REPORT #638 May 2003

Produced by the Belize Development Trust

OK -- start with this excellent paper on Honduras Electricity.

It is dated -- so remember -- they solved the problems outlined there by installing Big Warts.

But certainly -- you'll read about the expensive failure of hydro!! And yes -- we are doing the same mess -- for the same reasons -- read it carefully!

"Grupo Lovable owns 25 percent of the ELCOSA electric plant. Other investors in the joint venture include the World Bank, the Illinois Electric Company and Wartsila."

It is Elcosa in Puerto Cortez that finally got the electrical supply side straightened out!!

The Engineer there -- Richard James -- told me (3 years ago now) that they were making a killing selling power to Honduras for 6 cents US per kwh!!

The "secret" that saved their collective asses was deregulation of the Electric power industry!! Up till 1995 -- Honduras was doing just like Belize is today -- and losing it all big time -- just like we are going to.

"IFC also has extended US$52 million in financing for Electricidad de Cortes S.R.L. de D.V. (ELCOSA), the first Honduran private power project connected to the national grid. The 80 MW Diesel-fired project is sponsored by the local company HECO, a subsidiary of the Warstilla Group of Finland, the Scudder Latin American Trust for Independent Power of the U.S., and others. It complements the World Bank work in support of energy sector reforms underway in the country, establishing a new reliable long-term supply of power while also stimulating the opening of the power sector to private sector participation."

That in 1995 -- and now they are producing over 400 megs using big Warts!! There is no problem finding the financing for these Warts -- hell -- Warstilla looks after all of that -- just sign the dotted line!!

Warstilla leases the plant for a fixed price per kwh -- operates it -- and trains local operators. When the lease has met the financial commitments it turns it over for $1.00!!

In Honduras -- that took 8.5 years!!

The first private generator and supplier of electricity to the national grid was the Electricidad de CortÈs, Sociedad AnÛnima (ELCOSA), a joint venture between local industries and foreign investors. The IDB has recently approved a loan - its first financing directly to a private sector firm without government guarantee - to enable ELCOSA to increase the capacity of its plant.

And that is how it happened -- in Honduras -- but can the same ever happen in Belize??

Again -- between corruption and ignorance of technical infrastructure -- do we even stand a chance??


Elcosa, Honduras
Gradually more powerful

Meeting growing energy needs

An 80 MW Power Master plant, owned by the independent power producer Electricidad de Cortes S. de R.L, (ELCOSA), was installed in the city of Puerto Cortes in Honduras. This Power Master Plant consists of eight W”rtsil” 38 18-cylinder engines, each producing 10MW. The 80MW generated are supplied direct to the national electricity corporation Empresa Nacional de Energia Electricidad (ENEE), which, in turn, supplies industries and private homes throughout the country.

Due to the fast-track construction of the plant, 24MW were already being supplied to the grid within only five months of the ground-breaking ceremony. Within the following year, the Power Master Plant grew to produce 60MW. The last 20MW were installed in spring 1995 after the demand for power increased. This plant is the first privately owned and operated power plant in Honduras.

Our solution

W”rtsil”'s ability to provide a tailor-made solution for Honduras' fast-growing power needs was critical to the awarding of this substantial contract. This Power Master plant contributed to the reduction of power shortage in Honduras in 1994 and the prevention of insufficiencies in 1995. The highly efficient W”rtsil” 38 is the heart of a co-ordinated and integrated modular power plant. It works as a single cohesive unit to ensure the highest availability and total reliability.

Each engine and its associated equipment modules form one of the eight power-generating modules. The remaining equipment modules are station-related. This allows for adding generation modules as power demand grows. By following this method of construction, W”rtsil” has created a plant concept that is efficient to install (quick), operate (easy), and maintain (available).

Result of the close relationship between the customer and W”rtsil” is a well-operated and maintained plant. Highly skilled personnel, trained and supported by W”rtsil” , now operates the plant successfully.

Main Data Total electric output 80 MW
Electrical efficiency 43,6 %
Engine type 8 x W”rtsil” 18V38
Commissioned 1995

Honduran Energy Crisis: Between Light and Shadows
By Kattia RodrÌguez G.
Copyright © 1995 IsthmusComm-USA

One of the worst energy crises ever in Honduras is causing the economy to lose its balance. Honduras's National Electrical Energy Enterprise (ENEE) whose electrical production can reach 550,000 kilowatts has been rationing up to five hours daily in the main urban areas since April last year.

The measure has resulted in a partial paralysis of production which in financial terms translates into a 25 percent reduction of the of the GDP, at a rate of $2.5 million a day. Aside from the disturbances this policy imposes on the normal dynamics of the Honduran family, the problem has a direct impact on production in the trade, industry and service sectors and consequently on the unemployment rate.

Honduras is dry

Among the causes limiting the development of energy is a drop in water levels of hydroelectric plants that themselves are due to the little precipitation during the Central American "dry" seasons.

In the Honduran case, the drought has drastically reduced the volume of water retained by the Francisco Morazan dam (also known as "El Cajon"). Normally it produces 300,000 kilowatts, but currently it is down to 180,000.

Nevertheless, it should be noted that, as its neighbors, the country shares other limitations such as the state energy institutions' lack of financial resources for the purchase of equipment (thermal plants), investments (production of other sources), and limited autonomy to carry out expansion and maintenance programs.

The Honduran Council of Private Enterprise (COHEP) has become a strong voice from within the crisis proposing to buy the 125-megawatt thermal plant (run by fuel) free of taxes that would in turn cover current and future demand.

Furthermore, COHEP has long criticized the apparent inefficiency of EENEE's monopoly; at the same time, COHEP supports the privatization of electrical production in all Honduras based on the experience of the Dutch-owned power station Electrica de Cortes S.A. (ELCOSA). That company produces about 60,000 kilowatts that they then sell to ENEE.

Neighborly Cooperation

Part of what the Honduran government has done to solve the crisis has been to purchase power from the governments of Panama (15,000 kilowatts), Costa Rica (10,000 kilowatts) and recently from Nicaragua (20 thousand kilowatts).

However, in the case of the first two sellers, their own energy demands have risen between 5.3 and 7 percent respectively, forcing them to develop at the same time new hydroelectric or geothermal programs to face the demands between now and the year 2000.

This situation pressures Honduras into seeking its own solutions to the lack of energy resources. Among them is a broad $1.1 billion plan for hydroelectric production until the year 2014, all of which will be the responsibility of the private sector using thermal plants coupled with education programs that promote conservation.

Finally, it is important to consider that Honduras as well as all isthmian countries has before it a challenge to improve its activities in the area of energy if it is to move forward in an international economic climate that demands great levels of competitiveness.


Building success on environmental and community awareness

Thirty years ago San Pedro Sula merchant Juan Canahuati had no idea his business know-how would build one of Honduras' most progressive industrial empires.

The Grupo Lovable investment group began humbly when founder Canahuati decided to expand his activities and produce women's undergarments under contract for U.S. companies.

Over the years, the tiny 8-machine factory has exploded into two different textile plants that produce undergarments, polo shirts, elastic and ribbon for big name companies like Lovable, Lily of France and Maidenform.

Grupo Lovable has also built two industrial parks -- Zip Choloma and Zip Villanueva -- and now sits comfortably at the top of Honduras' booming industrial sector.


The group's latest expansion, the ELCATEX factory near ZIP Choloma, is the largest textile factory under a single roof in Latin America. But that's not its only claim to fame. The factory is also the only one in Honduras to boast an industrial water treatment plant.

"We believe that we cannot industrialize our country sustainably if we don't take care of the environment. Both things go together," says Jesus Kanahuati, Juan's grandson and ELCATEX general manager.

The ELCATEX water treatment plant is more technologically advanced than any other in Honduras. It is capable of treating 400,000 gallons of industrial wastewater per day, just a little less than the amount of water ELCATEX uses daily.

"By December we'll have expanded our capacity to 800,000 gallons a day," says Rony E. Carrillo, manager of ECOLOVA, an ecological organization created to monitor the environmental soundness of all of Grupo Lovable's operations. "Our aim is to protect the environment."

Grupo Lovable has always been concerned about the environment. Both ZIP Choloma and ZIP Villanueva have their own sewage treatment plants and ECOLOVA has its own lab, which offers treating services to other companies as well.

"Our primary goal is to provide the community with this service because there aren't any reliable labs in Honduras," says Carrillo. "We would even like to help other build their own treatment plants."


When the energy crisis broke out in Honduras last year, Grupo Lovable's first textile factory, ELCOSA, began generating its own energy. Producing up to 80 megawatts per hour, the plant more then met the needs of the factory.

In tune with it's community orientation, Kanahuati says, "what we didn't use we sold to the government."

Grupo Lovable owns 25 percent of the ELCOSA electric plant. Other investors in the joint venture include the World Bank, the Illinois Electric Company and Warsila.


In all, Grupo Lovable employs 5,500 workers at its ELCOSA and ELCATEX factories. ZIP Choloma and ZIP Villanueva employ another 15,000. Expansion plans could increase these numbers to 7,000 and 23,000 respectively. The group is also considering building a third industrial park.

With initiative, environmental awareness, community action and faith in the Honduran people, it's no surprise that Grupo Lovable is at the top of the Honduran industrial sector. Keeping abreast of the latest in sustainable development, the group is likely to remain there for at least another 30 years.

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