World Bank2014-05-152014-05-152012https://hdl.handle.net/10986/18373The increase in oil prices has created a growing economic pressure in Nicaragua. The electric power industry, especially, has generated controversy, because electricity prices have not kept pace with the costs of production. The situation at the beginning of 2006 was clearly unsustainable, and the entry of a new government provided an opportunity to refresh the vision of the sector, and address the problems. The objective of this note is to provide a balanced approach, taking into account both the short-term and long-term prospects of the sector, together with the lessons learned in similar situations. The questions facing the sector relate to its financial situation, the legal framework, the patterns of use of energy in Nicaragua, access and coverage of electric power, and its fiscal impact. Possibly the most important recommendation is to attenuate the disagreements with the government and seek areas of cooperation to improve the conditions of service. This should involve a quantification of the financial losses, and an operational audit to determine the status of implementation of their obligations to agents, investors, and customers.en-USCC BY 3.0 IGOACCESS TO ELECTRICITYAPPROACHASSETSAVAILABILITYAVERAGE PRICEAVERAGE PRICESAVERAGE TARIFFBALANCEBARRELS PER DAYBENCHMARKINGBIDDINGBIDDING PROCESSBIOMASSCAPITAL COSTSCAPITALIZATIONCASH FLOWCOALCOGENERATIONCOMPETITIVE BIDDINGCOMPETITIVENESSCONCESSIONCONCESSIONSCONSUMER PRICESCONSUMERSCONTRACT CONDITIONSCONTRACTUAL OBLIGATIONSCOST OF ENERGYCRUDE OILCRUDE PRODUCTIONDEBTDEVELOPMENT PROJECTSDIESELDIESEL GENERATORSDIESEL OILDISCOUNT RATEDISTRIBUTION ASSETSDISTRIBUTION COMPANIESDISTRIBUTION INVESTMENTSDISTRIBUTION LOSSESDISTRIBUTION MARGINDISTRIBUTION NETWORKDISTRIBUTION PRICESECONOMIC DEVELOPMENTECONOMIC VIABILITYECONOMIES OF SCALEELECTRICITYELECTRICITY CONSUMERSELECTRICITY CONSUMPTIONELECTRICITY DISTRIBUTIONELECTRICITY GENERATIONELECTRICITY LAWELECTRICITY PRICESELECTRICITY PRICINGELECTRICITY PRODUCTIONELECTRICITY REGULATORELECTRICITY SUPPLYEND USERSENERGY DEMANDENERGY LOSSESENERGY PRICEENERGY PRICESENERGY PRODUCTIONENERGY PRODUCTION REQUIREMENTSENERGY SALESENERGY SOURCESENERGY USEETHANOLEUCALYPTUS PLANTATIONSFINANCIAL VIABILITYFUELFUEL OILFUEL PRICESFUELSGAS TURBINESGASIFICATIONGASIFICATION PLANTGENERATING CAPACITYGENERATIONGENERATION ASSETSGENERATION CAPACITYGENERATION COSTSGENERATION MARKETGENERATION PRICEGEOTHERMAL CAPACITYGEOTHERMAL PLANTGEOTHERMAL PLANTSGEOTHERMAL POWERGEOTHERMAL POWER PLANTGEOTHERMAL PROJECTSGEOTHERMAL RESERVOIRGOVERNMENT SUBSIDIESHYDROCARBONSHYDROPOWERIMPROVING ENERGY EFFICIENCYINCOMEINDEXATIONINDUSTRIAL PRICESINFLATIONINFLATION RATEINVENTORYINVESTMENT PROGRAMLARGE CUSTOMERSLIQUIDITYLNGLNG TERMINALMARGINAL COSTMARGINAL COST OF PRODUCTIONMARKET INCENTIVESMARKET PRICEMARKET PRICESMARKET RULESMARKET STRUCTUREMARKET VALUEMARKETINGMONOPOLYNATURAL GASNATURAL GAS RESOURCESNET INCOMEOILOIL DEMANDOIL ENERGYOIL EXPLORATIONOIL IMPORTSOIL INDUSTRYOIL PRICEOIL PRICESOIL PRODUCTSOPPORTUNISTIC BEHAVIORPEAK DEMANDPEAK LOADPEAK LOADSPETROLEUMPETROLEUM GASPOOR CONSUMERSPOWERPOWER COMPANYPOWER PLANTSPOWER PRODUCTIONPOWER SECTORPOWER SECTOR REFORMPOWER STATIONSPOWER SYSTEMPRICE CONTROLPRICE FLUCTUATIONSPRICE INCREASESPRICE OF OILPRICE POLICYPRICING PRINCIPLESPRIVATE OPERATORSPRIVATE SECTOR INVOLVEMENTPRIVATIZATION PROCESSPRODUCTION COSTSPUBLIC FUNDSPUBLIC POWERPUBLIC SECTORPURCHASE PRICEPURCHASINGREFERENCE PRICESREFINED PRODUCTSREGULAR GASOLINEREGULATORY FRAMEWORKRENEWABLE ENERGYRENEWABLE RESOURCERENEWABLE RESOURCESRESERVE REQUIREMENTSRESIDENTIAL PRICESRETAILROUTESRURAL ELECTRIFICATIONSALESALESSPOT MARKETSPOT PRICESTORAGE CAPACITYSUBSIDIZATIONSUGARCANESUPPLIERSSUPPLY COSTSTARIFF ADJUSTMENTTARIFF ADJUSTMENTSTARIFF CHANGESTARIFF REFORMSTARIFF STRUCTURETHERMAL CAPACITYTHERMAL PLANTSTHERMAL POWERTHERMAL POWER PLANTSTRADE BALANCETRANSMISSION LINESTRANSMISSION SYSTEMUNDERLYING PROBLEMSVALUE ADDEDVARIABLE COSTSVOLATILITYVOLTAGEWHOLESALE MARKETWHOLESALE PRICES10.1596/18373