Honduras Electricity Sector Crisis Blamed on Politics, Stalled Reforms

Honduras's electricity sector is trapped in a cycle of crisis, marked by political manipulation and a critical lack of essential reforms, according to energy expert Samuel Rodríguez. He asserts that the ongoing deficiencies in service, substantial financial losses, and diminished competitiveness compared to its Central American neighbors stem directly from poor governance and the politicization of energy administration.

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The lack of governance, the politicization of the electricity sector, and the delay in approving reforms keep Honduras with deficient service, millionaire losses, and low competitiveness compared to the rest of Central America.

Rodríguez highlighted the persistent issue of the National Electric Energy Company (ENEE) being managed through political lenses. This approach, he argues, breeds inefficiency, fuels perceptions of corruption in contracting processes, and severely limits the nation's ability to attract vital private investment. Compounding the problem, Honduras has not initiated competitive bidding for renewable energy generation in over 16 years, with the most recent significant contract being for thermal power.

A crucial 1,500-megawatt tender, which prioritized renewable sources, remains paralyzed, awaiting approval for energy reform in the National Congress. Furthermore, government subsidies have artificially suppressed electricity tariffs, preventing them from reflecting the actual cost of service. This policy has resulted in a mounting financial deficit for the state-owned utility, making it impossible to accurately assess whether Honduras has the cheapest or most expensive energy.

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One of the main problems is that the National Electric Energy Company (ENEE) continues to be administered with political criteria, which, in my opinion, generates inefficiency, increases the perception of corruption in contracting processes, and limits the capacity to attract private investment.

The expert also criticized the National Congress for its protracted delay in debating and approving energy sector reforms. Each day of inaction translates into economic losses and postpones critical investments needed to bolster energy generation and distribution. Rodríguez stressed that prioritizing this reform is paramount for the country's economic development.

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Honduras has not promoted competitive tenders for renewable energy generation in the last 16 years, and recalled that the only major recent contract was for thermal generation.

Rodríguez proposed a multi-pronged solution: professionalizing ENEE's administration, reducing political influence, enacting legislation against energy theft, strengthening the regulatory role of the Electric Energy Regulatory Commission (CREE), and creating clear conditions to attract private investment without privatizing the service itself. He also called for a long-term energy policy focused on renewables, technological modernization, and rural electrification through isolated systems and microgrids, urging national banks to support these projects.

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The 1,500-megawatt tender, which prioritized renewable sources, remains paralyzed, awaiting the approval of the energy reform in the National Congress.