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Nicaragua sees red over blackouts

A decade after privatization, the nation struggles to keep the power on. The issue may help Ortega.

October 30, 2006|Hector Tobar | Times Staff Writer

MANAGUA, NICARAGUA — Every afternoon in this sweltering tropical city, the air conditioners and the fans stop working. Computer screens go dark. Children never see the end of their favorite cartoons, and people like Juan Palacio wish they had bought surge protectors.

"We lost a refrigerator once when the electricity came back on," said Palacio, 28, on a day when the power was out four hours in his middle-class neighborhood. "You never really know how long the light will be out, or when it will come back on."

A decade after Nicaragua privatized much of its electric business, the country has been suffering through a series of blackouts this year that leave most homes without power for several hours each day.

The visitor who arrives in Managua at night discovers a city where many neighborhoods have been plunged into darkness, the headlights of passing cars providing the only illumination. During the day, scattered outages knock out the traffic lights.

The electric companies blame government-imposed low rates and high oil prices, which have increased the cost of generating electricity. Consumer groups counter that local power producers are conspiring to manipulate the electricity market -- an alleged scheme similar to the one linked to Enron in California in 2000 and 2001.

The issue might help former Sandinista President Daniel Ortega win the country's presidential election Sunday. Ortega has linked the crisis to the privatization of the electric sector by right-wing governments.

"When the power goes out, so does the water system," said Gonzalo Salgado of Nicaragua's National Consumer Defense Network. Making the problem worse, he said, the country's main distributor of electricity, the Spanish company Union Fenosa, declines to provide the public a schedule of blackouts, as required by law.

"The problem here is that the system of regulation has completely broken down," Salgado said.

Nicaragua's electricity regulators have levied stiff fines against Union Fenosa, charging the company with failing to keep adequate records and poor maintenance of its lines.

Jorge Katin, a spokesman for Union Fenosa, said this month that the fines were politically motivated ahead of the elections and amounted to "reprisals" against the company. "All of these fines and sanctions make it clear that there are interests that are trying to hit hard the [electricity] sector and make it collapse," Katin said in a statement.

A report by the Nicaraguan Energy Institute, the country's top regulatory body, found this year that the blackouts were caused by many factors, including a shortage of fuel oil, a decrease in hydroelectric power caused by a drought and a series of technical problems at several plants.

The study showed that although demand for electricity in the country remained relatively constant during the first six months of this year at around 450 megawatts, the capacity of the nation's power generators dropped steadily, from 518 megawatts in January to 373 megawatts in June.

Consumer advocate Salgado and others argue that the drop in generating capacity of the nation's power producers is linked to a decision last year by the Nicaraguan Energy Institute to place new controls on the prices that producers charge in the "spot market," in which producers sell electricity to distributor Union Fenosa at hours of peak demand.

"The blackouts are a form of blackmail," Salgado said. The real purpose, Salgado said, is to pressure the government to relax the price controls. Early last week, Nicaragua's National Assembly voted to eliminate the controls.

Consumer complaints against the electric companies have tripled in recent months, according to the energy institute.

"After a while, the food starts to spoil, and it's hard on my mother-in-law when there's no air conditioning," said Managua resident Rosa Maria Martinez, describing a series of outages. "Things worked better when the government ran the electric company."

Tapping into such sentiment, leftist candidate Ortega has made attacks against Union Fenosa a centerpiece of his campaign speeches. He has suggested that, if elected, he will terminate the contract of the distributor and nationalize at least part of the utility.

"You, brothers, are suffering the effects of these outages every day," Ortega said at a recent campaign appearance. "Who brought Union Fenosa to this country? The government of the rich did, those who are in the service of barbarian capitalism."

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hector.tobar@latimes.com

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