HONDURAS: THE ROAD TO SUSTAINABLE REFORM
This crisis was unnecessarily worsened by the failure to maintain ENEE’s reserve thermal capacity in operating condition for emergency use.
First-generation Reforms: 1994 The 1994 energy crisis opened the way for first-generation sectoral reforms in the context of a sectoral reform loan supported by the World Bank and the Inter-American Development Bank (IDB). The 1994 Framework Law, which is still in force, was the first electricity-sector modernization law to be passed in Central America. It was based on the Chilean model and provided for a separation of functions (policy, regulation, and service production). The principal motivations for the reform were the inefficiencies and capacity constraints of the State-owned system. The law was promoted by the IFIs (International Monetary Fund, World Bank, and IDB) as part of the structural adjustment process that had begun in 1990. Once the macroeconomic situation had been corrected, electricity was one of the first focuses of sectoral adjustment loans. The Honduran government was strongly committed to using private sources for the future growth of generation, and was also motivated by the offer of balance-of-payments support under the reform operation. The law sought to: ♦ ♦ ♦
Strengthen ENEE’s financial situation by institutionalizing costbased tariffs overseen by a sector-specific regulator. Promote private investment through privatizing distribution and PPAs in generation. Increase efficiency (ENEE was heavily overstaffed and inefficient on standard international comparisons, such as system losses).
Sector Governance Under the 1994 Framework Law, an Energy Cabinet charged with defining sectoral policy meets on an ad-hoc basis to deal with crisis situations. On a day-to-day basis, sectoral policy is the responsibility of the Environment and Natural Resources Secretariat (Secretaría de Recursos Naturales - SERNA), whose Energy Directorate is charged with ensuring sufficient capacity and power supply. However, SERNA’s sectoral leadership is weak, and its principal electricity concern is promoting renewable energy sources. In practice,
Copyright © by the Inter-American Development Bank. All rights reserved. For more information visit our website: www.iadb.org/pub
166