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Chávez oil fails to stem Nicaragua crisis

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"Governments have always acted to resolve the energy problem in the easiest and cheapest way possible, which is through petroleum plants," says César Zamora, president of Corinto Power, the largest energy provider in the country. "An oil plant can be installed in two years, but a hydro plant takes five years to build, a year of study, and a lot more money."

Plus, Mr. Zamora says, no one ever expected oil prices to reach such nose-bleed heights. When Ortega forged his oil deal with Chávez at the beginning of 2007, the international price was $74 a barrel. The price has since jumped to over $130, meaning the country's oil bill to Venezuela this year will be nearly double what was budgeted at the beginning of the year

Soaring oil prices have already doubled food costs, led to a recent nationwide transportation strike over fuel prices, and kept the country teettering on the edge of power-rationing blackouts.

Ortega managed to bring an end to the transportation strike two weeks ago by offering taxi and bus drivers a $1.30 subsidy on diesel, but prices have since gone up twice and the transportation sector is again threatening a work stoppage as their subsidy whittles away.

As the situation worsens, a growing chorus of critics are questioning the oil promises made to Nicaragua under the label of the Bolivarian Alternative for the Americas, or ALBA – Chávez's leftist trade alliance among Venezuela, Bolivia, Cuba, and Nicaragua.

"ALBA is a mystery enveloped in a cloud of fog, wrapped in an enormous enigma," Mr. Aguirre says.

Though the lawmaker says that Venezuelan aid could "theoretically" be a great help to an impoverished country such as Nicaragua, the secrecy with which ALBA has been handled by Ortega has only fueled criticism and conjecture.

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