Latest News

High price of electricity spurs protests and theft in Guatemala

A rat’s nest of wires snarled near the peak of a power pole is a common sight in Guatemala. Rather than being the result of sloppy installation, the disorderly mass is evidence of an extraordinarily common crime in Latin America: electricity theft.

A minimum of $31 million worth of electricity is stolen annually in Guatemala and the high cost of electricity is increasingly a source of conflict, instability and civil unrest.

The telltale signs of electricity theft are most noticeable in poor districts, where residents often face the choice between using bare bulbs or buying bread. A walk through Guatemala City’s worst slums requires ducking under extension cords slung from house to house across alleyways.

High power prices exacerbate the problem. Whole communities across Guatemala connect to the grid illegally for all or some of their power needs, running up massive debts with the nation’s private utilities. Rural customers often report prices two or three times higher than in the capital and bills equal to half their monthly incomes.

The phenomenon has led to growing political tensions here, beginning with a march March 7 that drew 20,000 people to the capital in part to protest high power prices. Many of the protesters were women from distant parts of the country, and a common thread was that the cost of legal electricity had reached such a level that they were forced to forgo lamps and basic kitchen appliances such as blenders.

In early April, a power outage that hit 328,000 people in eight communities for a week sparked demonstrations in which protesters blocked highways and claimed that the private power company, Energuate _ owned by a London-headquartered private equity firm, Actis Capital _ had deliberately cut the electricity.

While Energuate initially claimed that power lines had been sabotaged, the national newspaper Prensa Libre later reported that the power had been cut in retribution for outstanding debts. During the week of conflict, protesters occupied one power substation.

In the town of Jacaltenango, near the western end of the border with Mexico, an estimated 1,500 children went without vaccinations due to a lack of refrigeration, according to Jaime Quinonez, the director of a local health center.

“Everything that’s happening is unfortunate because we are paying inflated bills,” said a community leader in the town of San Isidro, Jose Luis Perez. “Would you imagine that for the whole month of February there was no electric energy service and I received a bill” for the equivalent of $31.25.

While unrest over high power prices and a commensurate high level of electricity theft may be extreme in Guatemala, the problem exists throughout much of Latin America. Regionwide, theft is estimated to account for an average of 8 percent of electricity consumption, said Fernando Cesar Ferreira, the executive director of the Latin American Energy Organization.

“The countries with the highest indices of total losses are Haiti, Paraguay, Honduras. But it can be said that the rest also confront the same problem on a scale that cannot be ignored,” he said.

The theft in any given country is hard to estimate, Ferreira said. A base number can be arrived at by comparing billings to the amount of electricity flowing into a network, but losses can also be the result of billing errors, bad connections and network problems.

“The issue of theft or illegal use of electricity is in part due to issues with the social order,” Ferreira said.

Often old equipment and a deficit of meters make clandestine connections the path of least resistance.

Claudio Guidi, a partner at a Latin American energy consultancy firm, BA Energy Solutions, said Guatemala’s problem could be traced to a single factor: “People . . . aren’t paying their bills. And the company has the ability to cut the service due to political issues.”

There’s no such problem in other parts of Central America, he said, citing specifically El Salvador. “The payment culture is very strong” in El Salvador,” he said. That means El Salvador’s electricity providers don’t need to pass on the costs of theft to customers. “The price of energy is higher in Guatemala,” he said, because “in Guatemala, there’s no culture of payment.”

The solution to electricity theft is a combination of more secure networks, legal action and frequent meter checks, according to those in the industry. But the issue is more complicated.

Michael Dougherty, an assistant professor of sociology at Illinois State University, said the rapid privatization of power production and distribution in the 1990s and 2000s had contributed to the problem.

“There are just tons of little companies that come in and make a little electricity,” he said. Each company serves just a limited area, he said, “so what you have in Guatemala is something like 100 little monopolies.”

Now the companies are looking to the government to help, with Energuate asking in early April that Guatemala’s Ministry of Energy and Mines pay special compensation for losses due to theft.