RECO INCENTIVES SUBSIDIES AND TARIFFS

 As the blue private jet plane elegantly touched the smooth surface of Roatan´s airstrip, I[1] picked the latest issue of the Bay Island´s Voice. What initially looked to me in its front page as old pistons from a wrecked trumpet, I later learned that is a photograph taken of public utility´s exhaust pipes. 

14 questions immediately jump inside the mind of the reader.

According to recent reports the Government of Honduras (GOH) approved to subsidize RECO consumers under 150 kWh/month.  It has been informed by the local Voice Magazine that ´´ the way this would work is that Zolitur would hold two months worth of the subsidy, and the Central Government would replenish the money allocated by Zolitur´´ and goes on quoting RECO´s Richard Warren:

´´ We have been fighting for this for two years and currently have an application in with Zolitur´´ and,

´´ It´s taken us 2 years to convince the government that they would be giving money to a public utility, not a private entity.´´

The incentives.

As members of the community we need to ask:

Is this ok?

• What is the size of the monthly ´´under 150 kWh billing´´ in terms of GOH money?
• What is the sum of money to be held by Zolitur?
• What is the procedure to ´´replenish the money allocated by Zolitur´´.
• Is handling subsidies an activity permitted by Zolitur´s own Law?
• Is RECO registered under Zolitur and beneficiary of Zolitur´s incentives?
• What exactly are those incentives?
• Does that include the capacity to import free of duties?
• Is fuel included in the import duty exemption?
• Is income tax included as one of the incentives?
• What other incentives has RECO obtained from GOH, including Zolitur?

Is this OK!  with WTO regulations and Honduras standing?

Ask because the people of Roatán need to know.

The Subsidy.

Now, besides knowing all the answers to all the Q´s above and acknowledging the initiative is a good one and shall result in preventing renewed social unrest, I now ask:

• Will the subsidy bring added consumption in homes were only 150 kwh were traditionally used?
• Will the subsidy be applied in a bracketed method?
• Will the subsidy create new or restore old jobs?
• Will the added consumption (just like the triple saldo marketing scheme) actually bring about frustration and resentment in those whose bills will actually go up?

Resources:

A.   To help understand some of the language used by representatives and media here is some definitions and sources.

• A public utility (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and regulation ranging from local community-based groups to state wide government monopolies. Public utilities can be privately owned or publicly owned. Publicly owned utilities include cooperative and municipal utilities. Municipal utilities may actually include territories outside of city limits or may not even serve the entire city. Cooperative utilities are owned by the customers they serve. They are usually found in rural areas. Private utilities, also called investor owned utilities, are owned by investors. 

http://en.wikipedia.org/wiki/Public_utility

• An investment incentive is a subsidy given to affect the location of investment. The goal may be to attract new investment or to retain an existing facility.
• A subsidy, in turn, is money given to a firm by government. This can take many forms: cash grants, tax measures, loans at below-market interest rates, loan guarantees, capital injections, guaranteed excessive rates of profit, below-cost or free inputs including land and power, and purchasing goods from firms at inflated prices. This list is not exhaustive, but includes the type of support used in virtually all subsidies. In this work, I use the EU term “state aid” as interchangeable with “subsidy.”

Kenneth P. Thomas, University of Missouri-St. Louis. http://www.globalsubsidies.org/files/assets/GSI_Investment_Incentives.pdf

B.  To know more about how S&I´s are handled in the United States click here: http://www.masterresource.org/category/policy-issues/subsidies/ ,

Elsewhere in the World research: Perverse incentives subsidies and sustainable development or, do your own keyboard walking.

The Rates: know more about rates and how to read your power bill:  http://recoroatan.com/customer-service.html

---

[1] César A. González, former Harvard Institute for International Development Country Coordinator.