MANAGUA 2008 BFIF PROJECT PROPOSALS

UNCLAS SECTION 01 OF 03 MANAGUA 000059

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EB/CBA - DWINSTEAD
STATE PASS USAID

E.O. 12958: N/A
TAGS: BEXP ECON EINV ETRD ABUD AMGT BTIO NU
SUBJECT: MANAGUA 2008 BFIF PROJECT PROPOSALS

REF: 07 STATE 159597


1. (U) In response to Ref. A, Embassy Managua submits the
following two proposals for consideration for 2008 Business
Facilitation Incentive Funds (BFIF).


2. (U) Energy Solutions - Biofuels:

A) Nicaragua is heavily dependent on imported oil to generate
electricity. Rising oil prices and poor regulation have
resulted in serious cash flow problems throughout the power
sector. Lack of investment in plant and equipment within the
context of a growing economy has led to power outages,
affecting consumers and industry alike. However, Nicaragua's
soil and climate are ideally suited for the cultivation of
potential sources of biofuels such as sugar cane, African
palm, and switch grass. Solving the energy crisis is a top
priority for the Nicaraguan Government (GON),thus providing
an opportune moment to showcase alternative energy sources
and the role that the private sector can play. President
Ortega has criticized the production of ethanol with corn but
has been quietly supportive of efforts to produce ethanol
from sugar cane.

There exists an excellent opportunity to promote biofuels in
Nicaragua through a seminar or conference on the subject.
Raising awareness would open markets for U.S. technology as
well as for potential investment in production. Our effort
would complement other efforts by the Department of
Agriculture, Department of Commerce, Department of Energy,
and Department of State to promote the production and use of
biofuels.

We propose two half-day seminars focusing on the potential
market for biofuels in Nicaragua. The first seminar would be
directed toward the private sector and entitled "Best Choices
for Nicaragua: Raw Materials for Biofuel Production." The
objective would be to raise awareness of technology options
and markets. The second seminar would be directed toward the
GON. The objective would be to educate government officials
on the possibility for Nicaragua to produce biofuels to meet
a portion of its energy needs, and the kind of law and
regulation that would support the development of a biofuels
industry.

Issues for discussion include:
--In light of Brazilian and other technological advances,
moving away from seed (corn kernel) to cellulose (leaves,
stalks, and grasses);
--African palm and biomass as cost-effective sources of
energy;
--Assuring that land for biofuels does not replace land for
food;
--Environmental impact;
--Biofuels for export versus for local consumption;
--Legal and regulatory environment; and
--Challenges/needs to move the sector forward.

Potential speakers for these seminars would include: USG
officials, U.S. industry representatives, managers of local
ethanol plants, cellulose expert from the FIU Applied
Research Center George Philippidis, an environmental expert
to discuss issues of protecting land and the benefit of
biofuels, and Brazilian public and private sector actors in
the biofuels sector.

The guest list would include the National Assembly's Energy
Committee members, senior and working-level government
members, potential biofuel producers, business leaders, and
scientists from agriculture and engineering universities.

B) Planning Milestones:

--One month after BFIF money awarded: planning with local
partners underway, date set and local logistics established.
--Two months: speakers and topics defined, guest lists drawn
up.
--Three months after award: event held.

C) Estimated costs: $20,000. Post would use the funds to pay
for speakers from the United States and Latin America region
and for seminar expenses. The breakdown would be as follows:

--2 Speakers from U.S. ) $6,000
--3 Speakers from region ) $7,000
--Logistics expenses (hall rental, refreshments, and
invitations)- $10,000

D) POC: Naomi Fellows
E-mail: fellowsnc@state.gov
Tel: 505-252-7549
IVG: 746-4549

LES POC: Amanda Fonseca
E-mail: fonsecaac@state.gov
Tel: 505-252-7559
IVG: 746-4559

E) Post will work closely with Public Affairs, USAID, and
USDA on this project. Public Affairs will encourage media
coverage for the seminar and help locate and invite speakers
from the United States and the region. USAID and USDA will
coordinate with local partners and Washington offices on
trade and competitiveness issues.

F) Outcomes/Success criteria include the expansion of biofuel
production, increased exports of U.S. machinery for biofuel
production, encourage the presentation of a biofuels law to
the National Assembly, and increase favorable public opinion
toward the use of biofuels and positive media on biofuels.

G) The mission will continue to reach out to public and
private energy actors to explore biofuels and other energy
alternatives.


3. (SBU) Improving Competitiveness (as a follow-on activity
of the Department of Commerce's June 2007 America's
Competitiveness Forum and in preparation for the August 2008
Competitiveness Forum):

A) Although President Daniel Ortega has been a frequent
critic of the private sector since taking office in January
2007, he has so far maintained the free-market economic model
implemented by his predecessors. Post wants to build on the
opportunity provided by the Department of Commerce's Americas
Competitiveness Forum to reinforce the importance of
maintaining an open economy and free trade, and to emphasize
the role the private and public sectors can play in improving
international competitiveness.

Post plans to hold a seminar in May 2008 to focus on the
institutional, infrastructure, and human capital aspects of
competitiveness and demonstrate how Nicaragua businesses
could improve their ability to sell locally and
internationally. Instilling the notion of improving country
competitiveness should also benefit U.S. companies doing
business in Nicaragua. Post will leverage existing USAID and
MCC projects and their relationships with local think tanks,
academic institutions, and business associations (such as the
Council for Private Enterprise (COSEP),INCAE (Central
America's leading business School),and the Nicaraguan
Presidential Commission on Competitiveness (CPC)) to organize
the seminar.

The seminar will:
--Introduce and explain the concept of competitiveness and
its benefits;
--Present and explain existing competition law, encouraging
prompt implementation;
--Present additional government policies that would spur
innovation, workforce development and education,
infrastructure development, and supply chain strategies;
--Discuss the proper role of private-public partnerships;
--Highlight environmentally sustainable business practices;
and
--Discuss the role of investment.

Potential speakers at the seminar would include U.S. experts
on competitiveness, USAID and MCC partners in business
development and trade capacity building, leaders from other
Latin American competitiveness councils, and business school
professors.

The guest list will include members of the National
Assembly's Economic Commission, senior and working level
members of government, and private industry and business
leaders.

B) Planning milestones:
--One month after BFIF money awarded: planning underway, date
set, and local logistics established.
--Two months after award: speakers and topics defined, guest
lists drawn up.
--Three months after award: event held.

C) Costs: $20,000. Post would use the funds to pay for
speakers from the U.S. and Latin America region and seminar
logistics. The breakdown would be as follows:

--2 Speakers from U.S. ) $6,000
--3 Speakers from region ) $7,000
--Logistics expenses (hall rental, refreshments, and
invitations)- $10,000

D) POC: David Krzywda
E-mail: krzywdada@state.gov
Tel: 505-252-7571
IVG: 746-4549

LES POC: Marixell Garcia
E-mail: garciama5@state.gov
Tel: 505-252-7371
IVG: 746-4559

E) Post will work closely with Public Affairs, USAID, and MCC
on this project. Public Affairs will encourage media
coverage for the seminar and help locate and invite speakers
from the United States and the region. USAID and MCC will
coordinate with local partners and Washington offices on
trade and competitiveness issues.

F) Expected outcomes include increased government attention
to the competitiveness issue and recognition of the
constructive role government policy can play in supporting
private sector led economic growth.

G) This program will complement the Department of Commerce's
Forum on Competitiveness and USAID and MCC's work in support
of the private sector. It will also be part of a wider
effort to highlight the importance of the private sector and
role of government in support of free trade. These are
issues which we will continue to pursue with the Ortega
administration in a variety of fora and constitute the
primary thrust of mission work in the economic and commercial
policy arena.
TRIVELLI