US company New Fortress Energy plans to launch a $700mn LNG-to-power project in Nicaragua next month, just as the Central American country draws increasing international scrutiny ahead of November elections.
The 25-year project is designed to deliver 60,000mn Btu/d (419,000 t/yr) of LNG for a new gas-fired 300MW power station at Puerto Sandino in western Nicaragua.
On 6 July, New Fortress said it had reached an agreement for LNG supply to cover the remaining volumes for its existing natural gas and electricity businesses, including Mexico and Nicaragua, through end-2027, with more volume to be secured for Brazil. The unspecified volumes will likely originate in the US.
The New York-based company has not responded to repeated requests for comment on its Nicaragua project.
In February 2020, New Fortress chief executive Wes Edens was in Managua to sign a 2,233 GWh/yr power purchase agreement with Nicaraguan state-owned power distributors Disnorte and Dissur. And in October 2020, the government-controlled National Assembly of Nicaragua passed a special law providing a legal framework and extensive tax incentives for the project headed by New Fortress' local subsidiary NFE Nicaragua Development Partners.
Puerto Sandino is one of multiple Latin American projects that New Fortress is currently developing. The company grew exponentially early this year with a $2.18bn deal to acquire the Brazilian LNG and power assets of Norway's Golar and US private equity fund Stonepeak Infrastructure Partners.
Unwanted attention
In the latest sign of growing pressure on Managua, the European Parliament yesterday adopted a resolution condemning Nicaraguan repression and calling for the release of political prisoners, including prominent opposition figures who were poised to challenge President Daniel Ortega in 6 November elections.
In an event sponsored by the Inter-American Dialogue (IAD) this morning, former Costa Rican president Laura Chinchilla urged the international community to do more to isolate the Ortega government, drawing a distinction with Nicaragua's ally Venezuela, where she says international sanctions were not accompanied by a "coherent diplomatic strategy."
Venezuela's regional subsidized oil supply program PetroCaribe funneled money to the Nicaraguan government through the Albanisa venture, Chinchilla said.
She called on the international community to follow a US lead with targeted sanctions and the 2018 Nicaraguan Investment Conditionality Act (NICA), and urged multilateral agencies to suspend all funding, citing as an example the International Monetary Fund's $185mn emergency economic assistance approved in November 2020 and $342mn in back-to-back funding since May from Central American economic integration bank BCIE.
IAD non-resident senior fellow Manuel Orozco said such multilateral funding accounts for about $200mn a year or 10pc of Nicaragua's state budget, providing "oxygen to the repressive apparatus and clientelistic networks".
Among other tools under consideration is a suspension of Nicaragua from international trade agreements, including CAFTA-DR with the US and an association agreement with the EU, a move that could hurt projects such as Puerto Sandino LNG.
But Orozco warned that "suspending CAFTA can actually increase the revenue of the Nicaraguan state because of the tariffs that would be imposed on exports and imports."
