Honduras Faces Structural Electricity Reform After Decades of Neglect

Honduras is not experiencing a mere electricity crisis; it is grappling with a structural reform that has been deferred for three decades. The nation understands the necessary steps: separating generation, transmission, and distribution; tackling critical losses nearing 38%; ensuring consumption is paid for; reviewing contracts; and reorganizing the National Electric Energy Company (ENEE). This knowledge has been available for years, yet the political will to execute these changes falters when it threatens those who benefit from the current disorder.

The country's natural abundance of resources is contrasted by its institutional scarcity. Early legislation in the 1990s recognized the need for distinct operational logics for generation, transmission, distribution, and commercialization. Subsequent laws reiterated this path, but a lack of decisive action and a truly independent regulatory commission, free from electoral cycles, rendered oversight ineffective. This systemic failure has led to a cascade of problems: emergency thermal contracts becoming the norm, transmission treated as an invisible necessity, and distribution becoming a financial hemorrhage due to losses, unpaid bills, systematic theft, and poor metering. Consequently, those who do pay end up bearing a disproportionate burden.

The "Libre" chapter, while not inventing the crisis, added layers of confusion. It conflated rescue with recentralization and sovereignty with political control. Decree 46-2022, enacted five months into the current government's term, aimed to reassert state control but did not resolve the fundamental issues of losses, debt, contracts, transmission, metering, or governance. A bankrupt company does not become efficient simply by being declared a strategic sector. While the country debated models, ENEE's accumulated debt reached approximately 11% of GDP, according to World Bank estimates (2024). Thermal power plants continued to inflate electricity tariffs, and citizens continued to foot the bill for an ideological debate that offered no technical solutions.

A reform recently sent to Congress seeks to address these deep-seated issues. It proposes creating an independent System Operator, an autonomous technical entity separate from ENEE, and bolstering the Regulatory Commission for Energy Services (CREE) with its own funding. Furthermore, it aims for vertical separation of ENEE into distinct segment-specific companies. On paper, these measures target the core problems. While this reform may not be politically convenient for the current administration, its serious consideration is warranted. Honduras has a history of enacting sound legislation; the challenge lies in its consistent and effective implementation to overcome decades of systemic capture and neglect.