Honduras’ Energy Sector Grapples with Cost Recovery Challenges

2 Min Read


Author: Dr. Emily Carter

Executive Summary

According to the International Renewable Energy Agency (IRENA), inadequate cost-recovery mechanisms are a fundamental factor in the financial difficulties faced by Honduras’ state power company, Enee. As highlighted in a recent assessment, the company’s ability to fund critical infrastructure investments in generation, transmission, and distribution is severely hindered by existing debt and costly power purchase agreements (PPAs).

Financial Performance

Enee’s financial performance in the first nine months of 2023 witnessed a net loss of 4.34 billion lempiras (approximately $176 million). This represents a marginal improvement compared to a net loss of 4.60 billion lempiras during the same period in 2022. In September, the company reported a net loss of 630 million lempiras, notably higher than the 384 million lempiras loss recorded in September 2022. These losses are attributed primarily to increased electricity purchase costs and operational expenses.

Remedies and Recommendations

IRENA’s assessment outlines several recommendations to alleviate Enee’s financial challenges, including:

  • Unbundling of Enee’s operational costs
  • Enhanced revenue collection measures
  • Debt restructuring
  • Expeditious renegotiation of PPAs
Additional Challenges

Beyond cost recovery issues, Honduras’ energy sector faces other challenges, such as:

  • Complex engagement with communities over renewable energy projects
  • Stringent environmental and social safeguards
  • Limited coordination among public and private stakeholders
  • Inadequate tools available to the national dispatch center (CND)

IRENA’s assessment underscores the need for concerted efforts to resolve the cost recovery issues that have hampered Enee’s financial viability. Furthermore, addressing the aforementioned challenges will be crucial in ensuring the long-term sustainability and affordability of Honduras’ energy sector.

Credit and Rights

This article is protected by copyright and may not be reproduced in any form without prior written permission from OMG I Yoga.

Share This Article