SICA implements the Energy Sector Plan to face the COVID-19 crisis

This General Secretariat of the Central American Integration System release was published using machine translation.

Central America, May 8, 2020. The regional energy sector plays an essential role in the economic reactivation of the member countries of the Central American Integration System (SICA). In order to approve measures in such a regional sector in the face of the effects generated by the COVID-19 pandemic, an Extraordinary Meeting of the SICA Council of Energy Ministers was held.

During the meeting, the presentation and approval of the SICA Energy Sector Plan to face the COVID-19 crisis was carried out, which establishes the necessary measures to guarantee the continuity of the energy services of the member countries and take actions to prevent the current crisis from jeopardizing the sustainability of the sector and service supply chains, especially given the expectations of adverse economic scenarios that are forecast in the post-pandemic period. In this sense, in order to achieve the measures proposed by the energy sector, the aim is to have the support of multilateral financial organizations.

The main actions contained in the Plan include:

1. Seek the support of multilateral development banks, cooperating countries, cooperation agencies and commercial banks, to obtain funds and financing for the recovery of the energy sectors of the SICA member countries affected by the COVID-19 pandemic. .
2. To recommend to the corresponding regional and national instances to suggest to the banks and multilateral agencies that have granted loans for energy development projects of the SICA member countries the restructuring of the debt and the granting of a grace period; Said charges would be applied extending the term of the credits.
3. Create a "General Protocol to deal with emergencies and disasters in the energy sector of the SICA member countries", which will contain guidelines to be followed by companies in the energy sector, as well as regulatory entities and the ministries or secretariats that have He is in charge of the sector's policies, supervision and control. Among other actions identified as priorities.

The report was prepared by ECLAC in conjunction with the Energy Coordination Unit of the General Secretariat of SICA, based on a process of discussion and consultation with the main institutions of the energy sector in the countries, as well as with the inputs of the Operating Entity Regional (EOR) of the Regional Electricity Market (MER) of the Central American countries.

Intersectoral articulation:

The Secretary of State in the Honduran Energy Office and Pro Tempore President, Roberto Ordoñez thanked the General Secretariat of SICA and the invaluable work of the Directors of Energy and Hydrocarbons in preparing proposals and plans to respond to this crisis. "The challenges are great, the energy sector has to guarantee a quality service, at fair rates and it is essential in the stage of the crisis and the economic recovery," he said.

In this context, the Director of the Subregional Headquarters of the Economic Commission for Latin America and the Caribbean (ECLAC) in Mexico, Hugo Beteta, stressed that “It is necessary to ensure the sustainability of the energy sector for the future of the region, the different sectors they need it to carry out the different activities in the midst of the COVID pandemic. ”

Additionally, he stated, "The economic reactivation depends on the actions we take today. We must take joint and coordinated actions that complement national initiatives. We all know the relationship between growth and energy." For this reason, he affirmed that work is being done on the changes in the economic structure that is coming, and work will be done on the Energy Sector Plan that has been the product of shared work.

Regional Contingency Plan against Coronavirus

The General Secretariat of SICA works around the Regional Contingency Plan against Coronavirus approved on March 26 by the Council of Ministers of Foreign Affairs of SICA in follow-up to the Declaration "United Central America against Coronavirus" adopted by the Heads of State and Government of the region.

The regional institutional framework of SICA seeks to complement national efforts and contribute to mitigating the socioeconomic impacts of the pandemic, through actions that will allow the prompt economic and social recovery of the countries. It is for this reason that the importance of the energy sector in the economic reactivation of the region addressed in Axis 2 of Plan, Trade and Finance is highlighted.

In response, ECLAC's Expert on Energy issues, Víctor Hugo Ventura presented the Sector Plan for the Energy Sector “the proposal seeks mechanisms to ensure the liquidity of companies in the energy sector, the continuity of payment flows and the strengthening of established protocols for the protection of personnel in charge of substantive activities in the energy sector, which is essential to guarantee the continuity of energy services.

On the other hand, in relation to the current health crisis, aspects such as updating the Central American Sustainable Energy Strategy 2030 and preparing its matrix of actions are considered; as well as the coordination of actions that allow the Regional Electricity Market to evolve to more competitive states with special emphasis on those that contribute to the reduction of electricity costs for citizens.

The meeting was chaired by the Secretary of State at the Honduran Energy Office and Pro Tempore President, Roberto Ordoñez; the General Secretariat of SICA through the Secretary General, Vinicio Cerezo; the Director of ECLAC's Subregional Headquarters in Mexico, Hugo Beteta and the Expert for Energy issues of ECLAC, Víctor Hugo Ventura; the Ministers or Secretaries of Energy of the member countries of SICA; Multilateral financial organizations including representatives of the Central American Bank for Economic Integration (CABEI), Inter-American Development Bank (IDB) and the World Bank (WB).

Main regional impacts in the energy and hydrocarbon markets

Currently, as a result of the pandemic, there has been a lower demand for electrical energy and fuels for land transport (diesel and gasoline). Which means a drastic reduction in the use of aviation fuels.

The lower demand for petroleum products for transportation will affect the reduction of sales of these products. This will affect in a more drastic way the small companies that act in the intermediate and final activities of the chain (carriers and service stations). Likewise, it is considered that many users of the electric service will have problems paying their electricity bills.

Information in development, see our social networks: Twitter: @sg_sica ; Facebook @sgsica ; Instagram @sg_sica ; and the notes that the General Secretary of the Central American Integration System (SICA) constantly publishes, Portal SICA