2004News

Energy reform must include privatization

A four-month period of workshops and discussion between The National Energy Commission (CNE) and market agents, international organizations and business representatives concluded that in order to reform the energy sector, one factor must be guaranteed: that the government play no role in the process of electrical generation or distribution. According to the blueprint for the system’s overhaul, drawn up during the CNE workshops and ratified by the participants, the sector should be divided into three areas of operation: generation, transmission and distribution – ideally with no crossover of any entities into more than one of these activities. The transmission of electricity would remain under the control of Superintendence of Electricity, whose role in this capacity would be reinforced.

Additionally, a consensus was reached on the fact that the Edenorte and Edesur distribution companies, now in the hands of the authorities, should be reprivatized, although when this would happen was not made clear, reported El Caribe.

Generators are regarding the reform with skepticism and the feeling that only solid-capital companies with guaranteed financing could successfully commercialize the energy distribution with any degree of success.

The workshops left open to further debate the possibility of electricity co-operatives in rural and semi-rural areas. Proponents of the co-op system maintain that this is the easiest way to guarantee electricity in marginal areas. Another inconclusive subject was the distinction made between the regulated and non-regulated consumers. The non-regulated clients are those consuming 1.4 megawatts a month, who are already permitted direct connections to the power generators. A proposal was submitted to allow anyone who so wishes to directly connect to the distribution lines as well, without the intervention of the distributors. Regulated users are those who consume less than 1.4 MW per month, are located within 100 meters of the distribution lines and pay the tariffs established by the Superintendence of Electricity.

One of the keynote speakers, Elena Brineman of USAID, called the present situation “critical,” but said that most of the studies needed to comprehend the system’s shortfalls have now been conducted. According to Brineman, the goal was to have a sustainable energy sector within one year’s time.