Latin America Advisor

Energy Advisor

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Can Costa Rica’s ICE Survive Without a Major Reform?

The president of Costa Rica’s electricity and telecommunications services provider, Irene Cañas, in November said the state-owned company is facing high levels of debt. // File Photo: Costa Rican Government.

Costa Rica’s electricity and telecommunications services provider, the Costa Rican Institute of Electricity, or ICE, said in November it projects a loss of 314 billion colones, roughly $525 million, this year, citing low demand for energy and exchange rate volatility as the main causes. Irene Cañas, ICE’s executive president, announced plans to end several projects and a new policy of accountability as the state-run company, which maintains a monopoly in the country’s electricity market, seeks to revitalize its finances. Given Costa Rica’s economic troubles, how likely is it that ICE will succeed in boosting its profits and paying its debt? To what extent is ICE’s business model failing, and are changes needed to modify it? What should a major reform of ICE look like, and what advantages and disadvantages would it bring?

Juan Manuel Campos Ávila, president and senior consultant at Ciber Regulación Consultores in San José: “It is very unlikely that ICE will be able to revert its losses and pay its debt for various factors that are unlikely to change in the short and medium terms, particularly the fall in electric demand, the high level of debt, the high cost of maintaining and operating electric infrastructure and its significant loss in the telecommunications market due to the lack of new content services to build customer loyalty. Unfortunately, ICE ‘grew old’ along with its personnel, and it has not implemented important and structural institutional changes. ICE’s business model has failed. It did not prepare itself well for changes in the electricity and telecommunications sectors. Political intervention, a lack of internal leadership, the scarce promotion of new talent and especially the lack of accountability gave birth to the institute’s bountiful losses. In recent history, the debate on the future of ICE has been focused…”

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A sister publication of the Inter-American Dialogue’s daily Latin America Advisor, the weekly Energy Advisor captures fresh analysis from business leaders and government officials on the most important developments in oil and gas, biofuels, the power sector, renewable energies, new technologies, and the policy debates shaping the future of energy in the Western Hemisphere. To subscribe or for more information, contact Erik Brand, publisher of the Advisor, at ebrand@thedialogue.org.


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