The environment

As privileged as it is with the planet's finest natural reserves, Central America has passed many laws geared to the protection and sustainability of its environment, balancing its efforts toward ensuring economic growth for the region.

Honduras' current monthly energy consumption reaches the 1,200 mw. Energy production is based on thermal source (75%) and hydroelectric means (25%). Lately, other renewable sources, such as biomass, have emerged as alternatives to the actual setup.

The latter increment in oil prices have affected the country's energy matrix in a negative way and have brought upon final users the burden of a higher price for the energy they consume. As a response, the Government and private investors have realized that the current matrix could be reduced to more renewable sources, which in turn will provide energy at a lower cost. Therefore they are seeking for the development, construction and operation of renewable projects to take advantage of renewable energy.

The projects

Recently the National Congress approved more than 40 energy generation contracts with renewable resources, which include hydroelectric, geothermal, and biomass generation projects as well as cogeneration initiatives. It is expected that in the next 5 years the projects will produce some 700 mw of renewable energy and the country will benefit through different levels of installed capacity.

In general, the projects will be undertaken in the next 20 years and will be located in different zones of Honduras like Intibucá, Comayagua, Cortés, Yoro, Santa Bárbara, La Paz, Copan, Atlántida, Olancho, Ocotepeque, Francisco Morazán and Choluteca.

More recently twenty-six projects regarding renewable energy were presented during "Honduras is Open for Business", an international forum, which took place last May in San Pedro Sula, Honduras, focusing on diverse sectors such as energy, infrastructure, agri-business, forestry, maquila services and tourism. These projects represent a total amount of US$2.663.091.566.00 million dollars. Among those projects are hydroelectric, biomass, hydropower, energy crops and bio-fuel projects.

Many of the mentioned projects are being executed and others are on their way, pending obtaining environmental licenses and other special permits to operate.

Regarding wind energy there is a project located at Cerro de Hula, Francisco Morazán, Honduras, which aims to produce 100 mw and is expected to be the biggest wind energy facility in Latin America. The zone is well known for having periods of strong winds so it has favorable conditions for the development of the plant.

The project represents an investment of US $130M that will bring great benefits for the country, as well as for the neighboring communities.

Regarding hydroelectric, the Department of Olancho will host three projects to be constructed in the Patuca River named Patuca I, II and III, which will produce 524 mw with an estimated total investment of US$1,200M.

The above-mentioned projects will reactivate the construction sector in the country employing not only foreign but local workers, which means that a lot of families will benefit from these developments.

On the other hand biomass projects are also under execution, serving as an example the San Andrés Mine project, located in the department of Copán, expected to produce 10 MW of power.

The recent laws

Within the structure of the National Investment Promotion Program, Honduras has defined a new Legal and Institutional framework to attract and protect investments.

By means of this program the country offers domestic and foreign investors a package of laws among which we find "The Law for the Promotion and Protection of Investment" and the "Public Private Partnership Law".

The Law for the Promotion and Protection of Investment the State declares the promotion of investment as a primary concern; it creates mechanisms providing different tax incentives, it grants full guarantees to property rights in the country and enables arbitration as an alternative method for conflicts resolution.

On the other hand, the new Law on Promotion of Public Private Partnership (PPP), adopted in August 2010, allows public-private participation in the implementation, development and administration of public works and services.

In line with the reform of the country's legal framework the past year the country has adopted the following: i. The Secured Transactions Law, with the consequent establishment of the Register of Security Interests and by which a large number of assets may be pledged as collateral for loans; ii. The law for the Strengthening of the Income and Fiscal Equity, which reformed taxes on income and sales; iii. The National Hourly Employment Law, which establishes special working shift arrangements with limited time for work or services.

Honduras has really taken a big step charting a new legal framework for local and foreign investments.

The country is willing to carry out through the domestic and foreign private investment the great social transformation that the country needs to overcome the lack of development that so far has characterized the country.

We believe that this first major step in the country´s modern history, requires a true follow up, in order to take full advantage of the momentum and that the present and future governments must show through deeds, not words, their unconditional support for this initiative towards a better country for the benefit of all its habitants.-

**Published in Corporate Live wire e-magazine, Guide to Energy and Natural Resources, June 2011

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