VZCZCXYZ0002
RR RUEHWEB

DE RUEHGT #0677 1492243
ZNR UUUUU ZZH
R 282243Z MAY 08
FM AMEMBASSY GUATEMALA
TO RUEHC/SECSTATE WASHDC 5434
INFO RUEHGT/CENTRAL AMERICAN CARIBBEAN BASIN COLLECTIV

UNCLAS GUATEMALA 000677 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG ECON PREL PGOV GT
SUBJECT: GUATEMALA TAKES STEPS TO RESOLVE ELECTRICITY CRISIS 
 
¶1.  Summary:  During a recent lunch with the Ambassador, 
Guatemalan Energy and Mines Minister Carlos Meany detailed 
steps the GOG has taken to mitigate a shortage of electricity 
that would have resulted in blackouts by April 2009.  The 
Ministry has signed contracts to expand Guatemalan electrical 
capacity by approximately 71 percent to bring total national 
generating capacity to 2,729 megawatts.  The contracts are a 
culmination of a national energy plan developed by Meany and 
approved by President Colom in January.  The first 200 
megawatts are scheduled to come on-line by the end the year 
with the interconnection of the Guatemalan and Mexican 
electrical grids.  Remaining generation capacity will come 
on-line between 2010 and 2014 with the completion of a 
variety of coal and hydroelectric projects.  All of the 
projects Meany cited were supported by signed contracts that 
included stiff penalties if the providers failed to deliver 
completed projects.  If the contracts are completed on time, 
the expanded supply should keep Guatemalan electricity supply 
comfortably ahead of demand over the next five to ten years. 
End Summary 
 
Guatemalan Electricity Situation 
-------------------------------- 
 
¶2.  Over the past five years electricity demand in Guatemala 
increased by an average of 100 megawatts per year while 
supply increased only marginally.  Current total electricity 
generation capability is approximately 1600 megawatts and 
demand is 1500 megawatts.  This narrow surplus together with 
continued demand increases led analysts to predict brownouts 
or rolling blackouts by April 2009. 
 
National Energy Plan 
-------------------- 
 
¶3.  On January 21, President Colom approved Minister Meany's 
plan to avert a possible electricity crisis by expediting the 
completion of the interconnection of the Guatemalan and 
Mexican electrical grids (part of Plan Puebla-Panama to 
improve and integrate Central American and Colombian 
infrastructure) and signing contracts to increase domestic 
electricity production by hydroelectric and coal production. 
 The GOG decided to focus on coal and hydro-electric 
production since current oil prices make petroleum-based 
electricity production 50 to 300 percent more expensive than 
coal or hydro-electric production. 
 
Steps taken to date 
------------------- 
 
¶4.  The GOG has signed contracts that will gradually increase 
Guatemala's electricity supply by 71 percent from 1609 
megawatts currently to 2,729 megawatts by 2014.  The GOG 
granted contracts to large firms with international 
experience in large energy production facilities such as Duke 
Energy and Jaguar, with approximately $1.8 billion in total 
financing coming from multi-national lending institutions and 
private firms, primarily in Europe and the United States. 
The interconnection with Mexico, due to come on-line by the 
end of the year, will add 200 megawatts to national 
electricity supply.  New coal plants should provide an 
additional 470 megawatts by 2013 and one small fuel-oil plant 
would generate 35 megawatts.  In addition, five new 
hydro-electric facilities should generate 418 megawatts by 
¶2014.  Each of these projects has been approved for 
construction.  Twenty-five additional hydro-electric 
projects, for an with a projected capacity of 2,000 
megawatts, are under consideration by the Ministry of Energy 
and Mines.  However, these projects are still in the planning 
or approval phases and are not yet included in GOG 
electricity generating capacity projections. 
 
¶5.  Comment:  In a May 24 press release, Colom announced the 
success his administration has had in expediting a resolution 
Qsuccess his administration has had in expediting a resolution 
to the electricity crisis.  The speedy contracting process 
represents an important step forward in forestalling the 
electricity crisis and demonstrates the government's ability 
to act quickly when necessary.  While the complexity and 
relatively long-term nature of energy projects could lead to 
delays in implementation, it appears the GOG is on track to 
resolving this potential crisis. 
 
Derham