Guatemala betting on public-private partnerships for development
Pacaya and Agua volcanoes as seen from Guatemala City (source: Commons/ wikimedia, Sir James)
Francisco Rojas
3 Oct 2014
The strategy of the Guatemalan Ministry of Energy and Mines (MEM) is to attract investments to install geothermal power via the creation of a public-private partnerships.
According to the Deputy Minister of Energy, Edwin Rhodes, a scheme in which the state comes to have a minimum of 5% and a maximum of 10% of the shares of the potential companies to be established is being currently discussed. On the other hand, the private investor could own a maximum of 95%.
Another possibility also in debate would be for the State to increase its stake to 25%.
The MEM wants to minimize investment risks of the partnership by proposing that the government follows a similar partnership model as it has successfully done with the petroleum industry, which would include granting a long-term contract that guarantees the investor a rate of return of between 17% and 20%, “with an appropriate timeframe that has lower prices,” said Rhodes.
In addition to these considerations, the government would also include the right to for use of public property up to 50 years and supply contracts would be awarded up to 20 years.
The MEM also be responsible for doing market research to determine the energy demand for geothermal.
It is also worth mentioning that Guatemalan legislation already provides tax incentives, such as Decree 52-2003 and Government Agreement 211-2005, exempting from value added tax on imports of equipment and eliminate the trade income tax.
Source: Prensa Libre
