The governments of most Latin American countries have yet to establish clear policies about the future ownership of existing generation assets, but they do expect future capacity to be largely developed by the private sector. This has created friction in some countries between governments, which are eager to limit the role of the state in electric supply, and national utilities, which feel threatened and continue preparing traditional expansion plans. In assessing the region's power markets and preparing a strategy to penetrate them, the private power developer must take a critical look at utility plans, expose their incompatibilities with the government's stated independent power objectives, and build a case for independent power projects. The core problem is the predominance of hydroelectric power in Latin America and its abundant untapped potential.
Hydroelectric power in Latin America grew rapidly between 1960 and 1980. Development banks offered attractive financial terms, and fossil fuel prices were expected to escalate rapidly for a long time. These were the last decades in a long era of intense nationalism and extensive government control of all economic activity. Existing national power utilities were enlarged and new ones created. These became symbols of national independence and economic growth.