Who Really controls RECO?
As Armed Honduran Navy soldiers secure RECO facilities, Roatan’s Energy Crisis Continues

March 1st, 2008
by Thomas Tomczyk


Voting at the RECO General Assembly meeting on January 29.

Voting at the RECO General Assembly meeting on January 29.

Yet another chapter in the Roatan RECO saga was written in February. After the January 27 RECO general assembly vote and seemingly unanimous acceptance of Kelcy Warren as the winning bidder of 52% of the company’s shares, things got a bit more complicated. On February 7, military arrived in Coxen Hole and took over the RECO installations in the afternoon. They stayed at the facilities for 24 hours.

There is no clear understanding of why at this point the Honduran central government opposes the takeover of RECO control by Kelcy Warren, or why it supports the purchase of RECO by Punta Cana. Bay Islands Voice contacted Oscar San Martin, Punta Cana/EGE Haina Development Manager, for comment on the RECO purchase, but he did not get back to us.

In early January, Punta Cana representatives had held meetings with Roatan government officials. They failed to assure them that costs of energy will remain in line with the present 3.6 Lempiras a kilowatt-hour residential rates. The meeting ended badly, with Roatan officials feeling offended by the message and language of the negotiations.

“We don’t care what you think,” said one of the Punta Cana representatives about the official’s concerns with keeping the energy prices affordable. Local government officials felt the meeting was indicative of how the relationship with possible new RECO owners could be.

According to Humberto Mesa, Reco’s GM, because RECO is administered by an ENEE intervention committee, the January 27 general assembly had no legal authority to choose anyone as winner of the RECO bid. “On March 5 we will have a general owners meeting to decide who will receive RECO,” says Mesa, underlining that the evaluating committee gave Punta Cana the highest score in the bid process. “Nothing is decided … Warren, Fredy Nasser can still get the shares.” According to Steven Guillen, RECO board member, the purchase by Kelcy Warren was alredy registered in the property registry and the March 5 meeting will serve to approve the decision. It looks like the March 5 will be quite a show-down.

Despite all the drama, Kelcy Warren remains committed to executing this 52% purchase. Mike Warren, Kelcy Warren’s brother, attorney and spokesperson, says that Kelcy Warren is not frustrated by the delays and twists and turns of the purchase process. “Kelcy has chased more deals than he has received,” says Mike Warren, This is Kelcy Warren’s first such businesses pursuit in a third-world country. “If Kelcy had any doubts, they were dissipated by the support he has received from community, congressman Hynds, two mayors, Patronatos,” said Mike Warren.

“Because Kelcy is a guest in this country he has to do everything with a blessing and support of the government,” said Mike Warren. The blessing has certainly been delayed, but the offer made by Kelcy in March-April of 2007 is still on the table a year later.

“Kelcy Warren has a home on Roatan,” says Mike Warren, “He wants to be a participating member of a community, sees RECO as a good investment and an opportunity to do something important.”

“We plan on not increasing rates for a while,” says Mike Warren. A system of dual power-bunker fuel and diesel generators is envisioned for RECO. Down the road Kelcy Warren sees adding renewable sources of energy. He also envisions help with finances of the poorest customers with the creation of a $100,000 independently managed fund.

Even if transfer of RECO could happen quickly there is little chance of bringing in additional equipment needed to deal with the 2008 Semana Santa surge. “It took a long time for RECO to find itself in the dire strait situation that it is in. It will take 12-15 months for it to get better,” Mike Warren.

Things are likely to get worse, before any resolution is agreed upon. On January 18 RECO begun cutting off 10 of its large consumers that had their own generating capacity. Parrott Tree and Pineapple Villas switched to their own power. The situation could get dire for Semana Santa when a majority of Roatan hotels and rental houses are expected to be filled to capacity by Honduran and international tourists.

Still Mesa assured that two 1.5 Megawatt generators should be online by end of February and two other generators, a 1.0 and 1.2 (bringing RECO’s capacity to 10.0 Megawatt) will be online before March 15-the date when the winner of RECO shares is supposed to take over. [/private]

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