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Daily News - 01 June 1998

Fernández administration to resolve energy crisis
Guillermo Amore, former president of the Dominican Telephone Company, once said: "The most expensive service is the one that is not rendered." Apparently, President Leonel Fernández has made his this philosophy in what regards the electricity service in the Dominican Republic.
After decades of deficient service, it seems Dominicans will be getting a reliable electricity service, even though this may be one of the most expensive services in the world.
The Listín Diario summarized the 1998-2002 program of the Corporación Dominicana de Electricidad, the state electricity utility, and plans for installation of power plants from 1998 through year 2002. As appears in the plans, the government itself will be installing most of the generation capacity. It will not wait for privatization of the CDE to take place. The government seems committed to resolve the electricity crisis, regardless of the higher cost to the nation and consumers.
As per the 1998-2002 program, the CDE will be investing RD$7,382 million pesos to purchase new units and rehabilitate present power plants. The new plants to be installed or repaired will add 333.91 megawatts to the system in 1998, 303.80 in 1999, and another 364 megawatts in 2000, when the Fernández administration term ends. Another 380 megawatts are scheduled to be installed in year 2001.
Congress has not passed a bill that would provide for the legal framework for the privatization and its promise that competition will bring more efficient production and lower costs that will benefit consumers. It is uncertain when this will occur. This has delayed the actual selling of power plants and operations to the private sector. The CDE has advanced with privatization efforts calling a tender with the assistance of investment banking company, Salomon, Smith Barney of New York.
The Listín Diario has reported that the World Bank has criticized the government for making these investments at a time when the privatization has begun, following a world trend.
Privatization of the state electricity utility follows a world trend. In the Americas, it began in Argentina and Peru in about 1990, and has swept the continent. Brazil has been privatizing its many federal and state owned companies for about two years, and nearly all should be sold by the end of 1999. It is felt that smaller, private companies do a better job of watching costs and eliminating unnecessary
work. Also, by separating the company that distributes the energy from that which generates it, each company can concentrate on the type of business it does best. Bringing in foreign investors frees up the government to use its money for other things that are needed.
Privatization in the DR has been delayed by the impasse between Congress and the government. Several congressmen favor a bill that would maintain privileges and favorable conditions extended during the Balaguer administration to private operations. The Fernández administration favors that all companies operate on the same set of rules.
 
Corporación Dominicana de Electricidad Power Plant Plan for Years 1998-2002
 
 POWER PLANT MW CAPACITY  DELIVERY DATE
 Higuamo-I 34.04 April 1998
 Higuamo-II 34.04 May 1998
 Itabo-I 34.04 May 1998
 Cayman Power I 30.00 May 1998
 Itabo-II 34.04 June 1998
 Haina 99.67 June 1998
 Higuamo-III 34.04 December 1998
 Total 1998 333.91  
 Cayman Power 30.00 January 1998
 Privada I 20.00 January 1999
 Privada II 20.00 February 1999
Haina III 70.00 February 1999
 Privada III 20.00 March 1999
 CDE-I 20.00 March 1999
 Privada IV 20.00 April 1999
 CDE-II 20.00 April 1999
 Privada V 20.00 May 1999
 CDE III 20.00 May 1999
 CDE IV 20.00 June 1999
 CDE V 20.00 July 1999
 Contraembalse Monción 03.80 July 1999
 Total 1999 303.8  
 Haina V 70.00  January 2000
 CC BOO-I 98.00 July 2000
 CC BOO-II 98.00 September 2000
 Combined Cycle 98.00 October 2000
 Total 364.00
 Higuamo 40.00 January 2001
 Itabo 40.00 January 2001
 Haina 50.00 January 2001
 Itabo III 125.00 April 2001
 Itabo IV 125.00 November 2001
 Total 2001 380  
 Hidro Monción 50 August 2002
 Total 2002 50  

All must pay for electricity consumed
The Corporación Dominicana de Electricidad, the state electricity utility, signed an agreement with the Police and the District Attorney to eliminate illegal connections to the CDE network and fraudulent practices that affect the income of the state utility. A special unit to enforce this agreement has been created. The agreement was signed by Rhadames Segura, administrator of the CDE; Lic. Francisco J. Domínguez, District Attorney, and Jose Anibal Sanz Jiminián, chief of the National Police.
The government has committed to provide more electricity, but a priority is to step up collection efforts. If not, the government subsidy will have to be considerably increased.
The CDE at present only collects 50% of the energy served. In poor areas, it is believed that indigents should receive the service for free. As a result of the illegal connections, several tragedies have occurred in these areas. The enforcement of this agreement will save lives.

Challenges ahead for Congress
The new Congress that begins work 16 August 1998, has a heavy work burden waiting for it. The present Congress is better known for not working than for working. They are also better known for passing bills to increase their own salaries and benefits and for the passing thousands of pensions, than for studying and passing important bills. As a result, as per a story in the Listín Diario, still pending in Congress are the following bills:

Tariffs Reform
The DR is the country that places the highest taxes on imports in Latin America. This is an impediment for the DR joining regional blocks. Business groups demand that Congress legislate to reduce taxes if the country is to be able to fully participate in the Central American and Caribbean Community regional blocks and in the Free Trade Agreement of the Americas into year 2005.
Bills to the effect sent by the Presidency to Congress have been rejected. The government estimates that its tax income will decline significantly and seeks to compensate with an increase in sales taxes.

Tax Reform
The PLD government wants to increase fiscal pressure to 30% from 14.5%. The PRD has proposed that the government be more effective about collecting taxes and expand the base so that more businesses and individuals pay taxes. This bill was submitted to Congress in 1996 by the new government as part of the 1996 budget but was rejected by Congress.

Electricity Bill
Establishes the Superintendence of Electricity, and the National Energy Commission. The bill has been modified in Congress reportedly to suit interests of some legislators that have investments in the electricity sector. This bill establishes a legal framework for private investment in electricity sector. This bill is several years old.

Social Security bill
Controversy over this bill is due to the fact that several business sectors feel government participation should be kept to a minimum. Individuals should be able to decide where they place their pension fund savings. This bill has been under discussion for almost a decade.

Monetary and Financial bill
Restructuring of the rulings affecting the financial markets. The technical aspects of this bill are being applied since 1992. It has been in Congress for three years.

Budget Law bill
Regulates how the funds are allocated and used. Proposes the reduction of the discretionary powers of the President over the budget.

Dominican congressmen are best paid in government
Dominican congressmen are the best paid Dominican government officers. The Listín Diario reports that the 149 deputies and 30 senators that will begin work 16 August 1998 will receive RD$77,000 a month per salary, diet and representation expenses. They also have the right to a diplomatic passport and two unlimited vehicle tax exemptions. The Listín estimates these exemptions can command up to US$50,000 on the market. More so, the Listín mentions that several congressmen are known for accepting or soliciting payments for the passing of bills.

Controversial lawyer criticized Supreme Court judges
The president of the National Council of Drugs, Marino Vinicio (Vincho) Castillo said on his TV program "La Repuesta" that some Supreme Court of Justice judges respond to "determined political-party interests that serve international organized crime forces." He was referring to declarations of President of the Court, Jorge Subero Isa who on the day of the opening of the Escuela Nacional de la Magistratura, the school where judges will be trained, sustained that only those that oppose the transformation and creation of a new judicial order because they know that only in a justice covered with soot will they be successful.
He said that the past conduct of many Supreme Court judges is questionable, not for their lack of honesty nor capacity, but for having provided their professional services to non-clear causes.
Vincho Castillo also referred to the legal case between the Smith-Enron power plant and the Hotelera Moya company. The hotel company's Bayside Inn resort in Costambar was forced to close due to pollution created by the installation of the power plant nearby. Castillo said that who has been named the new director of the Escuela Nacional de la Magistratura, whose office represents Smith-Enron in the case with Moya, had submitted as candidates to arbitrage on the case four notable lawyers that later became judges of the Supreme Court of Justice. He says that in view of this situation, the hotel company could sue the Smith-Enron power plant in a U.S. court, which he considers would be a defeat for the country if in the US it is known that there is traffic of influences, extorsion and pressure against an arbiter, judge of the same Supreme Court of Justice.
He criticized that some of the judges are former lawyers who were at the service of powerful interests. He said he has not insulted the Supreme Court of Justice, just said that he feels working lawyers should not be judges, because even if they do the right things, they will always be suspect. Lawyers are very vulnerable, he said.

Santiago governor wants to run for President
The governor of Santiago, Marcelo Bermúdez, announced he aspires to the presidential nomination on the Partido de la Liberación Dominicana ballot for the year 2000 elections. He conditioned his running for President to the decision of President Leonel Fernández, whom whom he called the party leader.

Balaguer not making up his mind, yet
Former President Joaquín Balaguer, during the traditional distribution of Mothers Day food baskets to indigent women, said that he will continue serving the nation "until he dies." Balaguer is 92. He thus responded to reporters questions as to whether he would be the Partido Reformista Social Cristiano candidate in the year 2000 presidential elections. The former statesman reprimanded journalists, saying, "That is politics, and today is not a day for politics."

200,000 beepers in service
Ultima Hora newspaper reports that there are 200,000 beeper service users in the Dominican Republic. Most users are 18 to 45 years.
Beepers were introduced to the Dominican Republic by Codetel in 1988. Codetel estimates the potential market is 1,200,000 persons. Codetel has some 150,000 subscribers. The rest of the market is served by Tricom and Skytel beepers. Tricom has 28,332 subscribers and there are some 11,000 Skytel beepers. Smaller companies make up the difference.
Ultima Hora report says users should reach 320,000 by year 2000. Growth is estimated at 30% per year.
There are also 150,000 cellular phone users in the DR.

Releasing the funds for banks to lend
The Vice Governor of the Central Bank, Luis Manuel Piantini, told the Listín Diario that interest rates will begin a downward trend after several months of increase. The Central Bank will gradually implement a new policy over 15 months that will allow banks use of the frozen funds of the excess of the legal reserve that adds up to RD$1,417 million. Interest rates surged earlier this year when the Central Bank limited money in circulation in order to restrain a run on the exchange rate.

More visits by Canadians to sun spots
The Dominican Republic was among the 15 most visited sites by Canadians in 1997. According to Statistics Canada, travel to the so-called sun spots in the United States and overseas saw greater numbers of Canadians last year, despite Europe still being the preferred destination for Canadians (apart from the United States).
Statistics Canada reports results of the International Travel Survey that despite a slight drop (-1.1%) in Canadians' overnight trips to the United States, their number of overnight visits to Florida was up 9.6% to 2.1 million. Last year, Canadians made 1.0 million visits to California, an increase of 7.4%.
Canadians visited sun spots in Central America and the Caribbean more often in 1997. And visits to Mexico jumped 29% to 567,000, second in overseas destinations after the United Kingdom.
Travel to the DR was up 23% in 1997, to 138,000. The Dominican Republic is Canadians preferred destination in the Caribbean.
Top ranked Canadian destinations per visitors:
 
United States:
New York 2,399,000
Florida 2,098,000
Washington, D.C. 1,900 ,000
Michigan 1,326,000
California 1,000,000
 
Europe:
United Kingdom 700,000
France 404,000
Italy 163,000
Netherlands 145,000
Switzerland 123,000
 
Other:
Mexico 567,000
Hong Kong 139,000
Dominican Republic 183,000

Seeking funds to expand water works
The Technical Secretary of the Presidency, engineer Temístocles Montás said he will travel to Washington D. C. for a meeting with World Bank executives. The country seeks US$120 million to be used for potable water and sewage expansion projects in tourism areas. These projects will be built in Puerto Plata, Sosua, Cabarete, Las Terrenas, Samana, Bavaro, Juan Dolio, Punta Cana, Guayacanes, Boca Chica , Andres and Barahona.
Montás said he is working closely with the National Hotel & Restaurant Association, the Ministry of Tourism and the Instituto Nacional de Aguas Potables y Alcantarillados (INAPA), the potable water and sewage department.

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