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Emergency acquisition has also led to sub-optimal technology choices, resulting from commissioning small, high-speed diesel units to meet urgent needs, with unit costs well above those of larger units, which could have been ordered had forward planning been better. As a result, the balance of current thermal capacity is skewed toward small plants with low capital costs and high dispatch costs. Indications are that ENEE has learned how to handle the contracting process more efficiently, and recent PPAs have been offered better value for money than earlier contracts. However, delay persists in deciding whether to contract additional capacity, making it impossible to contract the most efficient technology. In addition, the dead weight of high stranded costs of early PPAs and recent rental contracts remains a major financial problem for sectoral management.
ENEE Headway in the 1990s Efficiency Gains Notwithstanding the delay in privatization of distribution, during the 1990s, ENEE made continuing headway with internal efficiency gains. Labor productivity improved from 739 employees per 10,000 users in 1994 to 478 in 1998; and energy sales per employee rose from 527 MWh to 1,014 MWh over the same period (Figure 3.1). Job cuts linked to the outsourcing of billing and collection and use of PPAs for expanding generating capacity have been the main factors behind this improvement. Distribution losses were reduced from 27 percent in 1996 to 18.5 percent in 2000—well above the 10-12 percent levels registered in comparable Central American utilities, indicating an opportunity for further advances in this area. ENEE has outsourced billing and collection to SEMEH (Servicios de Medición Eléctrica de Honduras), a company that undertakes this task in return for the right to handle the resulting revenues for two months, before passing them on to ENEE.9 It is hoped that this will lead to further reductions in economic losses from distribu9
With ENEE’s monthly billing of L.320 million, SEMEH can expect to hold L.640 million ($40 million) at any given time (2001 figures). A monthly interest rate of 1 percent would generate a monthly interest income of L.6.4 million ($420,000); however, since ENEE previously averaged a 120-day delay in bill collection, this arrangement is apparently free to the company.
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IAN WALKER AND JUAN BENAVIDES