VZCZCXYZ0005
RR RUEHWEB
DE RUEHMU #0325/01 0772153
ZNY CCCCC ZZH
R 172153Z MAR 08
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 2277
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RHEHNSC/NSC WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
C O N F I D E N T I A L MANAGUA 000325
SIPDIS
SIPDIS
STATE FOR WHA/CEN, WHA/EPSC, NEA/IR
E.O. 12958: DECL: 03/16/2018
TAGS: EINV EFIN ENRG NU IR
SUBJECT: NICARAGUA: IRANIANS SHOW THE MONEY FOR
HYDROELECTRIC PROJECT AT BOBOKE
REF: A. 2007 STATE 21770
B. 2007 STATE 37801
C. 2007 MANAGUA 0177
D. 2007 MANAGUA 1987
Classified By: CLASSIFIED BY AMBASSADOR PAUL A. TRIVELLI: Reason: E.O.
12958 1.4 (d)
1. (C) Summary: Late on March 11, 2008, a major Nicaraguan
daily reported that the Iranian Council of Ministers had
approved a 150 million euro loan to fund a Nicaraguan
hydroelectric project at Boboke in the North Atlantic
Autonomous Region (RAAN). After the story broke, Rappaccioli
took pains to explain to a news reporter on camera that the
Iranian loan was not to the Government of Nicaragua, but
rather to an unspecified Iranian company that would invest in
the hydroelectric plant. Construction would start in
November 2008 and the plant would come on-line in 2011. News
reports out of Iran identified the Export Development Bank of
Iran as the issuer of a 10-year project loan carrying an
implied interest rate of 5%. Sources tell us that ENATREL,
the state-owned transmission company, would be the Nicaraguan
entity that would purchase the power from Boboke. After ten
years, the project would be transferred to the state. End
Summary.
2. (SBU) Late the evening of March 11, 2008, major Nicaraguan
daily El Nuevo Diario reported that Islamic Republic News
Agency (www.irna.ir) carried a story (we believe from SEDA-YE
EDALAT, or the Voice of Justice) that the Iranian Council of
Ministers had approved a 150 million euro loan to fund a
Nicaraguan 70 MW hydroelectric project at Boboke. The report
stirred interest because such a loan to the Government of
Nicaragua would require National Assembly approval, as would
the development of a private hydroelectric project larger
than 30 MW require. Boboke is located in the Matagalpa
basin, north of Lake Apanas, itself created by the
construction of Nicaragua's largest dam (100MW). This is the
same general area eyed by another long gestating
hydroelectric project (600MW), called COPALAR, which
reportedly would require a billion dollar investment.
3. (SBU) After the story about the Boboke loan broke, a local
24-hour television news station reporter managed to corner
Minister of Energy and Mines Emilio Rappaccioli as he was
departing the National Assembly. On camera, Rappaccioli took
pains to explain that the Iranian loan was not to the
Government of Nicaragua, but rather to an unspecified Iranian
company that would invest in the hydroelectric plant.
Rappaccioli assured the reporter that the Iranian loan would
cover everything, i.e., the purchase of land, resettlement of
inhabitants to "better living conditions," engineering
studies and designs, as well as construction of and capital
equipment for the dam and associated electrical works.
Reportedly, an existing feasibility study for Boboke prices
the hydroelectric project at about half the value of the
Iranian loan, but may not take into account all of the costs
associated with the project. Rappaccioli told the reporter
that ground breaking is planned for November 2008, but that
the plant would not come on-line until 2011.
4. (SBU) Also on March 11, Mehr News Agency
(www.mehrnews.com) reported that the Iranian Ministry of
Economic Affairs and Finance had announced that the Export
Development Bank of Iran would administer a 10-year project
loan to Nicaragua in the amount of 150 million euros. The
loan will be repaid in 22 installments during a 10-year
period, incorporating an implied interest rate of 5%. (Note:
The Export Development Bank is not listed as one of the
Iranian institutions suspected of facilitating terrorism
finance under UNSCRs 1747 or 1803 (Refs A, B).)
5. (C) On March 12, participants in an internal meeting on
debt at the Ministry of Finance and Public Credit queried
whether the Government of Nicaragua would be the debtor or a
guarantor of a new debt to Iran. The Director for Debt
confirmed what Rappaccioli had told the media the night
before, i.e., the Iranian loan would go to an unspecified
Iranian company, not to the Government of Nicaragua. The
Director added that the project would be managed as a
Build-Operate-Transfer project over a 10-year period. Power
produced would be purchased by the National Corporation for
Electrical Transmission (ENATREL, formerly known as ENTRESA).
6. (SBU) Our understanding is that Nicaraguan law allows only
three entities to legally purchase power for resale: ENATREL
as the operator of the national grid, and distributors
DISNORTE and DISSUR, both under concession to the same
Spanish company, Union Fenosa. ENATREL may resell power to
the either of the two distributors, or to large users.
Unlike the distributors, ENATREL is state-owned and under the
direct political control of the government. Minister of
Energy and Mines (Emilio Rappaccioli) is Chairman of
ENATREL's three-person Board of Directors. The other two
Directors are the Minister of Finance and Public Credit
(Alberto Guevara) and the Minister of Trade, Industry, and
Development (Orlando Solorzano).
7. (SBU) Iranian involvement in the Boboke project is a
result of cooperation agreements signed by President Mahmoud
Ahmadinejad and President Daniel Ortega the week of Ortega's
inauguration in January 2007 (Ref C). Boboke was one of six
hydroelectric projects that the government was promoting. In
June 2007, Ortega visited Ahmadinejad in Teheran. A
high-level Iranian technical delegation visited Nicaragua
July 31 ) August 4 which included the following individuals
(Ref D):
-- Mohsen Bakhtiar
Director General for Economic Studies
and Export Promotion
Ministry of Energy
(Water and Electricity Sectors)
-- Masoud Hojjat
Managing Director
Iranian Power Network Administration
(Electricity Projects)
-- Ahmad Shakoori Rad
Managing Director
Ghods Niroo*
(Electricity Projects)
-- Reza Gholami
Assistant Manager for the Karun Dam Project
FARAB Corporation
Construction of Dams and Hydroelectric Dams
-- Reza Ebad Zadeh
Managing Director
Corporation Sunir
(Water and Electricity Sectors)
*Ghods Niroo is listed as an engineering consulting company.
We note that both Ghods and Niroo are words commonly
associated with in the formal name of the Qods Force, a
component of the Iranian Revolutionary Guards Corps.
TRIVELLI