Energuate and CODECA

By EntreMundos

The controversy over electricity is one of the most important in Guatemala, though it does not affect the country’s largest cities. One on side, Energuate and the government say that customers who are ‘in resistance’ are stealing electricity through illegal connections that are responsible for poor service and the blackouts that are increasingly common. They say that those who encourage the population to make these illegal connections are criminals who are charging for the connections. Meanwhile, communities throughout Energuate’s operating zone say that poor service predated the direct connections and that they can’t afford the bills from Energuate, an electricty distributor whose majority owner is Actis Capital, an English private equity firm. It operates a monopoly in 86% of the country.

At least 160,000 of Energuate’s 1.6 million customers are ‘in resistance’;  they’ve reconnected themselves around Energuate’s meters and no longer pay the company. Many see a foreign company abusing the poor rural population, whose wages often don’t allow them even basic nutrition. There are 16 municipal distributors like Xela’s; Energuate operates primarily in rural areas where rates of poverty and illiteracy are especially high. Activists and movement leaders have been kidnapped, incarcerated, and even killed demanding the nationalization of electricity distribution, so that the state instead of private capital would profit from citizens’ electricity payments. In October, 2012, for example, near Alaska, Totonicapán, the army shot and killed eight peaceful demonstrators in a protest against Energuate/Actis and in favor of nationalization, and against unrelated legal reforms.

Actis Capital bought the distributors DEORSA-DEOCSA in 2011 from the Spanish firm Unión Fenosa and changed their names to Energuate. In the 90s, electricity distribution was nationalized. A distributor buys energy from producers, pays transport companies, maintains cables, substations, and wirepoles, connects customers to existing infrastructure, monitors their energy use, and charges them. Rural electrification and infrastructure expansion (apart from wireposts) is the responsibility of the government, as is the publicly funded discount that 95% of Guatemalans receive; the distributor collects both from customers and from public coffers. Privatization was supposed to lower costs and improve service, but after 20 years, the results are mixed at best. Energuate runs a very profitable business; Actis paid $449 million for DEORSA-DEOCSA in 2011, while Unión Fenosa paid $101 million in 1999. CODECA estimates Energuate’s annual revenue at over $300,000,000. (Energuate told Entremundos that that was too high, but not by how much..)

The two foreign distributors in Guatemala, EESGA and Energuate, operate monopolies; EEGSA operates in the two departments where Energuate does not. EEGSA is owned by the Medellín Public Corporation (EPM), a Colombian public utility that contributes a large portion of Medellín’s city budget. Actis is private, but still pays dividends to the British government for past investments. Members of the resistance point out that conflict is only occurring where Energuate operates.

Communities generally make the decision to declare themselves ‘in resistance’ through popular assemblies and announce their decision through sheets and banners at the entrances of their communities. Energuate’s most common reaction is to cut electricity to the community (which can last months) and negotiate. When it’s a larger town, as has happened repeatedly, Energuate cuts power for certain hours. The communities tolerate this until they reach an agreement with Energuate, which often involves a reduction in the back-payments demanded by Energuate. The government has mainly focused its efforts on confronting two organizations: CODECA and Frena (Front of Resistance for the Defense of Natural Resources and Communities’ Rights, from San Marcos). Frena became involved in 2008 when, after years of rising costs and poor service, a blackout on December 24 caused social unrest that lasted so long that in November 2009 President Colom declared a State of Emergency in several cities.

Entremundos sent this commentary and other questions about CODECA’s perspective to Energuate three weeks before publish. In summary, they said that: there are so many communities ‘in resistance’ because this is profitable for CODECA and others who charge for illegal connections and sometimes use intimidation; Energuate didn’t collect Q200,000,000 that it was owed in 2014; it  has invested Q500,000,000 in infrastructure in three years; the government establishes the maximum that distributors can charge; six of ten customers pay more for public lighting than their own use, and this charge is set by local authorities; 60,000 customers reconnected with Energuate in 2014; the supposed ‘kidnapping’ of CODECA members has been on the part of community members fed up with poor service caused by illegal connections; and that ‘the social unrest comes from social demands that the government doesn’t attend to.’ On this point, the two sides agree. Energuate did not respond to the rest of the information in time for publication.