Gonzalo Salgado

biography

Gonzalo Salgado is a founding member and the coordinator of the National Consumer Defence Network in Nicaragua. This network supports poor consumers in their struggle to gain access to fairly priced basic goods and services. It has closely monitored the privatisation of electricity in the country as well as campaigning against water privatisation and participating in the formulation of the 'general water law' in 2003. Given the current crisis in the electricity sector the network's national campaigning for reform in the electricity sector has become a key priority.

Mr Salgado also represents the National Consumer Defence Network in the National Chapter of the Inter-American Platform on Human Rights, working with their team on energy issues. He has wide experience working on a range of development issues and has worked with both government and civil society organisations over the last decade.

Electricity Privatisation in Nicaragua

The electricity sector in Nicaragua was privatised as a result of IMF and World Bank conditions linked to loans and debt relief. The process started in Nicaragua in 1998 with electricity generation and was followed by the granting of a monopoly over the state’s distribution companies to Unión Fenosa in 2000. Privatisation has led to disastrous results for consumers and Nicaragua’s poor. It has brought no significant investment and no improvement in efficiency. Consumers have seen a worsening quality of service – including a severe increase in power cuts – and have had to pay much higher bills. Many small businesses have folded due to their spiralling losses, and hospitals and other public services have been badly affected. There are also serious grounds to suspect that the generators and the distributor have colluded to cause crisis-inducing power cuts to force the government to grant subsidies and to allow higher tariffs to be charged. Throughout the crisis, the government has not been able to regulate private sector operators, nor champion the interests of consumers. Good practice from managing privatisation of energy sectors in developed countries has been ignored. There is strong evidence that the electricity system in Nicaragua simply cannot function on a commercial basis. This fact is still being ignored by the World Bank and IMF who continue to call for higher tariffs on consumers.

Mr Salgado will report at the hearing how this will heavily penalise the poor while improving the bottom lines of companies operating in the sector.