LatinFinance - July/August 2015 - 32
CENTRAL
AMERICA
INFRASTRUCTURE
El Salvador, Guatemala and Honduras are finding increasing success at
drawing foreign investors into billions of dollars of new projects. By Jennifer P. Roig
Building
attraction
rom power to transport and logistics, the three Central American countries of the
Northern Triangle are prioritizing infrastructure roll-out in their development strategies. But
with billion-dollar price tags, executing the plans is tough. That is making it critical to draw in
a range of players - including multilateral lenders, export credit agencies and international
concessionaires.
While this may not be the first time the region pushes to develop its infrastructure, what is
new is that countries are overcoming historical bilateral tensions to join efforts. Already the
pay-offs are clear. The 1,800-kilometer Central American electrical interconnection system
(Siepac) that traverses six countries is a clear example of the potential advantages of cooperation. The system, which began operating in 2013, allowed Panama to quickly recover from
a drought-induced energy crisis in May of that year by importing power from El Salvador,
Honduras and Nicaragua.
The Central American Regional Electricity Market went into effect later that year and
has helped these host countries, which have
historically high electricity rates, reduce
wholesale costs. In energy alone, the region
reportedly will need to build up to 10 gigawatts
over the next 15 years. That generation pipeline, which entails an investment of $10 billion,
is also expected to further decrease power
prices in Central America.
"Around 35% of this new capacity could
come from hydropower generation, 5% from
geothermal and 7% from wind and solar
sources," Gina Montiel, country manager
for Central America, Dominican Republic,
Mexico and Panama at the Inter-American
Development Bank (IDB), tells LatinFinance.
"There is a gap where around two thirds,
which is half of the total increase, could come
from natural gas."
Most recently, Honduran President Juan Orlando Hernández signed a protocol in March
to develop the Mexico-Central America gas
32 L ATINFINA NCE.COM - July/August 2015
INTERESTS ALIGN: Central American
countries stand to benefit from the cooperation demonstrated in the development
of the Siepac transmission system
Source: Flickr David R. Tribble
F
pipeline alongside Mexico and Guatemala.
The project will cost around $1.6 to $2 billion and will provide the entire region with
more affordable energy, as well as fortify
relationships among the trio. Technical and
feasibility studies are in progress.
It makes sense for the three countries to
work together on such projects, says José
Félix Magana, head of private and public
non-sovereign sector at the Central American Bank for Economic Integration (Cabei).
http://www.LATINFINANCE.COM
Table of Contents for the Digital Edition of LatinFinance - July/August 2015
Contents
LatinFinance - July/August 2015 - Cover1
LatinFinance - July/August 2015 - Cover2
LatinFinance - July/August 2015 - Contents
LatinFinance - July/August 2015 - 2
LatinFinance - July/August 2015 - 3
LatinFinance - July/August 2015 - 4
LatinFinance - July/August 2015 - 5
LatinFinance - July/August 2015 - 6
LatinFinance - July/August 2015 - 7
LatinFinance - July/August 2015 - 8
LatinFinance - July/August 2015 - 9
LatinFinance - July/August 2015 - 10
LatinFinance - July/August 2015 - 11
LatinFinance - July/August 2015 - 12
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LatinFinance - July/August 2015 - Cover4
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