Anti-Fraud Law Stuck in Political Tussle

April 18, 2008

MANAGUA – In the latest round of high stakes political brinkmanship between the Sandinista Front and opposition lawmakers in the National Assembly, Liberal party leader Eduardo Montealegre sent a letter to the International Monetary Fund (IMF) last week saying that opposition lawmakers were not going to pass an anti-energy theft law until President Daniel Ortega starts respecting the country’s Constitution.

The Law of Distribution and Responsible Use of the Public Service of Electrical Energy, known more neatly as the “Anti-Fraud Law,” would impose criminal sanctions on those who steal electricity in Nicaragua.

The IMF has insisted that Nicaragua pass the anti-fraud law as part of its economic assistance agreement. At play is $100 million in IMF funding which Nicaragua could lose if it doesn’t approve the law by May, when the IMF is scheduled to visit Nicaragua to measure the government’s compliance, according to Central Bank President Antenor Rosales.

In an ironic reversal of roles, President Ortega this week called for the anti-fraud law to be passed in accordance with the IMF’s wishes. The Liberal opposition, however, is stalling the bill at risk of breeching the international agreement – a tactic that until recently was used by Ortega’s Sandinistas when they were the opposition party.

“We cannot be approving laws when we know that the government only complies with laws when it’s convenient and favorable [for them to do so],” said Montealegre, who sent his letter to the IMF on April 9, signed by 21 Liberal lawmakers.

The group of opposition lawmakers decided to make their stand in protest of the Supreme Electoral Council’s (CSE) decision to suspend the municipal elections in three municipalities on the Caribbean coast – an act the opposition claims was illegal and authored by Ortega (see separate story).

Montealegre, therefore, said it will be on the shoulders of the Sandinista government if the IMF agreement is broken.

“Each act against the democratic institutionalism, each threat against the state of law, constitutes not only a form of self-sabotage by the government against the compliance with its socio-economic objectives, but it also diminishes the possibilities of the Nicaraguan people to get out of poverty,” Montealegre said in his letter to the IMF.

Leaders of the private sector, meanwhile, have declared support for the anti-fraud law and have expressed concern that the issue has become mired in politics.

“We don’t get into political issues, but some of these issues in recent weeks are economic ones and they worry us,” said Cesar Zamora, president of the Nicaraguan-American Chamber of Commerce.

Calling for the law’s approval, he said the anti-fraud legislation is crucial “not because it’s a position of the IMF, but because it represents a commitment to Nicaragua’s poorest people.”

In Nicaragua, the largest commercial energy consumers represent 0.62% of the market, yet consume 50% of the country’s energy.

More than 90% of Unión Fenosa’s clients, meanwhile, are domestic use consuming only 32% of the country’s energy demand, according to the company.

It is also the “big consumers”who steal the most energy by tampering with meters or by taking advantage of illegal hook-ups, the company claims.

“It is sad that in our country it is those who have the most who steal the most,” said Humberto Reyes, head of Unión Fenosa’s anti-theft division, during the beginning of the company’s campaign to get an anti-theft law passed last year.

Lawmakers of the Sandinista Renovation Movement (MRS) have called for amendments to the anti-fraud law so that it will apply sanctions only to the biggest theives, those whose monthly energy consumption is 150 kilowatts or more, and not criminalize poor people who tap lines to light their homes.

Unión Fenosa reports that some 26% of all the energy it purchases from power generators is lost due to theft and “technical loss” during transmission.

“The root problem is fraud and the illicit use of energy,” Unión Fenosa claims. “(Energy fraud) is great business; there is no cost and no risk. Those who do it don’t lose anything because there are no penalties or sanctions against those who steal energy.”

Nica Times reporter Blake Schmidt contributed to this story.

 

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