15-07-02 Progress is being made towards the creation of a wholesale market for energy in Central America by 2006, at an approximate cost of $ 320 mm. Although the plan was approved by the governments of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama in 1996, it did not get off the ground until last year because the legislatures of each country first had to ratify it.
The project's manager, Teofilo de la Torre, explained that a 230-volt power line would be installed, capable of transporting up to 300,000 kW from Guatemala in the north to Panama in the south, a distance of 1,830 km. Through that power line, the partners to the Central American agreement will be able to purchase or sell electricity among themselves, which will guarantee power supplies to any country with an energy deficit.

The accord will also give nations that are now supplied by thermoelectric plants access to energy produced by hydropower plants in the region, to get around problems of fuel supplies or simply to reduce costs. A $ 240 mm loan approved in November by the Inter-American Development Bank will finance 75 % of the project, and the remaining $ 80 mm will be provided in equal parts by the six countries involved.
De la Torre said the participating countries set up a corporation based in the Costa Rican capital to supervise implementation of the plan. An international call for bids will be issued in late 2003 to begin selecting the company that will create the new power grid, work on which is to begin in 2005, said the official.
He explained that once the new region wide system was in place, around 100 public and private sector companies would generate and distribute electricity in the six countries. As a sort of pilot project in energy integration, a preliminary grid will be operating between the six countries next August, but with the capacity to transmit just 60 kW, added de la Torre.

The preliminary grid will be complemented by existing arrangements between countries that have traded energy in the past, like Honduras, Nicaragua, Costa Rica and Panama, or Guatemala and El Salvador, he said. Central America has an installed capacity for generating around 7,000 kW, while demand currently stands at around 4,800 kW.
Around 50 % of those 7,000 kW are produced by hydropower plants, 44 % by thermoelectric plants and the remaining 6 % by geothermic plants, like the ones operating in Costa Rica, El Salvador and Nicaragua. Costa Rica has the capacity to produce 1,700 kW, Guatemala 1,600, El Salvador and Panama 1,100 kW each, Honduras 900 and Nicaragua just 500.

Mario Montenegro, the president of the Nicaraguan Electric Energy Company (ENEL), which is in the process of privatisation, raised doubts as to the success his country would have in the framework of the regional energy integration project.
"Since Nicaragua is the smallest producer, it will be very difficult to export energy, which will make us a net buyer of electricity," he pointed out. Although Montenegro said he was satisfied with the progress made in preparations for implementation of the project, he added that "we are moving very slowly."