Despite the significant initial investment required for the
exploration stage and the long project commissioning cycle,
geothermal power is the source of renewable energy that most energy
produces without interruptions for several decades with relatively
low operating costs, which leads to an energy source with excellent
long-term performance results. In Nicaragua, geothermal power
provides attractive tax incentives based on Act 443, "Law on
the Exploration and Exploitation of Geothermal Resources" and
any amendments thereto, published on November 17, 2014.
Some of these tax incentives for the development of geothermal
power in Nicaragua include the following:
Exoneration of customs duties
and VAT on machinery, equipment, and materials for works
Exoneration of the payment of
income tax for a 10-year period following
the commencement of the project's commercial operations.
Exoneration of payment of
municipal income tax (IMI) for a 5-year
period following commencement of the project's operations.
A key aspect to be noted is that ENEL (Empresa Nicaragüense
de Electricidad), a state-owned company for power development,
should own at least a 10% equity interest in the specific
geothermal exploitation project and must have a seat at the Board
of Directors with right to speak and vote in the company that was
granted the exploitation concession. On the other hand, the
remaining 90% equity interest must be owned by the specific
domestic or foreign investor for up to a 30-year
exploitation concession period following the execution of
the exploitation agreement.
The geothermal exploitation concession may be extended by the
Ministry of Energy and Mines (MEM) for a similar period to that
initially granted –up to 30 years-, provided that the
concessionaire has applied for an extension after five years
following the commencement of the exploitation and/or at least
three years before the expiration thereof, and to the extent there
is technical evidence on the possibility to increase its generation
The fact that geothermal power flows 24 hours a day in a
consistent and uninterrupted way is an attractive factor
which favors its high profitability, along with the steady
investment environment in Nicaragua over the last 5 years, which
represents a positive global landscape for the commencement of
geothermal energy development projects in the country.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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