Energuate’s internal crisis

By Richard Brown and Patricia Macías – EntreMundos correspondents. September, 2015

The electricity distributor Energuate (Doecsa-Deorsa) and its majority shareholder, Actis Capital, a British private equity firm that bought a 90% share in Deocsa-Deorsa in 2012, have a new and serious internal problem.


For years, Energuate has had to confront over 150,000 consumers “in resistance” who refuse to pay their bills. Energuate operates a monopoly in 20 of Guatemala 22 departments, generally rural areas where many families cannot afford even the food necessary to meet basic nutritional needs. Energuate and the government say that the consumers in resistance are stealing electricity through their illegal connections, which cause poor service and power outages, and that the community groups that encourage people to connect themselves illegally to the power grid and refuse to pay their bills are criminals who charge for these connections.


Communities in resistance maintain that endemic poor service predates the illegal connections, that bills have been going up and that they are too high to pay, and that Actis is a foreign corporation that abuses the poor, rural population of Guatemala. They also maintain that the corporation and the government use violence, murder, and arrests to discourage their movement.


But these aren’t the only accusations made against Energuate; many of its own shareholders now accuse it of fraud and abuse. The Energuate Holdings Shareholders’ Association (Asacen), a Guatemalan organization of minority shareholders, is readying a lawsuit against Energuate, alleging that the corporation cooks its books in order not to share dividends with minority shareholders, thereby increasing the profits it uses in part to bribe the officials it needs on its side. David Lopez, vice president of Asacen, told EntreMundos, “The question is: Where is the ‘take?’”


The majority of the minority shareholders are former employees of INDE (the public National Institute of Energy, which currently generates about a third of Guatemala’s electricity production and, before the sector was privatized in the 90s, controlled electricity distribution) and family members, who received stocks in electricity distributors after the sector was privatized in the 90s. Energuate has paid them virtually nothing through the three years since Actis’ buyout, even though it has continued to sell the stocks to retired workers as a substitute for pension payments. Lopez said that there are retirees who have died waiting for their dividends.

Members of the Energuate Holdings Shareholders' Association (Asacen) speak with EntreMundos in Guatemala City. Speaking is Acasen president José Kelvin Coti. To his right, retired INDE workers. To his left, vice president David López. Photo by Patricia Macías.

Members of the Energuate Holdings Shareholders’ Association (Asacen) speak with EntreMundos in Guatemala City. Speaking is Acasen president José Kelvin Coti. To his right, retired INDE workers. To his left, vice president David López. Photo by Patricia Macías.

Jose Kelvin Coti, president of Asacen, explained to EntreMundos that he had meetings with Jaime Tupper, Energuate’s CEO, Maria Antoineta de Bonilla, president of Energuate’s board of directors and former president of the Bank of Guatemala, and other managers, but they did not take Asacen’s complaints seriously. “They thought we weren’t going to do the press conference” that occurred in April of 2015, when Asacen made its complaints public. After the press conference, Coti attended another meeting expecting Tupper, but only lawyers arrived.


Asacen seeks an audit of Energaute. And now they’re in touch with minority shareholders of CAESS, a major Salvadoran distributor that operates principally in the north of El Salvador and supplies electricity to 400,000 consumers. Jaime Tupper also had a key position in this corporation, legal representative, when, according to Salvadoran sources in touch with Asacen, CAESS was defrauding shareholders and cooking its books. Coti explained to EntreMundos that Asacen is trying to prove that it’s the same “mafia of executives” that is again defrauding their shareholders and the people of Central America.


We told Coti and Lopez that Actis Capital paints itself as a socially responsible organization, whose fundamental strategy, according to its website, “is underpinned in by the observance of rigorous Environmental, Social and Governance (ESG) guidelines.” Lopez said, “That’s a lie.” And Coti said, “It’s one thing to say something, another to do it.”


Energuate and Actis Capital are about to suffer a new publicity crisis.