Maria Travers de Paniagua
Energy Law
Professor: Alan Palmiter
Research Assignment.
December 21, 2012.
INVESTING ON GEOTHERMAL ENERGY IN NICARAGUA
INTRODUCTION.
Nicaragua is strategically located in the heart of the Americas: it is located at the
center of the Central American that forms a land bridge between North and South
America. It is bordered on its eastern and western shores by the Atlantic and Pacific
oceans. It is the largest country in Central America with a territory of approximately
130,600 square kilometers.
Nicaragua offers a wide range of investment opportunities in the energy.
Because of its richness of natural resources, the country has a potential of approximately
4,500 MW for renewable energy generation from geothermal energy, hydroelectricity,
wind energy and biomass.
Nicaragua Government.
Nicaragua is a democratic republic made up of four branches of government and
the government system is ruled by the 1987 Political Constitution. The current President
is Daniel Ortega Saavedra, who was elected in November 2011. The Vice President is
Omar Halleslevens Acevedo.
Government’s Branch.
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
Executive Branch. The President is the Head of State, elected for a 5 year period,
and the Commander in Chief of the nation’s Defense and Security Forces.

Legislative Branch. Legislative power is vested in the National Assembly,
composed of 92 representatives elected by universal suffrage or a five year
period.

Electoral Branch. This power is constituted by the Supreme Electoral Council,
composed of judges appointed by the National Assembly, through short lists
proposed by the President of the Republic for a five year period. This is the organ
responsible for organizing national, regional and municipal elections.

Judiciary Branch. The highest judiciary power is the Supreme Court, composed
of sixteen judges nominated by the National Assembly.
In addition, Nicaragua has 3 state institutions, 13 ministries and 26 decentralized entities.
Administratively, Nicaragua is divided into 15 departments and two autonomous regions
with 153 municipalities.
BACKGROUND NOTE.
By the end of the year 1990, the Law of the Electric Industry (Law 272) was
approved in Nicaragua. This Law segmented the electric industry into three activities:

The generation segment: Open to competition where more than 80 percent of the
generating agents are private companies. The generation of energy has grown at
an annual rate of 5 percent. The following chart lists all the companies that are
currently generating energy in Nicaragua.

Transmission System: the State of Nicaragua through its National Electric
Transmission Company (ENATREL), which manages the National
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Interconnection System (SIN) in conjunction with the National Center of Power
Dispatch (CNDC), operates it. The National Transmission System contains
approximately 1,923.64 kilometers of transmission lines that are property of the
State and 90.78 kilometers of transmission lines that are owned by private
generating companies.

Distribution System: Privatized in 2000, UNION FENOSA (of Spanish origin)
obtained a distribution concession of the majority of the national territory. Union
Fenosa was recently bought and is now named Gas Natural. Additionally, in 2008
the Government of Nicaragua acquired 16 percent of the company’s stock.
Ministry of Energy and Mines. We are an institution that has among other
responsibilities to formulate, propose, coordinate and implement the Strategic Plan and
Public Policy Energy Sector, Geological Resources, Mineral Resources, Geothermal
Resources, Hydropower Resources and Hydrocarbons and manage the operation and
administration of the state companies operating in the energy sector.
Mission. Develop, establish, conduct and promote energy and mining policy of the
country, promoting their development with environmental sustainability criteria and
sustainability, and to monitor and verify compliance in line with current legislation, legal
certainty for all economic actors and establishment of strategies for the comprehensive
utilization of resources for the generation of electricity for the benefit of society.
Vision. Consolidate leadership in the energy, mining and hydrocarbons, including
electrification and promotion of investment in the rural sector, facilitating conditions
towards promoting domestic and foreign investment to the country's development and
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improvement in the level of life of the population.
Investment Opportunities on Geothermal Energy.
Nicaragua offers a wide range of investment opportunities in the energy sector.
Due to its richness in natural resources, the country has a potential of approximately
4,500 MW for energy generation from renewable sources distributed by geothermal,
hydroelectric, wind, solar and biomass.
Geothermal Potential: The geothermal potential in Nicaragua, the largest in
Central America, is linked to the regional geological context related to the Cocos and
Caribbean tectonic plates. This has given rise to the volcanic mountain range “Los
Maribios”, which run parallel to the Pacific Coast and is composed of volcanoes, craterlakes and volcanic craters, composed of extensive areas of hydrothermal activity that
indicate a strong presence of magma.
In total, these areas represent an approximate capacity of energy generation of
almost 1,500 MW.
Geothermal Areas under concession and generating energy:

Momotombo Geothermal Field - 28.5 MW.

San Jacinto Tizate Geothermal Field - 9.2 MW (At this moment, exploration
works are being developed to increase the generation capacity of the field to up to
72 MW).
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Geothermal Areas in Exploration phase:

El Hoyo-Monte Galán – expected generation capacity of 200 MW.

Casita – San Cristóbal - expected generation capacity of 225 MW.
Geothermal Potential.
Name of the Geothermal Area
Potential (MW)
Level of Study
Managua Chiltepe
150
Prefeasibility
Mombacho
111.5
Prefeasibility
Caldera de Apoyo
153
Prefeasibility
Telica-El Ñajo
78
Prefeasibility
Caldera de Masaya
99
Prefeasibility
Tipitapa
9
Prefeasibility
Volcán Cosigüina
106
Recognition
Isla de Ometepe
146
Recognition
TOTAL
852.5 MW
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Geothermal Energy in Nicaragua.
http://www.geni.org/globalenergy/library/renewable-energy-resources/world/latinamerica/geo-latin-america/geo-nicaragua.shtml
Legal Framework.

Law for the Exploration and Exploitation of Geothermal Resources and it’s
Reforms (Law 443)
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The Ministry of Energy and Mines is entitled to invite domestic or foreign investors,
so that through direct negotiation they may be granted concessions for exploration and
exploitation of geothermal resources.
Concession for Exploration.
The exploration contract has a duration of no more than three years, with
extensions up to 2 years. The granted exploration area is 100 km2.
Concession for Exploitation.
The holder of an exploitation concession will own the electricity produced by the
geothermal steam, while the exploitation contract is valid. Grants for exploitation
activities cover an area of 20 km2 and has a duration of 25 years, renewable for a period
of 10 years.

Law for the Promotion of Foreign Investment (Law 344).
Over the past years, Nicaragua has made important progress in its investment climate
in efforts to continue attracting high-quality foreign direct investment. The main
legislation governing foreign investment in the country is Law 344 for the Promotion of
Foreign Investment and its bylaws, establishing a series of solid legal guarantees for
foreign investors, such as:

Equitable treatment to foreign investors.

Free currency convertibility.

Freedom to repatriate all capital and profits, dividends or earnings generated in
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the national territory, after paying pertinent taxes.

Full international ownership permitted.

There is no discrimination against foreign investors.

Access to local funding available at local banks, according to their terms and
conditions of approval.

Security and property protection.
Bibliography.
o DOIN BUSSINESS IN NICARAGUA.
http://www.pronicaragua.org/images/stories/guia_inversionista/DOING_BU
SINESS2012.pdf (Last Visited: December 21, 2012 at 8:50 am).
o LAW FOR THE EXPLORATION AND EXPLOITATION OF
GEOTHERMAL RESOURCES AND IT’S REFORMS (Law 443)
http://www.vicepresidencia.gob.ni/leyes/ley_recursos_geotermicos.pdf (Last
Visited: December 21, 2012 at 9:10 am).
o LAW No. 714 LAW REFORM ACT No. 443, LAW OF EXPLORATION
AND EXPLOITATION OF GEOTHERMAL RESOURCES.
http://www.mem.gob.ni/media/file/MARCO%20LEGAL/LEYES/LEY%20
%20714%20%20LEY%20DE%20REFORMA%20A%20LA%20LEY%20
No%20443.pdf (Last Visited: December 21, 2012 at 11:52 am).
o LAW FOR THE PROMOTION OF FOREIGN INVESTMENT (Law 344).
http://legislacion.asamblea.gob.ni/Normaweb.nsf/($All)/A5C6D6F25A6B2C7
C06257213005F7EBC?OpenDocument (Last Visited: December 21, 2012 at
11:52 am).
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o RURAL ELECTRIFICATION POLICY OF NICARAGUA DECREE No.
61-2005.
http://www.mem.gob.ni/media/file/MARCO%20LEGAL/NORMATIVAS/P
OLITICAS%20DE%20ELECTRIFICACION%20RURAL.pdf (Last Visited:
December 21, 2012 at 10:22 am).
o GLOBAL ENERGY NETWORK INSTITUTE.
http://www.geni.org/globalenergy/library/renewable-energyresources/world/latin-america/geo-latin-america/geo-nicaragua.shtml (Last
Visited: December 20, 2012 at 10:22 am).
o MINISTRY OF ENERGY AND MINES.
http://www.mem.gob.ni/index.php?s=1&idp=165&idt=1 (Last Visited:
December 21, 2012 at 11:25 am).
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