While the government removes control of the electric system from the much-despised and inefficient Spanish operators, analysts say there were better ways out.
Business consultant Federico Martinez, in an interview with Hoy, said, “I would have let them continue operating and when they could not sustain themselves under market conditions and the interests of the nation, then let them go.” By taking over before the companies went forcefully bankrupt, he added, the government assumes a massive amount of debt, after having delivered a completely debt-free company to Union Fenosa at the moment of privatization. The government has agreed to pay back more than US$700 million over a 12-year period, and has guaranteed the revenues on collections of the best-paying clients to Didoel, another Union Fenosa affiliate.
Martinez told the newspaper that privatization in Ecuador and Peru worked because the companies did their job and invested, contrary to what has happened here.
Martinez says that the Madrid Accord, as negotiated by the Mejia government and which fixes high prices for the purchase of power, stimulates inefficiency among generators. As a result, companies only think short term when investing in power production. According to Martinez, this has led to a proliferation of power generation plants that use expensive bunker c fuel, which causes instability in the service. At the time of capitalization in 1997, bunker generators made up 15% of the supply, while today they generate 40%. He said that AES has been the exception, investing in natural gas plants. He believes the whole idea behind capitalization is to have generators install low-cost power plants and the investment recovered long term. This, however, did not happen here with rare exceptions.
Martinez would like to see the installation of a transmission line to deliver the power to the north, or an electrical superhighway.
Martinez also says that the government needs to call a tender with one whole year’s advance warning. He says no important international company is going to get involved in a tender called a mere three months in advance.
For his overview of what’s with the power situation, see http://www.dr1.com/news/2003/082803_electricity.shtml