Lights Off!

Ready to read more about my exciting adventures abroad? When
I left off in my story, I was happily moving my family to Nicaragua while being
extorted by Nicaraguan customs and a suspicious broker. Never fear, though,
because through the grace of God and diligent investing and saving, we were in
a great cash position. I guess governments have some sort of income radar to
zero in on and drain anyone who is productive, and I’ll talk more on that
later, but today I want to focus on the main reason we went in the first place.

As I mentioned previously, Nicaragua, a third world country
with a huge energy deficit, was ripe with opportunity for investment in that
sector. Before we moved, we had queued up several possible manufacturers to build
hydroelectric and wind projects, were in discussions with contacts at the local
power distributor for a PPA (Purchase Power Agreement, needed for financing)
and had previously met with the country’s leaders concerning the need for more
power and been encouraged to build projects. We had detailed designs and had
done some preliminary scouting for ideal site locations. In addition, renewable
energy was being touted and given special tax incentives.

Did you know that European governments will practically give
away money to third world countries to help develop beneficial projects such as
ours? They only ask that standard good business practices be used to protect
against corrupt and graft. When we arrived in Nicaragua, we were blessed to run
into a dear friend of ours who clued us into this and introduced us to people
that could help secure a grant for our project. We, together with our friend
and his contacts, had a fantastic team of talented individuals ready to embark
on exciting work that the country desperately needs. We were on (what seemed) the
right track to build two projects that together would have added approximately
80 desperately needed megawatts to the country’s electrical grid in a  $200 million investment.

However, all was not to go as planned. Nicaragua unfortunately is ruled by a group                                                                                                                                                                                                                                                                                            of Marxists (despite their slogan about being
“Christian and Socialist”), who have recently adopted crony capitalism under
the guise of seeming “business-friendly.” Elected on a shady plurality and with
outrageous promises to the people (another one of his party’s slogans is “El
Pueblo Presidente” or “The people for President”), Daniel Ortega claims to protect
the poor people of the country from oppression from the bourgeois by giving
them free stuff and allowing them to take over public property for personal
use. He also claims that as long as the business sector stays out of politics,
he will stay out of the business sector.

Well. It sounds pretty but, um, it’s not.

You see, in an alliance with Hugo Chavez, Ortega formed a
company called “Albanisa”.  When it was
formed, one of the goals of Albanisa was to funnel Venezuelan oil to Nicaragua
at heavily discounted prices, essentially amounting to foreign aid.  Ortega sold this concept to the people of
Nicaragua as a boon from their friends in Venezuela and that it would help him
realize his goal for providing “social programs” for the people.  The way it would work is thus: Venezuela
would sell Ortega/Albanisa a barrel of oil at a price between
$35-50/barrel.  Ortega/Albanisa would
then turn around and resell the oil at market prices, $80-110/barrel and pocket
the diff…uh…spend it on programs for the people.  Not surprisingly, where the oil was supposed
to be given as untied aid, the exchanges were later converted after the fact to
national debt.  Ortega has mortgaged the
future of Nicaragua for Venezuelan oil. He now uses the money to buy all kinds
of things for himself, personally, within the country.  Purchases include hotels, restaurants, land, and
others.  Seeing how fun capitalism can
be, Ortega has recently announced that he, personally, will begin to address
the country’s energy problems by building all kinds of new power plants.

So despite all the touting of renewable energy as the future
of Nicaragua, it presents a bit of a conflict of interest for a few key people
heavily invested in Venezuelan oil, and a huge problem for small developers
such as ourselves. Oh, there are some renewable projects being built, but with huge
contributions and ownership from other Ortega-friendly governments such as Iran,
and despite heavy obstacles from the government regulating entities, not to
mention pockets being lined left and right.

Per the advice of our friend and his European contacts, we
tried to structure our project so that we could build something together with
the government and get a grant, but despite their previous “enthusiasm”, when
it came time for the Nicaraguan government to commit, we began to find it
increasingly difficult to get in contact with the same government officials we
had spoken to before. In addition, the implication was that we would need to
resort to the same illegal bribing as the other projects currently under
construction (and give away the business in the process) in order to get any
traction, which would have not only landed us in jail in violation of the
Foreign Corrupt Practices Act, but it would have made us ineligible for the
grant, which has very strict ethical provisions.

The icing on the cake, after months of work to build the
project (years if you count the preparation before we moved) and nearly
$100,000 of our own money invested, came with the news that the local power
distributor was deep in debt, had failed to pay its energy suppliers, and was
now asking for its parent company in Spain to bail it out. The Spanish company
refused to do anything, and so the Nicaraguan government is considering a
bailout (read: nationalization.) This made the PPA worthless, and any hope of
financing (even with a grant) was now a fond memory. To make matters worse,
there is speculation that this bankruptcy was encouraged by insiders in bed
with the government to secure the oil interests.

Our team decided that the conditions in the country were not
conducive to investment in energy, and we decided to move on. So much for the
future of Nicaragua, not interfering in business, and touting renewable energy.
The oil company owned by Nicaragua’s leader and his cronies simply could not
allow anything or anyone to get in the way of its Venezuelan oil deals, and so
the people continue to suffer and investors are driven away.

OK, you may be saying, that really sucks for Nicaragua. That’s
why it’s a third world country, full of people that were easily swayed to vote
for Ortega in exchange for the promise of a free ride. What does that have to
do with U.S. politics? It’s not like we
have a president who got elected with empty promises and is an egomaniacal dictator
wannabe, abusing the executive power to control the oil and energy industries
and other vital sectors of the economy for his own political and personal gain
and that of his cronies.

Oh…wait…

I’ll leave you to chew on that until next time…