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    Hydroelectric plants among the most profitable businesses

    June 17, 2022 - CE Noticias Financieras


      While it is true that in times of crisis it is necessary to reinvent ourselves with creativity for social peace in our country, to alleviate the effects of the rise of imported products and inputs and above all the price of fuel, since its increase seems unstoppable, affecting everything we consume. Perhaps we can avoid substitute rents before the elimination of the fuel tax, reason for which I propose to review the yields and benefits of the hydroelectric "business" that induces us to reflect on a legislative restructuring, due to the need for alternatives to assume subsidies and other collateral of temporary condition.

      I am trying to understand the subject where their operations and profit results are excellent, but meager for the State.

      It is necessary to consider that the waters of our rivers and their tributaries are used for the operation of several hydroelectric power plants that total several dozen throughout the national geography in the hands of private consortiums, so it is necessary to corroborate their operations and their cost-benefits according to the investment and financial costs in a period that does not exceed 30% of the time of the concession, which is 25 years.

      It is important that the State carries out an exhaustive review, since serious doubts arise about the official performance, to clarify apparent indications of accounting opacity, operating under a State Concession regime, it becomes exigible to know that nothing goes against the principles of transparency in the finances on reasonable profits detailed in the Financial Statements without dilution of costs in subterfuges unrelated to the operation of the hydroelectric power plants as such.

      Of course, we aspire to locate an alternative through restructuring of liens or shareholding of the State by right, due to the use of water transforming hydraulic energy into electric energy.

      In the absence of available information and in "penny words" questions arise to obtain concise answers and adjusted to the truth, imagine kind readers that the kilowatt hour produced in a plant of this type is billed to the country in $0.10, in proper classification they tabulate megawatt hour (production unit) and therefore that MW/h is sold to us at $100 hour, in such a way that a hydroelectric plant that generates 15 megawatt hours would be accounting for $1,500/h, reflecting in a linear way $12.96MM over 8,640 hours per year.

      However, it is important to consider its sales based on the firm power production and the affectation of the dry season, which reflects a reality of 70% production and yield with results that oscillate around $9,072MM over 6,048 hours per year whose results in 25 years without considering possible increases and interests total $226.8MM.

      Now, we move on to the hypothetical exercise detailing the possible realities of the investment including its financial costs and start-up:

      1. $60.0MM (Est. Design & Construction)

      2. $16.2MM (Financing)

      3. $3.6MM (Inflation and others)

      4. $31.5MM (Operations and maintenance) We clarify that the addition of $31.5MM is the result of average annual constants in the order of $1.26MM. From the grand total of $226.8MM we deduct the detailed values that add up to $111.3MM, a sum that at the end of the period reflects a profit of $115.5MM ($4.62MM/year) something out of the ordinary in business practices and results in our environment.

      After overcoming the opprobrious and badly remembered time of the Noriegato, we are as if we were anesthetized with intravenous and we do not take it for granted.

      Those $115.5MM mean an unreasonable profit over 103.33%, approximately, and with the option of automatic renewal for another 25 years, when doing the exercise to observe the profit results of those subsequent 25 years, it is pathetic.

      Three important impacts need to be considered:

      1. Concessionaires project production annuity and their monthly invoices are paid practically on demand.

      2. To the international market ("Spot") they sell cheaper than to the local market, energy considered dirty, but received in a country like Costa Rica, considered a "green" country.

      3. The calculations on hydroelectric plants of 15.0MW shock us, for your information, the hydroelectric generation in the country exceeds 1100.0MW.

      Panama is for and by Panamanians we do not deserve more exploiters with subtleties behind the curtain.

      Political engineer and Torrijista.


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