Latin America's Business Information Leader
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Electric Power Perspectives - a weekly summary
January 9 - January 15 2010
Click to read the online version:
http://www.bnamericas.com/perspectives_home.jsp?idioma=I§or=10&id_email=170280020
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In this issue:
* Weekly Wrap
* Q & A:Latin America still full of opportunities
Pablo Moysam
Corporate commercial manager
Santos CMI
Argentina, Chile, Mexico, Regional
* Coming Up
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
** WEEKLY WRAP **
Venezuela once again dominated the headlines this week after President Hugo Chávez suffered the embarrassment of having to call off programmed power rationing in Caracas just days after implementing it.
"I realized that it didn't have the desired effect, so the rationing plan has been called off," Chávez said in a televised address.
Chávez also asked for the resignation of the country's newly appointed electric power minister, Ángel Rodríguez.
Programmed rationing will continue in the rest of Venezuela.
Venezuelan state power distributor EDC said earlier in the week that it had began implementing rotating four-hour programmed power cuts in Caracas that would affect specific zones every other day. The programmed cuts were planned to save 2.6GWh/d in January, 2.1GWh/d in February, 1.4GWh/d in March, 900MWh/d in April and 3.6GWh/d in May.
Venezuela's power crisis is becoming increasingly severe as levels at the Guri dam, which provides about 70% of the power consumed in Venezuela, continue to fall. The water level was last reported at 261m, 10m below normal.
Venezuelan authorities are trying to reduce national consumption by 20% to prevent the water level at Guri from reaching the emergency level of 240m. If waters drop below that level, authorities will have to reduce Guri capacity by 5GW.
Shopping malls and other industries have already been forced to cut power demand. Public employees, meanwhile, saw their work day cut in half to reduce power consumption in offices. The programmed rationing, however, was rolled out without much notification, and local reports filled newspaper pages with stories of people trapped in elevators and schools without lights.
Many Venezuelans, already angry over last week's currency devaluation, protested the power cuts by chanting "Welcome to Cuba" in the streets. In a bizarre move, Venezuela's embassy in Washington sent out critical press clippings of all the problems with the programmed rationing.
Venezuela's state power company Corpoelec is rushing ahead with plans to install new backup thermo capacity, but some analysts say that the company has not been moving fast enough.
"Chávez is concerned. He tries to blame it on El Niño and deny the problems with power and water infrastructure. He talks constantly on his television talk shows about it. There's just not enough water up at Guri dam," Thomas O'Donnell, a nuclear physicist with the New School University in New York City and Caracas-based Venezuelan energy analyst said.
"If it starts raining hard and he gets lucky with a little infrastructure, he might pull out of this. But it's a serious problem," he added. "There's a pretty high tolerance for this kind of stuff here in Venezuela. If there were to be a blackout in Caracas for a couple of days, things could get intense. It wouldn't necessarily mean a revolution, though."
Power troubles in Venezuela, meanwhile, have spilled across the border to Brazil. State-run utility Eletronorte reconnected the 47MW Floresta thermo plant in order to compensate for reduced power exports from Venezuela to Roraima state.
"The company reconnected the Floresta thermo plant on January 11 to compensate for the reduced Venezuelan power exports. There is no risk of a blackout or supply failure in the region," a spokesperson for Eletronorte said.
Brazil's northern state of Roraima is not connected to Brazil's national interconnected power grid, and the region usually receives part of the power it needs from Venezuela.
Also this week in Electric Power:
Argentina
- Federal planning minister Julio De Vido denied any plans to raise power prices in the near future.
- The first phase of a wind farm in Argentina's La Rioja province should be completed and start operations by February.
Chile
- The amount of imported LNG used to fuel thermo power plants on Chile's central SIC could double in 2010, according to energy minister Marcelo Tokman.
"LNG is now accounting for 13% of the power produced on the SIC," Tokman said. "And its participation in the matrix is only going to grow."
- Chile should expect restrictions tied to trade based on the country's carbon footprint which is expanding because of the increased reliance on coal-fired thermo power capacity, Tokman said.
- International geothermal experts from three distinct regions will arrive in northern Chile in March to assess the El Tatio geothermal site.
- Corema, Chile's regional environmental regulator for northern region Antofagasta, approved Spanish firm Solarpack's EIA to construct and operate Chile's first solar plant.
Ecuador
- The governments of Ecuador and China signed an MOU for a US$1.7bn loan to finance the 1.5GW Coca Codo-Sinclair hydroelectric plant in Napo province.
Mexico
- The 10MW La Rumorosa I wind farm owned by Mexico's Baja California state government began commercial operations January 13.
The farm is located in the La Rumorosa area between Tijuana and Mexicali in the Sierra de Juárez region. It is the first wind plant in the La Rumorosa area and will serve as an example for other projects soon to follow.
- UK-based firm Biogas Technology will invest up to US$35mn in waste-to-energy projects in Mexico over the next five years.
Peru
- Peru's mines and energy ministry (MEM) will carry out a new electrification program that aims to bring power to 92% of its population by 2011.
- The board of Peru's state agency for promoting private investment ProInversión approved the promotion plan for putting out to concession 600MW of standby power.
RESULTS & FIGURES
Power demand on Argentina's national grid fell 0.3% to 9.02TWh in December from 9.05TWh in the same month of 2008. The reduction was attributed to weaker demand in greater Buenos Aires and coastal regions. December demand was up 4.8% from 8.61TWh in November 2009.
In 2009, increased capacity and flat demand led to greater reserve capacity on Chile's grids. On the central SIC grid, capacity increased by 1.4GW in 2009, from around 13GW to 14.5GW. Demand barely rose over the period.
End power prices on the SIC grid are set to continue to fall, according to Tokman.
"We expect a near-term drop in prices of no more than 4% in the SIC," Tokman said. "This adds to the 15.6% decline from their peak in February 2009."
For the eighth straight month, dams in Colombia have registered lower than average water levels. Hydro power accounted for 1.95TWh of power produced on the country's national SIN grid in December, down 50% from the same month of 2008.
By Nathan Crooks
Related Companies
* Centrais Elétricas do Norte do Brasil S.A. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=13618§or=0
* C.A. La Electriciad de Caracas - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=13818§or=0
* Agencia de Promoción de la Inversión - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=14544§or=0
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
** Q & A **
* Latin America still full of opportunities
Pablo Moysam
Corporate commercial manager
Santos CMI
Argentina, Chile, Mexico, Regional
While some companies chose to hunker down and ride out the worldwide crisis, others seized the moment to retool their business strategies to stay a step ahead of the competition.
International engineering and construction contractor Santos CMI - based in Ecuador - is one company which expanded its geographic scope and the type of projects it participates in to bolster its regional footprint.
BNamericas spoke to Santos CMI corporate commercial manager Pablo Moysam to learn about these efforts.
BNamericas: With 2009 now behind us, how would you rate the year in terms of doing business here in the region?
Moysam: It was a year of many challenges for the industry, in particular service companies.
In our case, I believe we were fortunate to be very well prepared to face this type of situation which on one hand generates opportunities because crises always require specialized solutions, like the ones we offer, but it also required us to be more flexible in the services we offered to cover a wider geographic area and types of projects.
BNamericas: Could you expand a little on Santos CMI's efforts to be more flexible?
Moysam: Geographically, I believe in the last three or four years we were very much concentrated in the Southern Cone, with many opportunities in Argentina and Chile where we are still very active, but due to the crisis in Argentina, for example, and the resurgence of opportunities in countries like Ecuador and in Central America, there's an opportunity for us to geographically redirect our attention more toward the center-north of the continent.
In terms of project profiles, we kicked off 2009 with a lot of exposure to shorter term projects. Santos CMI in the last 10 years focused on EPC contracts which take much longer to develop and carry out.
In 2009 and in light of the crisis, we decided to focus on construction and installation, without engineering and procurement.
BNamericas: The crisis also led to downward pricing pressure. Is the region a competitive market?
Moysam: Yes, definitely. I believe competition always exists. Latin America is a very competitive region where there are not only local players in every country, or regional players like us, but also players from Europe and the US.
BNamericas: What is Santos CMI's strategy/action plan for this year and the short term?
Moysam: Our plan goes to at least 2012. We're closely following the principal infrastructure projects planned for Central America, the Caribbean and South America for the next three to five years.
I think we're at an important moment in the consolidation of our EPC capacities through a lot of internal investment but also strategic alliances with large companies that we believe will allow us to participate in large infrastructure projects in years to come.
BNamericas: Apart from Quito, I see the company also has offices in Argentina, Brazil, Chile, Colombia, Mexico and the US. Any plans to open new offices?
Moysam: Not necessarily opening new offices; Santos CMI's operations model entails having offices in countries where projects are being carried out. Permanent offices, be they commercial or administrative, in countries where there are not projects underway is not common to our operation.
So more than a plan of opening new offices, I would say our plan is to maintain our commercial and operational presence in the 18 countries we are currently present.
It has been a very successful formula because it has allowed us - considering the size of the company - to maintain a constant, flexible operation in all these countries and reach all these markets without having to be one of the giant European or US companies with offices in every country.
BNamericas: Working in such a varied economic, political and social landscape, how does Santos CMI tackle risk?
Moysam: Like all global business, we follow risk analysis policies for all markets, clients and business opportunities. Santos CMI uses methodologies from the Project Management Institute to evaluate and classify risks.
BNamericas: What are some projects the company is currently working on in the electric sector?
Moysam: We have a very important project in Mexico where we are carrying out the mechanical electrical assembly of two recovery boilers for a 500MW combined cycle plant in Queens, New York. The plant owners are SNC Lavalin and Suez Energy.
In Ecuador, we are participating in the installation and commissioning of equipment required by General Electric which is supplying seven generation units purchased by the power and renewable energy ministry.
BNamericas: And in oil and gas?
Moysam: In Ecuador, we are involved in the design, supply and construction of infrastructure in the Pañacocha field administered by Petroamazonas, a unit of state oil company Petroecuador.
By David Casallas
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
** COMING UP **
January 15, 2010:Bids for 500MW of renewable capacity in Peru are due on January 15. Energy and mining investment regulator Osinergmin is hosting the round.
Peru
January 17, 2010:Second round of presidential election.
Chile
January 18, 2010:The bidding deadline for the 487MW Paute-Sopladora hydro project in Ecuador has been extended to January 18 from November 16.
Ecuador
January 18, 2010:Letters of interest due for the development of the massive 2.4GW Hidroituango hydro plant in Colombia's Antioquia department.
Colombia
January 18, 2010:Martin Luther King, Jr. Day, US markets closed.
Regional
January 18, 2010:Deadline for potential bidders to register with Peru's energy and mining investment regulator Osinergmin for an auction to supply 500MW to the national grid from renewables for 20 years.
Peru
January 21, 2010:Power authorities from Bolivia, Chile, Colombia, Ecuador and Peru are due to meet in Santiago to review advancement of a planned interconnection among the countries.
Bolivia, Chile, Ecuador, Peru
January 27, 2010:New president Porfirio Lobo to be sworn in.
Honduras
January 28, 2010:Bids due to supply 190MW to El Salvador's principal distributor Caess.
El Salvador
January 29, 2010:Companies interested in taking part in the auction for Brazil's 11.3GW Belo Monte must submit application documents.
Brazil
January:Mexico's energy regulator CRE plans to present in January new rules related to the interconnection of renewable generation capacity and cogeneration plants.
Mexico
January:Auction for Brazil's 11.3GW Belo Monte hydro plant postponed from December 21.
Brazil
February 07, 2010:Presidential and congressional elections.
Costa Rica
February 11, 2010:Bids due for tender launched by Mexico's state power company CFE for the construction and operation of three wind generation power plants, Oaxaca II, III and IV, each of which would have capacity of some 101MW.
Mexico
February 15, 2010:Washington's Birthday/Presidents' Day, US markets closed.
Regional
February 20, 2010:Hydro and environmental impact studies for the multipurpose Majes-Siguas II concession project in Peru's Arequipa are due to be ready.
The studies will determine the necessities of Arequipa and Cusco departments, as there has been a conflict over where water from the Apurimac river should be directed.
Peru
March 5-6:Energy Efficiency Expo, organized by Chile's energy commission CNE
Chile
CNE
www.expoeficienciaenergetica.cl
1Q10:Colombia's energy and gas regulator CREG and Panama's public services watchdog Asep aim to wrap up the regulatory aspects of a planned power interconnection by the end of the first quarter of 2010.
Colombia, Panama
1Q10:The Nicaragua component of Central America's Siepac grid project will be completed in the first quarter of next year, according to country's state transmission company Enatrel.
Nicaragua
Enatrel
1Q10:Mexican state power company CFE aims to complete the profitability study for its prospective 25MW Cerritos Colorados geothermal project in Jalisco state's Primavera forest by 1Q10.
Mexico
CFE
March:International experts to assess the El Tatio geothermal site in northern Chile.
Chile
April 02, 2010:Good Friday, most markets closed.
Regional
April:Maintenance works at US power company Duke Energy's Cerro Colorados hydroelectric complex in Argentina's Neuquén province are to be complete.
Argentina
May 31, 2010:Memorial Day, US markets closed.
Regional
July 05, 2010:US holiday marking Independence Day.
Regional
September06, 2010:Labor Day, US markets closed.
Regional
October 03, 2010:Presidential elections.
Brazil
November 01, 2010:All Saints Day, most Latin American markets closed.
Regional
November 25, 2010:Thanksgiving Day, US markets closed.
Regional
December 24, 2010:Christmas holiday (observed), US markets closed.
Regional
end-2010:The 46MW Totoral wind farm in Chile's region IV is set to begin operations by the end of 2010.
Chile
Click here to view the most important conferences and events in your sector of interest. http://www.bnamericas.com/conferences_home.jsp?idioma=I§or=10
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Featured Reports
* BCRP - Nota de Estudios Nº 59: Déficit del Sector Público No Financiero Enero - octubre: S/. 548 millones - http://www.bnamericas.com/research_detalle.jsp?idioma=E&documento=978742§or=0
* Celfin - Monthly Generation Review - November 09: SIC grid demand higher YoY in November; lower in SING - http://www.bnamericas.com/research_detalle.jsp?idioma=I&documento=986135§or=0
* Celfin - ENERSIS (Initial Opinion, BUY): LatAm Powerhouse - http://www.bnamericas.com/research_detalle.jsp?idioma=I&documento=986954§or=0
* BCRP - Nota de Estudios Nº 60: Superávit de US$ 152 millones en cuenta corriente en el tercer trimestre - http://www.bnamericas.com/research_detalle.jsp?idioma=E&documento=981111§or=0
* Celfin - Chile Macro: Industry Still Weak - http://www.bnamericas.com/research_detalle.jsp?idioma=I&documento=978694§or=0
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
TO UNSUBSCRIBE
To take yourself off this email list please reply to this email to mailto:info@BNamericas.com and write "UNSUBSCRIBE" in the subject line of the email.
CUSTOMER SERVICE
Please contact BNamericas at mailto:info@BNamericas.com or at the address below if you have any questions/comments about changing your email format, subscriptions, additional copies, corporate discounts, advertising, media monitoring or require information about other Business News Americas services.
FOR YOUR EYES ONLY
Reproducing, forwarding, faxing or electronically transmitting this newsletter in whole or in part in any form or medium without the expressed written permission of Business News Americas is prohibited. If you would like other colleagues, regional offices or a partner company to receive the BNamericas news service or would like more details about publishing BNamericas content on your intranet or internet site, please contact us at mailto:info@BNamericas.com or call us on (56-2) 941-0300.