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Nicaragua approves a Law that promotes electricity generation with renewable sources<br />
 

BLP
Nicaragua ,   September 16, 2020

Nicaragua approves a Law that promotes electricity generation with renewable sources
 

On September 8, 2020, the Nicaraguan National Assembly approved the proposed reform of Law 532, a law for the promotion of electricity generation with renewable sources.

Since its approval in 2005, this law has undergone several reforms through which the tax incentives that were initially given to electricity generation projects from renewable sources have been extended.

On this occasion, the reform goes hand in hand with a process of voluntary renegotiation of existing power purchase and sale contracts with companies that produce electricity ("generators").

Worth noting is that this Law is not an amendment to the article on the period of application of incentives, but rather a temporary provision that only allows current generators to apply an extension of the period of exemption from Income Tax (IR), as long as they decide to negotiate a decrease in the purchase price of energy. Geothermal generators may apply for a 2-year extension, while generators of power from other sources may obtain up to 5 years.

To benefit from this negotiation process and a possible extension of the benefit, generators must have negotiated and signed a new contract no later than October 31, 2020.

On the other hand, the Reform law did permanently modify a provision referring to the price to pay per kWh band in commercialization outside of the contracts with the Distributor. Previously, the band included a minimum price and a maximum price, and from then on only the maximum limit is maintained at 6.5 cents per kWh.

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