Investment Opportunities In Energy And Infrastructure

Energy & Infrastructure

Industry Profile

Nicaragua offers a wide range of investment opportunities in the Energy and Infrastructure sectors. Due to its richness in natural resources, the country has a potential of energy generation of more than 4,500 MW, distributed in Geothermal, Hydroelectricity, Wind Energy, and Biomass.

Currenty, the installed capacity for power generation in Nicaragua is approximately 1,100 MW:

2012 Installed Capacity

Source: Ministry of Energy and Mines

The Government of Nicaragua has set the goal of reducing the country's dependence on hydrocarbons to 21 percent of the energy generation matrix and is therefore prioritizing the granting of concessions to generate energy from renewable sources.

2017 Projection

Source: Ministry of Energy and Mines

There is also a great potential for the construction and operation of infrastructure in the country to boost the development of different economic sectors. The Government of Nicaragua, through the National Port Company (EPN, for its acronym in Spanish), is modernizing the current port system and is seeking foreign investment to develop projects of interest.

These are the expected benefits of the port projects:

With the Monkey Point Project, a dry canal would be created, connecting the Pacific Coast with the Caribbean Coast of Nicaragua.
The Tourist Port Project in San Juan del Sur will boost the development of Nicaragua´s tourism sector transforming San Juan del Sur into one of the region´s most modern ports.
Boost Nicaragua´s economic development by stimulating commercial activity in the country´s main port: Port Corinto.
Transform Nicaragua into a competitive, cost efficient commercial platform for import and export activities.
Increase Nicaragua's competitiveness by promoting sustainable economic growth through the development of export-oriented sectors.

Investment Opportunities

The main investment opportunities in the Energy and Infrastructure sectors are:

1. Energy Generation from Renewable Sources

Hydroelectric Energy
Geothermal Energy
Eolic Energy
Biomass

2. Construction of Ports

Construction of a deep water port at Monkey Point in the Caribbean
Reconstruction of the pier of Puerto Cabezas

3. Highway Construction

Coastline Highway

4. Airports

Expansion of the Augusto Cesar Sandino International Airport
Airport in Punta Huete

Why Nicaragua?

The government promotes and facilitates the attraction of foreign investment in these sectors through a sound legal framework, an attractive business climate, availability of a qualified and competitive personnel, and tax benefits and incentives.

Regulatory Framework

The regulatory framework used to award an energy generation concession, varies by type of renewable source:

Hydroelectric Projects
The existing legislation determines that projects that will produce less than 30 MW can request the Ministry of Energy and Mines (MEM) a License or Concession, but projects above 30 MW require a special law for the project, approved by the National Assembly. This law establishes the special tax benefits offered by the various laws related to the project.

Geothermal Projects
The concessions are granted through a direct negotiation with the Ministry of Energy and Mines (MEM):

The exploration contract has a duration of 3 years, but it can be extended by the MEM for another 2 years. The granted area for exploration is 100 km2.
The concession for exploitation activities covers an area of 20 km2 and has a duration of 25 years. It can be extended for 2 periods of 5 years each.

Renewable Energy Incentives Law (Law 532)
This law provides exemptions of up to 100 percent in property taxes, taxes on fixed investments in machinery and equipment and taxes on the sale of carbon bonds, among others.

For the Port Projects that the EPN is promoting, a new Port Law is under the process of approval by the National Assembly. The Law will establish the process that a company has to follow for private investment in the National Ports.

Market Access

Local Market

Energy generators can sell their production to the Private Energy Distributers: Disnorte - Dissur.
Direct Energy Sale to Great Consumers: Direct energy sale to companies that consume more than 1 MW. To be able to conduct this negotiation, "great consumers" must be recognized as such by the Electric Institute of Nicaragua (INE, for its acronym in Spanish). There are currently several companies established as major consumers.

Regional Market

To increase the capacity of energy and power transfer in the regional market, the construction of a regional transmission line of 1,800 km long with a capacity of 300 MW at a voltage of 230 KV is currently underway. This project is known as the Electrical Interconnection System for Central America (SIEPAC, for its acronym in Spanish). It will enable the joint operation and development of the regional electricity market, ensuring the safety and quality of electricity supply so that any authorized agent may buy or sell energy regardless of their geographical location.

Testimonial

"We feel very satisfied with these amendments to the law since it clears the way for more investments in this sector which are expected to considerably improve the returns on investment for the existing geothermal concessionaires" said Tom Ogryzlo, CEO of Polaris Geothermal Inc.

Contacts in PRONicaragua

Let us arrange a personalized agenda for your visit to Nicaragua that suits your business needs. We invite you to discover why Nicaragua is the right move for your business!

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