Nicaragua OKs electricity price rise for Fenosa

MANAGUA, Oct 30 (Reuters) - Nicaragua said on Tuesday it has authorized Union Fenosa to raise electricity tariffs by 9.06 percent, which will allow the Spanish utility firm to keep up with higher fuel costs in the Central American nation.

Nicaragua, which has a precarious power system, suffers from daily blackouts across the country. Union Fenosa (UNF.MC: Quote, Profile, Research, Stock Buzz) enjoys a virtual monopoly in the power distribution in Nicaragua since 2000.

Leftist President Daniel Ortega has blamed Fenosa for the blackouts in the impoverished Central American nation. But Fenosa has argued that the government would not let them increase prices in tandem with rising fuel costs.

"If we don't make tariff adjustments, (Union Fenosa) would not have money to pay energy generators and generators would not have money to buy fuel," said David Castillo, head of Nicaragua's Energy Institute.

He warned that leaving tariffs unchanged could eventually paralyze the country.

The tariff increase will be gradual, from November through January.

Power generators often complain Fenosa lags behind with payments. The government is also lending Fenosa $15 million to buy fuel.