Proceedings Presentation
of Country Reports Country: Guatemala Success Story: Privatization of the
Energy Sector in Guatemala,
a
Public-Private Partnership
by Ms Maria Mercedes Zaghi
Senior
Project Advisor Guatemalan
Commerce Chamber, Guatemala INTRODUCTION The
Guatemala Government initiated a series of efforts to privatize different
industry sectors in 1998. The
main industries that were privatized include the airline sector, the energy
sector and the telecommunications sector, according to the following table
published by the World Bank in 2000:
The
effort in the energy sector included several companies: the electricity distributor in the capital city (Guatemalan
Electric Co), the electricity in rural areas (Electrica de Occidente y
Oriente) and a thermoelectric generating plant. The
financial options used in the privatization scheme included foreign and
local investors for private sale as a joint venture in the first case,
foreign investment as a direct sale in the second and foreign trade as a
trade sale in the last. The
process of privatization in the electricity industry began earlier in 1996
by the Government of the Republic of Guatemala. The process of deregulation
began with the publication of the General Electricity Law, Decree No. 93-96
and its Regulations, Government Agree No. 256-97. Within
the 44th article of the General Electricity Law,
the creation of the wholesale market Manager (Administrador del
Mercado Mayorista - AMM, in Spanish), a non-lucrative and private entity,
with the following major
functions:
In
addition to the previously mentioned functions, AMM must perform the
following tasks: Operation
Programming: The
AMM is responsible for the annual planning for covering the needs of power
and energy in the system, trying to optimize the use of available energetic
resources. The annual program is reviewed and adjusted in a weekly and daily
basis. Supervision
of Real Time Operation: The
AMM must monitor the behavior of the demand, the operation of the generation
plants, and the transportation system. It also has to assure the security of
supply by constantly verifying the electrical variables of the system and
complying with the limitations of the equipment and associated facilities. Transactions Management: The AMM must
quantify the Power and Energy exchanges between participants of the Market,
and assign a monetary value using the Spot Energy Price and the Power
Reference Price. For this, the AMM must design and implement a measuring
system that allows to know on an hourly basis the energy and power produces
and/or consumed. Furthermore, it will manage the funds that are a product of
the transactions between the agents that operate in the Market. The creation of this organization,
the AMM, as part of the privatization scheme was part of the liberalization
of utility services for private operation, but since the electric industry
has monopolistic characteristics a regulating
model was established by creating a National Electric Commission
(NEC) that oversee the AMM operation in coordination with the
Ministry of Energy. ORGANIZATION
According
to the 21st
Regulation Article of the AMM, the principal authority of the
organization is the Board of
Directors which is formed by two members of each wholesale market sector
(one titular member and one supplementary member). The members are elected
for a 2 years period, and could be re-elected for an additional period. Their
major functions, according to the 20th
Regulation Article, include:
A
CEO (Chief Operation Officer) is responsible
for the coordination and management of
the AMM administrative
and technical activities. The
ruling entity of the AMM is the Board of directors, which is formed
(according to Article 21 of the AMM Regulations) by a holder and a substitute
representative of each of the five groups of market participants. The
representatives have to be elected for a two year period and can be
reelected. MISSION
The AMM is a private, non-profit entity that coordinates the
transactions between the participants of the Electrical Market, that assures
the competition in a free market, with clear rules that promote investments
in the electrical system, and that ensures the quality of the electricity
service in Guatemala. MEMBERS
The
wholesale market players or members, are defined in the
5th regulation
article with the following categories: Power Generators, Transporters,
Distributors, Major Users and Commercial Members. The
basic requirements to be a member, for each category, are:
INITIAL LIST OF MEMBERS
Generators
Transporters
Distributors
Commercial
Members
Major Users
Municipal Companies (Distributors)
CURRENT
SITUATION The
privatization of the energy sector in Guatemala, 4 years later, has been one
clear example of a success story. During
this for years, the private organization created to coordinate the
Guatemalan energy market has accomplished a number of its original objectives and more including: AMM Power Dispatch Center: This
unit, coordinates real time operation coordination of the Guatemala’s
National Interconnected System and its international interconnections. Commercial
Coordination Norms: The dispositions and procedures have been approved by
National Electric Energy Commission and are being successfully used for
commercial transaction coordination. Coordination Norms:This
dispositions are being used by the AMM, according to
Electricity Regulation law, for continuity and quality
electrical service. Long-Term Programming: The programming has been done on a yearly basis and the
results are sent to both members and the National Electric Energy
Commission, in order to receive constant
observations and feedback within the period established by
Coordination Norms. Operative Coordination Norms: This dispositions have been used and approved
by National Electric Energy Commission, for
the National Interconnected System operation and coordination.
Their main objective is to satisfy the demand at minimal cost, to
guarantee system reliability and to provide a quality service. Real
Time Operation: The coordination of the National Interconnected System and
international interconnections operations, including the complementary
services (primary reserve, secondary reserve, black start, and so on). The
objective is to keep the balance between generation and demand to guarantee
the system reliability. The AMM Control Center (Dispatch Center) has the
responsibility of the real time operation, either on normal or emergency
conditions. That AMM unit has the authority over the bulk power generation
system. Technical
Norms: These dispositions by the National Electric Energy
Commission, according to the Electric Law and Regulations and to
international norms have been used as a
Commercial and Operative complement. Weekly
Programming: A set of values
consisting of one value for each hour for a single day for each day of the
week are constantly being published in the AMM´s Web site to insure
transparency and as information to members and the general public. GENERAL
RESULTS AND CONCLUSIONS : According
to the AMM 2001/2002 Financial Statements,
during the fiscal year:
Among
the general improvements in the market that can be accountable to the
privatization scheme and that can be identified the following are the more
significant:
Note:
The author has been a senior project advisor for the AMM
administration since the start of the project
in 1999. The actual study is
being conducted as a project for the Guatemalan Chamber of Commerce as part
of the Guatemalan Country Gateway, a project sponsored by the World Bank
through the Gateway Development Foundation. The actual conclusions and
recommendations for the project are currently being revised. |