanding the capacity of the plant and installing new technology. They hope that by next April it will be producing 36 megawatts (up from 10 megawatts), enough energy to supply the departments of Chinandega and Leon. Tom Ogryzlo, head of Polaris Energy Nicaragua, said, “I have worked in many countries around the world and in only a few places have I seen the support from a government similar to that which has been offered by this government.” A total of US$151 million has been invested in this phase of the operation.

Rappaccioli said that by 2012, the geothermal plants at San Jacinto-Tizata and Momotombo will be producing between them 72 megawatts of electricity. Polaris Energy already has a contract to sell energy to Union Fenosa (the Spanish-owned electricity company which runs Nicaragua’s energy distribution network) at US$92 per megawatt hour. (La Prensa, May 6; Radio La Primerísima, May 7, 8)