Honduran Electricity Reform Needs a Leader

Honduras has spent months debating an electricity law that still does not have the votes to pass. If building a legislative majority has proved this difficult, how does the country expect to carry out a multi-year reform that must cut energy losses exceeding 38%, restructure $4.5 billion in debt, and deliver results in a process that no single administration can finish? The legislative deadlock is not the core problem. It is a symptom: no one is clearly responsible for making this reform work.

The country has already learned that passing a law is not the same as reforming the sector. The 2014 Ley General de la Industria Eléctrica provided a solid technical basis for transformation, but its implementation fell short. It showed that a law is not enough: it must be backed by a solid national consensus that facilitates effective implementation. Both in 2014 and today, that consensus has been lacking, and the reform needs leadership capable of building it. A law can reorder the institutional framework on paper, but not, by itself, reduce losses, professionalize boards, or make newly created companies viable.

Reforming the energy sector is complex. It requires aligning interests and sequencing financial, regulatory, operational, and investment decisions so the system can function as a coherent whole. But it is not impossible. Over the past few decades, several countries in the region have successfully carried out sector-wide reforms. The common thread was not the model, but the leadership behind it. In Guatemala, the 1996 reform was led by the energy minister, with authority delegated by President Arzú. In Panama, President Pérez Balladares entrusted the 1997 reform to a dedicated team — a planning ministry steering legislation, a new independent regulator, and Fernando Aramburú Porras restructuring the state utility. In both cases, the executive backed the process and assigned clear responsibility for carrying it through.

Similarly, Honduras needs a designated leader with a mandate to build a political consensus and execute the reform. This requires full-time dedication, operational autonomy, independence from sector interests, and direct accountability to the President and Congress. Its role would not be to replace existing institutions or absorb their powers, but to bring them together, turning technical knowledge into decisions the state can execute. It would set priorities, unblock critical decisions, keep the different fronts aligned, correct course when needed, and report publicly on progress. Without that, each of the various institutions in the sector will act within its mandate, but no one will be accountable for aligning those efforts behind an overall reform agenda.

Today, responsibility is fragmented. ENEE’s chief executive manages the state-owned utility, while the head of CREE oversees sector regulation, and the finance minister bears the fiscal impact of the mounting debt. The Ministry of Energy is currently a smaller, more technical institution that doesn’t have the political weight required to drive a transformation of this scale. The point here is not to question their capabilities, but to recognize a structural constraint: those responsible for managing the various elements of the daily crises, for regulating the market, for setting sector policy, or for safeguarding the public finances cannot also be expected to lead the system’s broader transformation.

The successful management of the system also requires far more continuity than is provided for by the current setup. In the power sector, the outcome of today’s decisions unfolds over a time horizon which extends far beyond the four-year political cycle. In recent years, ENEE’s leaders have held their posts for less than 20 months on average. In contrast, it can take up to seven years before a tender for additional generation capacity yields new power supply. The transmission system needs roughly $900 million in investment over the next decade, a backlog the World Bank was already flagging in 2008. Energy losses cost more than $500 million in 2025 (Sendas 2026); reducing them requires sustained work on metering and customer regularization, effective enforcement, technology, investments, and a constant presence on the ground.

Fragmented and short-lived leadership also risks diluting the external support to the sector. International cooperation can accompany the reform, but it cannot lead it. International organizations’ support will falter without a strong national counterpart, clear priorities, and defined lines of accountability.

The profile of an effective leader for the reform process is less that of a sector specialist than of a political figure with the credibility and authority to make decisions stick. Technical expertise can come from a team; political authority cannot. Whoever leads the reform must have standing, convening power, and enough presidential backing to align institutions, which no technical office could coordinate on its own. The reform will inevitably affect vested interests, so the leader  will have to make difficult political decisions without losing sight of the goal: of building a power system capable of supporting Honduran development. They will also need to be able to hold the line under pressure, so their personal integrity will be crucial. They can’t be linked to vested interests in the sector. Their responsibility is to Honduran society as a whole.

This is not a call for a savior. The reform needs leadership, but it cannot depend simply on one person’s will. An effective leader will bring order to decisions, build teams, forge coalitions, and leave self-sustaining capacity behind (Fajardo and Andrews 2014). Their initial mandate must be translated into permanent institutions: core decisions written into law and accountability anchored in targets, public reporting, and sanctions. Political leadership can set reform in motion; effective, well-designed institutions and — above all — successful outcomes are what make it endure.

Chile has sustained the core principles of its model, set out in the 1982 Ley General de Servicios Eléctricos, for more than 40 years, under governments of different ideological stripes. Colombia has preserved the sector architecture it built in 1994 for close to 30 years, through changes of government and periods of crisis. Guatemala and Panama point in the same direction: nearly three decades later, the regulators and wholesale markets they created remain in place. That is the mark of success proposed by the OECD (2010): a real reform is not one that passes under a single administration, but one that can withstand the political transition that follows.

The current reform bill offers a starting point, but it should not be mistaken for the finish line. The proposal to establish a Steering Committee and a Technical Implementation Unit attached to the Office of the President rightly recognizes that the reform needs high-level coordination. But a technical unit is not enough. The law creates a space for coordination; by itself, it does not secure the authority to implement. That difference is decisive.

The appointment of a credible political leader would be a concrete signal that the reform process is being equipped to succeed. Their profile, and the authority granted to them, will show whether the Executive regards electricity sector reform as a genuine priority or merely as a formality.