Monday, March 17, 2008

Guatemala's economy threatened by looming energy crisis

SOURCE: La Prensa Latina—“Guatemalan Government Sees Energy Crisis”

Guatemala is facing a potential energy crisis due to outdated infrastructure that requires expansion and updating in production, transmission, and distribution, government officials report.

Currently, the nation is fueled primarily by oil combustion, which is increasingly unsustainable due to rising costs. The government seeks to attract investment to replace some of this consumption with renewable energy sources—Guatemala is rich in rivers and waterfalls—and cheaper fuels such as coal.

Romeo Rodriguez, the nation’s Energy and Mining Minister, stated that unless preventative steps are taken, it will be impossible to meet growing energy demands, resulting in “severe effects” on the national economy.

FOR DISCUSSION: Energy crises appear to be a growing problem for some developing nations and regions (see, for example, earlier posts on energy crises in South Africa, Botswana, and Nigeria) and can threaten to destabilize otherwise healthy (or at least growing) economies. What role, if any, should multinational organizations like the IMF and World Bank play in helping ensure effective investment in energy infrastructure? Should such assistance focus on sustainable and/or cleaner energy sources?

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