Finance Ministry report reveals economic woes at state utilities company

June 20, 2012

A Finance Ministry analysis of financial statements from the Costa Rican Electricity Institute (ICE) shows a steady decline of revenue, especially in the last year.

The report notes that in 2011, ICE closed the year with a loss of $43.7 million and a profitability of 2.1 percent, according to an audited financial statement, the daily La Nación reported Tuesday.

The report included the company’s two main businesses, electricity and telecommunications. ICE’s biggest losses were registered in the telecommunications sector, with a loss of almost $30 million in 2011. This sector shows “a downward trend in net incomes,” decreasing from $167 million in 2007 to $7.1 million in 2011, La Nación noted, citing the Finance Ministry report. The report also warns of an alarming increase in the company’s debt, which grew by 184 percent in four years, while incomes increased just 26 percent in the same period.

ICE’s executive director, Teófilo de la Torre, told La Nación he was concerned about the financial situation, but described the loss as “small” when compared with the company’s total assets. However, he said ICE is committed to reducing costs by $160 million by year’s end by cutting travel expenses and overtime pay and freezing hiring. De la Torre attributed ICE’s fiscal problems to the opening of the telecommunications market in Costa Rica.

Not another Caja

Shortly before departing for Rio de Janeiro, Brazil, President Laura Chinchilla said ICE will not become a “Caja 2,” referring to the troubled Social Security System, or Caja, which accrued a $92 billion deficit last year, resulting in the Caja board of directors voting unanimously to request the resignations of all six top department managers.

Chinchilla said her administration is paying “much attention to ICE’s financial problems,” and are in the process of “ensuring that [ICE] will not face the financial problems the Caja is facing.”

She also stressed that De la Torre is already implementing corrective measures.

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