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Secretary General Insulza Took Part in Ministerial Meeting in the IDB on Energy Integration in Mesoamerica

The Secretary General of the Organization of American States (OAS), José Miguel Insulza, today participated in the inauguration of the "Ministerial Meeting on Electrical Integration in Mesoamerica,"​​ organized by the Inter-American Development Bank (IDB) at its headquarters in Washington, DC, in which he emphasized the role of the Organization in promoting collaboration among the countries of the Hemisphere on energy.

The OAS Secretary General said that Latin America offers a fertile field for energy integration given its importance as a producer and net exporter of primary energy. "The region accounts for 18 percent of the world's proven oil reserves and 12 percent of world production of this resource. It also presents a wide variety of renewable energy resources," he said, while noting the favorable conditions in the region for the production of geothermal, wind, hydroelectric and solar energy.

Secretary General Insulza said the OAS is "an agent for change in the development and use of sustainable energy solutions in the Americas," and explained that the Energy and Climate Partnership of the Americas (ECPA), whose coordination is under the supervision of the OAS Department of Sustainable Development, is based on seven fundamental pillars: renewable energy; energy efficiency; the use of more efficient and less polluting fossil fuels; energy sufficiency; the sustainable use of land and forests; adaptation; and energy infrastructure. “Through each of these pillars, regional actions are held that help formulate policies, share best practices and experiences, and establish the framework for investment in a more robust and integrated energy future," he said.

The ECPA was an initiative created at the Fifth Summit of the Americas, held in 2009 in Trinidad and Tobago, and the OAS leader recalled that at the Sixth Summit, which took place in 2012 in Cartagena, Colombia "our leaders stressed the importance of committing to achieve universal access to electricity through the electrical interconnection of the Americas." "This initiative, called 'Connecting the Americas 20-22' will increase access to reliable, clean and accessible energy for more than 30 million people who today do not enjoy it," said the Secretary General, adding that "the focus of this meeting on Interconnection in Mesoamerica is a central pillar of the ECPA Energy Infrastructure."

The meeting, which is taking place today and tomorrow at IDB headquarters, involved ministers, diplomats and businessmen involved in the energy sector in Central America, Mexico, the United States, Colombia, the Dominican Republic and some Caribbean countries.

IDB President Luis Alberto Moreno said electrical integration in Mesoamerica is the backbone of competitiveness in the region. "The Mesoamerican energy strategy is becoming increasingly more important, the growth opportunities in many of our countries will depend on it," said President Moreno.

The head of the IDB noted the importance of changes in the energy matrix in the region, induced by the increased supply of natural gas and the development of new technologies. "The reduction of costs from the introduction of gas is generating very good progress in production costs, but also carries the risk of driving industries out of the market in the countries of Central America, to the extent that they are not only seeing changes in their energy matrix, but are actually seeing reduced energy costs," he said.

In this regard, President Moreno noted that the current costs of electric energy in Central America and the Dominican Republic are among the highest in the world, with an average 2.5 to 3 times higher than those of other markets. "There is no doubt that these costs hit the competitiveness of the private sector," said Moreno, who noted that in some Central American countries “electrical subsidies reach 1.5 percent of gross domestic product."

The Minister of Energy and Mines of Colombia, Federico Rengifo, said the success of energy integration in the Americas requires the consolidation of several regional integration initiatives, among which he mentioned the Electric Interconnection System for Central America (SIEPAC) and the consolidation of the Regional Electricity Market (MER); the Panama-Colombia interconnection, within the Mesoamerica project; and the feasibility analysis of the Andean Electrical Interconnection System (SINEA), comprising Chile, Colombia, Ecuador and Peru, as well as Bolivia as an observer.

"Only dialogue and joint efforts of all the regions of the American Hemisphere will allow the electrical corridor of the Americas to become the motor of development for all the submarkets that make up the region," he added.

The Deputy Minister of Electricity of the Ministry of Energy of Mexico, Lourdes Melgar Palacios, stressed the significance for her country of cooperative projects with its neighbors in this area. "For Mexico electrical interconnection, both north and south, is a fundamental part of regional integration with our North American neighbors, and with Mesoamerica. For our geographical position, we are aware that we play a strategic role in achieving the goals outlined in the initiative "Connecting the Americas 20-22," she said.

Deputy Minister Melgar Palacios mentioned the idea to revive the Central America- Mexico gas pipeline project, which was driven in the late 90s and which failed due to higher natural gas prices. The Mexican Deputy Minister noted that "the new energy reality of North American region with natural gas prices lower worldwide brings to the table the need to reassess the project, which could accelerate the energy transition in Mesoamerica and drive regional development."

IDB Energy Specialist Enrique Rodriguez Flores stressed the strategic importance for Central America of developing SIEPAC/MER and increasing collaboration among countries. Electricity markets in Central America are very oriented to self-sufficiency, he said, and have an electrical grid heavily dependent on fossil resources. "This is not sustainable in the future," he said, and also has a negative effect on the competitiveness of the domestic private sector.

The IDB Specialist said the key to addressing this problem is "electrical integration, which means improving energy security, sharing resources and taking advantage of the complementarily obtained especially in the use of renewable energy resources." Rodriguez Flores added that "this can be achieved with an integrated infrastructure and above all with a reliable market, and this is the SIEPAC/MER," which he called "a complete project, comprehensive and at the same time complex."

A gallery of photos of the event is available here.

For more information, please visit the OAS Website at www.oas.org

Reference: E-253/13