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Last Updated: Tuesday, 20 September 2005, 12:04 GMT 13:04 UK
Sandinistas in Venezuela oil deal
Energy company Fenosa plant in Nicaragua
Nicaraguans have faced power outages of up to eight hours
Nicaragua's left-wing opposition party has announced an agreement to buy Venezuelan oil at preferential rates.

Sandinista leader Daniel Ortega said councils governed by the party would be able to buy oil at a 40% discount.

The rise of global oil prices has caused an energy crisis in Nicaragua which has led to power rationing.

But the government, which did not take part in the deal, is questioning the Sandinistas' access to the proper infrastructure to carry it out.

New company

Nicaragua's main energy supplier, Fenosa, began rationing power for up to eight hours a day earlier in September.

Fenosa said it was left with no choice after the Supreme Court barred it from raising tariffs to keep up with the price of fuel used to generate electricity in Nicaragua.

President Enrique Bolanos - who is locked in a power struggle with the Sandinistas - said on Monday that he would ask congress to approve rate increases.

He also wants congress to allow him to hand over $30m to private energy firms.

Under the deal announced by Mr Ortega, a Venezuelan-controlled company will be created in partnership with the municipalities. The company will transport, store and deliver fuel.

More than half of Nicaragua's councils are run by Sandinistas and could benefit from the cheaper oil.

Venezuela's Ambassador Miguel Gomez said he hoped similar schemes could be extended to other Central American countries.




SEE ALSO:
US warns Nicaraguans against coup
09 Sep 05 |  Americas



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