VZCZCXRO5080
RR RUEHLMC
DE RUEHMU #0059/01 0171524
ZNR UUUUU ZZH
R 171524Z JAN 08
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 1934
INFO RUEHLMC/MILLENNIUM CHALLENGE CORP WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 03 MANAGUA 000059 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/CBA - DWINSTEAD 
STATE PASS USAID 
 
E.O. 12958: N/A 
TAGS: BEXP ECON EINV ETRD ABUD AMGT BTIO NU
SUBJECT: MANAGUA 2008 BFIF PROJECT PROPOSALS 
 
REF: 07 STATE 159597 
 
¶1. (U) In response to Ref. A, Embassy Managua submits the 
following two proposals for consideration for 2008 Business 
Facilitation Incentive Funds (BFIF). 
 
¶2. (U) Energy Solutions - Biofuels: 
 
A) Nicaragua is heavily dependent on imported oil to generate 
electricity.  Rising oil prices and poor regulation have 
resulted in serious cash flow problems throughout the power 
sector.  Lack of investment in plant and equipment within the 
context of a growing economy has led to power outages, 
affecting consumers and industry alike.  However, Nicaragua's 
soil and climate are ideally suited for the cultivation of 
potential sources of biofuels such as sugar cane, African 
palm, and switch grass.  Solving the energy crisis is a top 
priority for the Nicaraguan Government (GON), thus providing 
an opportune moment to showcase alternative energy sources 
and the role that the private sector can play.  President 
Ortega has criticized the production of ethanol with corn but 
has been quietly supportive of efforts to produce ethanol 
from sugar cane. 
 
There exists an excellent opportunity to promote biofuels in 
Nicaragua through a seminar or conference on the subject. 
Raising awareness would open markets for U.S. technology as 
well as for potential investment in production.  Our effort 
would complement other efforts by the Department of 
Agriculture, Department of Commerce, Department of Energy, 
and Department of State to promote the production and use of 
biofuels. 
 
We propose two half-day seminars focusing on the potential 
market for biofuels in Nicaragua.  The first seminar would be 
directed toward the private sector and entitled "Best Choices 
for Nicaragua: Raw Materials for Biofuel Production."  The 
objective would be to raise awareness of technology options 
and markets.  The second seminar would be directed toward the 
GON.  The objective would be to educate government officials 
on the possibility for Nicaragua to produce biofuels to meet 
a portion of its energy needs, and the kind of law and 
regulation that would support the development of a biofuels 
industry. 
 
Issues for discussion include: 
--In light of Brazilian and other technological advances, 
moving away from seed (corn kernel) to cellulose (leaves, 
stalks, and grasses); 
--African palm and biomass as cost-effective sources of 
energy; 
--Assuring that land for biofuels does not replace land for 
food; 
--Environmental impact; 
--Biofuels for export versus for local consumption; 
--Legal and regulatory environment; and 
--Challenges/needs to move the sector forward. 
 
Potential speakers for these seminars would include: USG 
officials, U.S. industry representatives, managers of local 
ethanol plants, cellulose expert from the FIU Applied 
Research Center George Philippidis, an environmental expert 
to discuss issues of protecting land and the benefit of 
biofuels, and Brazilian public and private sector actors in 
the biofuels sector. 
 
The guest list would include the National Assembly's Energy 
Committee members, senior and working-level government 
members, potential biofuel producers, business leaders, and 
scientists from agriculture and engineering universities. 
 
B) Planning Milestones: 
 
--One month after BFIF money awarded: planning with local 
partners underway, date set and local logistics established. 
--Two months: speakers and topics defined, guest lists drawn 
up. 
--Three months after award: event held. 
 
C) Estimated costs: $20,000.  Post would use the funds to pay 
for speakers from the United States and Latin America region 
and for seminar expenses.  The breakdown would be as follows: 
 
--2 Speakers from U.S. ) $6,000 
--3 Speakers from region ) $7,000 
--Logistics expenses (hall rental, refreshments, and 
invitations)- $10,000 
 
D) POC: Naomi Fellows 
   E-mail: fellowsnc@state.gov 
   Tel:  505-252-7549 
       IVG: 746-4549 
 
   LES POC: Amanda Fonseca 
   E-mail: fonsecaac@state.gov 
   Tel:  505-252-7559 
   IVG: 746-4559 
 
E) Post will work closely with Public Affairs, USAID, and 
USDA on this project.  Public Affairs will encourage media 
coverage for the seminar and help locate and invite speakers 
from the United States and the region.  USAID and USDA will 
coordinate with local partners and Washington offices on 
trade and competitiveness issues. 
 
F) Outcomes/Success criteria include the expansion of biofuel 
production, increased exports of U.S. machinery for biofuel 
production, encourage the presentation of a biofuels law to 
the National Assembly, and increase favorable public opinion 
toward the use of biofuels and positive media on biofuels. 
 
G) The mission will continue to reach out to public and 
private energy actors to explore biofuels and other energy 
alternatives. 
 
¶3. (SBU) Improving Competitiveness (as a follow-on activity 
of the Department of Commerce's June 2007 America's 
Competitiveness Forum and in preparation for the August 2008 
Competitiveness Forum): 
 
A) Although President Daniel Ortega has been a frequent 
critic of the private sector since taking office in January 
2007, he has so far maintained the free-market economic model 
implemented by his predecessors.  Post wants to build on the 
opportunity provided by the Department of Commerce's Americas 
Competitiveness Forum to reinforce the importance of 
maintaining an open economy and free trade, and to emphasize 
the role the private and public sectors can play in improving 
international competitiveness. 
 
Post plans to hold a seminar in May 2008 to focus on the 
institutional, infrastructure, and human capital aspects of 
competitiveness and demonstrate how Nicaragua businesses 
could improve their ability to sell locally and 
internationally.  Instilling the notion of improving country 
competitiveness should also benefit U.S. companies doing 
business in Nicaragua.  Post will leverage existing USAID and 
MCC projects and their relationships with local think tanks, 
academic institutions, and business associations (such as the 
Council for Private Enterprise (COSEP), INCAE (Central 
America's leading business School), and the Nicaraguan 
Presidential Commission on Competitiveness (CPC)) to organize 
the seminar. 
 
The seminar will: 
--Introduce and explain the concept of competitiveness and 
its benefits; 
--Present and explain existing competition law, encouraging 
prompt implementation; 
--Present additional government policies that would spur 
innovation, workforce development and education, 
infrastructure development, and supply chain strategies; 
--Discuss the proper role of private-public partnerships; 
--Highlight environmentally sustainable business practices; 
and 
--Discuss the role of investment. 
 
Potential speakers at the seminar would include U.S. experts 
on competitiveness, USAID and MCC partners in business 
development and trade capacity building, leaders from other 
Latin American competitiveness councils, and business school 
professors. 
 
The guest list will include members of the National 
Assembly's Economic Commission, senior and working level 
members of government, and private industry and business 
leaders. 
 
B) Planning milestones: 
--One month after BFIF money awarded: planning underway, date 
set, and local logistics  established. 
--Two months after award: speakers and topics defined, guest 
lists drawn up. 
--Three months after award: event held. 
 
C) Costs: $20,000.  Post would use the funds to pay for 
speakers from the U.S. and Latin America region and seminar 
logistics.  The breakdown would be as follows: 
 
--2 Speakers from U.S. ) $6,000 
--3 Speakers from region ) $7,000 
--Logistics expenses (hall rental, refreshments, and 
invitations)- $10,000 
 
D) POC: David Krzywda 
   E-mail: krzywdada@state.gov 
   Tel:  505-252-7571 
   IVG: 746-4549 
 
   LES POC: Marixell Garcia 
   E-mail: garciama5@state.gov 
   Tel:  505-252-7371 
   IVG: 746-4559 
 
E) Post will work closely with Public Affairs, USAID, and MCC 
on this project.  Public Affairs will encourage media 
coverage for the seminar and help locate and invite speakers 
from the United States and the region.  USAID and MCC will 
coordinate with local partners and Washington offices on 
trade and competitiveness issues. 
 
F) Expected outcomes include increased government attention 
to the competitiveness issue and recognition of the 
constructive role government policy can play in supporting 
private sector led economic growth. 
 
G) This program will complement the Department of Commerce's 
Forum on Competitiveness and USAID and MCC's work in support 
of the private sector.  It will also be part of a wider 
effort to highlight the importance of the private sector and 
role of government in support of free trade.  These are 
issues which we will continue to pursue with the Ortega 
administration in a variety of fora and constitute the 
primary thrust of mission work in the economic and commercial 
policy arena. 
TRIVELLI