Nicaragua: Overview of Geothermal Power Legalities

Nicaragua: Legal Updates On Geothermal Power (BLP Legal)

by Fidel  Sanchez, BLP Legal 

(Courtesy CIA.gov)

In Nicaragua, geothermal power provides attractive tax incentives based on Act 443, "Law on the Exploration and Exploitation of Geothermal Resources" and any amendments thereto, published on November 17, 2014.

Some of these tax incentives for the development of geothermal power in Nicaragua include the following:

• Exoneration of customs duties and VAT on machinery, equipment, and materials for works construction.
• Exoneration of the payment of income tax for a 10-year period following the commencement of the project's commercial operations.
• Exoneration of payment of municipal income tax (IMI) for a 5-year period following commencement of the project's operations.

A key aspect to be noted is that ENEL (Empresa Nicaragüense de Electricidad), a state-owned company for power development, should own at least a 10% equity interest in the specific geothermal exploitation project and must have a seat at the Board of Directors with right to speak and vote in the company that was granted the exploitation concession. On the other hand, the remaining 90% equity interest must be owned by the specific domestic or foreign investor for up to a 30-year exploitation concession period following the execution of the exploitation agreement.

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