El Salvador's Asociacion Intermunicipal de Energia para El Salvador (ENEPASA) has closed a deal with Petroleos de Venezuela (PDVSA) that eliminates the intermediary and promises to funnel less expensive fuel into the gas tanks of the country's drivers. The alcaldias taking advantage of the deal are for the most part governed by Farabundo Marti para la Liberacion Nacional (FMLN) mayors. Thus, there is more to it than cheap gas. This deal is also about rebuffing President Antonio Saca, the legacy of Shafik Handal, and the further adventures of the Alternativa Bolivariana para las Americas (ALBA) in Central America.

Carlos Ruiz is mayor of Soyapango. He is also president of ENEPASA. He said that ENEPASA would supply 30% of the automotive fuels consumed in the country. El Salvador burns between 30 million and 40 million gallons a month. Read more...

Panama and Guatemala are in contention for the site of the most expensive project ever undertaken in Central America. Ten heads of state, representing the isthmus plus Mexico, Colombia, and the Dominican Republic, met in La Romana, the Dominican Republic, to decide whether a US$6.5 billion gasoline refinery would be built in Puerto Armuelles, Panama, or Puerto Quetzal, Guatemala. Aiming to reduce Central America's energy costs, the refinery, with a capacity of 360,000 barrels per day, would provide the isthmus with gasoline at US$8 a barrel less than open-market prices, according to Mexico's Energy Secretary Fernando Canales.

The project has the support of the Inter-American Development Bank (IDB) and the UN Economic Commission for Latin America and the Caribbean (ECLAC). The IDB kicked in US$1.5 million and ECLAC US$500,000 in March to pay for a consultant to do a two-part feasibility study. Read more...

Honduras became the 17th member of Petrocaribe on Dec. 22. Petrocaribe is the program of Venezuelan state-owned Petroleos de Venezuela, S.A. (PDVSA) through which struggling Central American and Caribbean countries buy fuel products at favorable and deferred terms (see NotiCen, 2007-11-29). Honduras agreed to terms that would supply 100% of its bunker fuel and 30% of its gasoline and diesel for the next two years. The administration of President Manuel Zelaya has said repeatedly that the state would not be able to continue to subsidize fuel prices as it did during 2007 to keep the economy from stalling.

But Congreso Nacional president Roberto Michelletti of Zelaya's Partido Liberal (PL), once a supporter of the plan, came down against it. In a Jan. 5 meeting, the congressional delegation decided to vote against approval. The stated issue upon which they turned was the debt Honduras would accrue under the terms of deferred payment. Read more...

Guatemala's freshly inaugurated chief of state has said he intends to seriously consider creating a state oil company. The country produces some oil and is exploring for more, but the main reason for a state company, President Alvaro Colom said, would be to negotiate imports of oil from Venezuela. As president-elect, Colom said in December he would send a delegation composed of his Minister of Energy and Mining Carlos Meany and his transition manager Edgar Barquin to look into joining Petrocaribe, the Venezuelan program that supplies oil under special terms to Central America and the Caribbean.

Colom said at that time, "We want to study Petrocaribe in detail, we want to know exactly what it's about." He had been briefed on the program by Venezuelan President Hugo Chavez when both attended the swearing-in of President Cristina Fernandez in Argentina. Read more...

Guatemala's president announced a plan to reduce the country's dependence on foreign oil. The initiative will depend instead on foreign investment, somewhere in the US$2 billion range. President Alvaro Colom said the investment would buy the generation of more than 920 megawatts of electricity, and would permit a medium-term revamp of the country's energy mix.

At present, 46% of the electricity in Guatemala comes from bunker fuel, the heavy residue at the bottom of the barrel, after gasoline and diesel have been distilled away. But even this stuff has been subject to enormous increases in price. By medium-term, Colom meant the projects he has in mind would come on line sometime between 2010 and 2014, if they start up this year. The projects are a mix of geothermal, hydroelectric, and coal generation. Once running, oil would only contribute 5% of the electricity, 47% would come from hydro, 2% from geothermal, and 46% from coal. Read more...

Venezuela is on its way to becoming Central America's most ubiquitous purveyor of petroleum products, having just welcomed Guatemala to the Petrocaribe family. Petrocaribe is the program under which the Venezuelan state oil company Petroleos de Venezuela SA (PDVSA) supplies fuel and petrochemical products to the isthmus and the Caribbean on very favorable terms. The company already has deals with Honduras, El Salvador, and Nicaragua, while a heretofore reluctant Costa Rica is looking ever more favorably at signing up.

Just a couple months ago, a Guatemala deal seemed unlikely. President Alvaro Colom wanted to negotiate for a supply of 30,000 barrels per day, but his Energy Minister Carlos Meany said there would be no contract when the Venezuelan government offered only 10,000 bpd. That offer came after a preliminary discussion between Foreign Minister Roger Haroldo Rodas and his Venezuelan counterpart Nicolas Maduro. Read more...

The municipality of San Pablo, in Guatemala's northern department of San Marcos, is divided between the approximately 40% of inhabitants who refuse to pay their electricity bill and those who would rather stay clear of trouble and continue to pay. "The problem is that the charges are excessive. When my administration began, the municipal fee charged by Distribuidora Electrica de Occidente (DEOCSA) was between 26 quetzales and 27 quetzales (US$3.26 to US$3.38) per household. But then the electricity company introduced a hike without prior warning. I don't know why the bill says 'municipal charge' when we never receive a single cent of that money," says Rolando Barrios, mayor of San Pablo.

But even though Barrios sympathizes with the 35 villages that consider that their electricity bill is far too high, he disagrees with their decision to suspend payments and claims that activists from the Frente en Defensa de los Recursos Naturales (FRENA)--a social organization affiliated with the Frente Nacional de Lucha (FNL) labor union--are inducing people to use this as a means of exerting pressure. Read more...