This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS TEGUCIGALPA 002857
GUATEMALA FOR COMATT: DTHOMPSON STATE FOR WHA/CEN
E.O. 12958: N/A TAGS: ENRG EPET EINV ECON HO SUBJECT: EMBASSY ADVOCACY FOR AES AS THE DECISION ON THE 210 MW CONTRACT APPROACHES
REF: a) 01 TEGUCIGALPA 2872, b) TEGUCIGALPA 02207
1. (SBU) The Embassy continues to advocate strongly for a transparent process that will treat American investors fairly, as the state electricity company ENEE's decision on the winner of the 210MW electricity tender approaches. ENEE's decision, like the bid opening itself (ref b), has been postponed several times. It now appears that the announcement may occur by October 14. Rumors continue to swirl of corruption and political intrigue. High level GOH officials were surprised by the unexpectedly low prices bid by the domestic companies. AES is the only U.S. firm to bid on the project; if AES wins the bid, this power contract will allow it to proceed with financing and construction of its LNG-fuel combined-cycle El Faro project. With its usd 650 million investment, its low cost per kilowatt hour and its benefits for regional integration, the project would be a boon to Honduras.
2. (SBU) In response to advocacy requests by AES throughout the summer and fall, Emboffs have taken all available opportunities to demonstrate USG interest in the fairness of the process. On Monday, October 7, then-Charg d'Affaires, Roger Pierce spoke with Luis Cosenza, Minister of the Presidency, to raise the issue of the energy bid and emphasize the importance of a fair and transparent process. A followup conversation is planned for October 11.
3. (SBU) Econcouns reinforced this message with Presidential Advisor Ramon Medina Luna on October 7, and with Investment Minister, Camilo Atala, on October 10. She emphasized the importance of the project as an indication of Honduras' ability to attract sizable foreign investment. She flagged the possible timing problem of an announcement occurring after the President, Luis Cosenza, Camilo Atala and other high level officials leave the country for a trip to Europe and Asia (providing more opportunity for undue pressure). Atala indicated that the GOH intends to have the announcement occur before President Maduro's departure for Europe on October 15 for that very reason. Finally, she asked if it were possible that a firm that did not comply with all the tender requirements could be declared winner (a veiled but clear reference to the rumor that is circulating that AES's closest competitor, Lufusa, omitted from its offer a commitment to build a usd 20 million transmission facility). Atala acknowledged familiarity with this issue and responded that such a firm would be disqualified.
4. (SBU) Also on October 10, Emboff was in contact with the Commerce Department advocacy center and AES local representative, Carlos Pineda, to confirm appropriate wording for a possible advocacy letter for AES to be sent to President Maduro from Commerce Secretary Evans. The letter emphasizes the proposed AES plant would be a regional power facility, supplying power to Honduras, El Salvador, Guatemala and elsewhere. It cites the benefits in terms of job creation, lower cost of electricity, and the introduction of an environment friendly fuel, liquid natural gas. The letter continues on to request that the bid process be followed strictly, that all participants have a level playing field and that there be maximum transparency.
5. (SBU) Background: Since the bid opening, there has been a raging war in the press between the two most competitive bidders, AES and the Honduran firm Lufusa (ref b). As the contest entered the endgame, there have been increased rumors and allegations of Honduran firms offering bribes. The lack of a disqualification of Lufusa, because of its failure to include the cost of building a new substation and associated transmission lines, worried local AES reps that the intrigue might be yielding fruit. Embassy strategy has been to ensure that the GOH is fully aware that the USG is watching the process closely and aware of the details. Opponents of the AES project have also advocated disqualification of the U.S. company because of financial setbacks of its parent company.
6. (SBU) Embassy will continue to engage high-level GOH officials on the importance of the transparency and fairness of the tender process, fair treatment of U.S. investors such as AES, and the benefits of the El Faro project. Palmer