President Takes Control of Ailing State Power Company in Honduras

By: Juliette Kerr

21 February 2007
Global Insight Daily Analysis
Copyright 2007, Global Insight Limited. All Rights Reserved.

The President of Honduras Manuel Zelaya yesterday personally took over the administration of the state electricity company ENEE and announced that he will spend six hours there a day until its earnings are increased. The president's personal intervention is an attempt to try to resolve the financial crisis at the company, whose losses exceed US$160 million a year. Zelaya said that the first thing he would do would be to pay the government's US$27-million debt to ENEE accumulated over the past 15 years. Zelaya has also asked Congress to review contracts awarded to privately owned thermal power plants. Significance: In addition to the debts owed to the company by state institutions, ENEE's losses have been exacerbated by the large number of clients that do not pay their bills.

A resolution of the financial problems at the state-owned utility will be critical for future reductions in the country's external indebtedness and possibly also for Zelaya to demonstrate that his commitment to cracking down on corruption was not just campaign rhetoric. His success in this endeavor will also determine whether the company will be able to raise the necessary finances to fund the construction of new power plants.