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Daily News - Wednesday, 07 February 2007

Bidding will save RD$750 million
Public bidding for contracts covering fuel transport across the Dominican Republic would save an estimated RD$750 million each year, and these savings could be spent on health or education or passed on to consumers, as reported in Hoy. Even with the price reductions, the study reveals that fuel transport sector would continue to be profitable. The document's first point is that open bidding would prevent the conflicts that damage the nation's image and create problems for the government. The document goes on to say that the current controls on fuel transport should be maintained under the bidding procedures, and that all companies currently servicing the sector would be free to participate. Petroleum distributors would be free to choose their carriers, "but with a strict control on volumes, and with penalties for anyone who breaches the agreements." Going further, the proposal says that drivers' salaries should be adjusted to current market levels that correspond to their labor, since "this would prevent labor conflicts in such an important area." According to the newspaper, the document points out that accepting the proposal would help resolve current issues within the sector, "without putting any of the parties at a disadvantage, except that it would reduce the hefty profits that no more than a dozen rich traders now receive to more acceptable levels." As a means of explanation, the document indicates that the current crisis in the sector is the result of differences between the petroleum distributors, the Petroleum Products Transportation Association (ATP) and the union that represents tanker truck drivers (SATPA). As a final point, the document lists three positive results: freedom to choose the fuel transportation company, lower transportation rates for all, and savings for the government.
Meanwhile, the conflict has the implementation of the DR-CAFTA moved now to March, as Texaco-Chevron distributors dispute the right to transport their own fuel.

CDEEE studies lawsuit
Members of the President's Energy Cabinet are planning to meet with the chief executive's legal advisors and a team of outside lawyers in order to study the lawsuit brought by Trust Capitol of the West (TCW) against the CDEEE (the Dominican Corporation of State-owned Electricity Enterprises), the Superintendent of Electricity and the National Energy Commission (NEC). CDEEE administrator Radhames Segura confirmed the fact that TCW was indeed suing them for US$680 million. Diario Libre reports that TCW is a 50% shareholder in EdeEste. Segura said that the government would pursue the case in the courts, but "this is not going to make the government change its plans to solve the electricity problem..." Segura pointed out that in September 1999, the Dominican government entered into partnership with AES, with a 50% share of the corporation as well as the administration. In November 2004, the AES Corporation sold its shares to TCW. TCW is now arguing that since its inception, they have invested US$279 million in EdeEste, and, in addition, they have losses of US$250 million on the books. TCW is demanding RD$535 million for the loss of income and cash flow, or as an alternative, no less than US$680 million for the depreciation of the company that AES kept operating even after the sale.

Ministry of Environment closes tannery
The Ministry of the Environment prosecutor has warned Teneria Bermudez executives that the factory will remain "provisionally closed" until they fulfill the legal requirements and use chemicals that fulfill the parameters for non-pollution by effluents. Prosecutor Jacinto Mejia met with the tannery's president, Aquiles Bermudez and his lawyers, and, afterwards, he told reporters that since he was acting under the articles of Law 64-00 on the Environment and Natural Resources, he would not order the re-opening of the facility. In an article in Diario Libre, Mejia said that the tannery used to send its toxic effluents to a treatment plant operated by the Santiago Water Works (Corasan), but after complaints from this institution, they began dumping the effluent directly into the Yaque River. Yesterday's Diario Libre confirmed the fact that the effluents are dumped directly into the river, causing high levels of pollution, including a smell that is offensive to passers-by. Company president Aquiles Bermudez said that he was surprised at the prosecutor's action and claimed that such action could well have a negative effect on both local and foreign investments.

Drastic reduction in GLP subsidy
Last year, the Dominican government spent RD$5.56 billion pesos on propane (LPG) subsidies, but this year the total is said to be just RD$2.4 billion. The lower amount allocated to subsidize the LPG used in household cooking is due to the obligation for such a reduction contained in the Letter of Intent that will be reviewed by the International Monetary Fund (IMF) board of directors on 14 February. According to El Caribe, during the presentation of the fifth and sixth revision of the Stand-by accord with the IMF to the government's economic cabinet, the document foresees a 6% growth in 2007 and an inflation rate of between 4% and 6%. The entire document from the Central Bank was published in today's papers. Vicente Bengoa, now the head of the Treasury Ministry, revealed the lowering of the funds for the subsidy. He pointed out that in case the funds allocated to the subsidy run out, the government would meet with IMF officials to discuss alternative solutions. For a long time, the IMF has pushed for a removal of all of the LPG and electricity subsidies, since this would save US$400 million each year. If the IMF revisions are accepted, the Dominican government will have access to US$57 million in IMF funds.

Department of Taxes reports large increase
The Department of Taxes (DGII) has reported income of RD$13.4 billion for January, a 61% increase on the money received in 2006. According to a press release from the DGII, the government office received over RD$3 billion more than it had projected. Corporate and personal income taxes made up 44% of the large income and the VAT and luxury taxes made up most of the rest of the income. Personal income tax collection was reported to be up 94% as a result of stiffer government regulations.

Government wants limits increased
The Dominican government is asking the International Monetary Fund (IMF) to raise the foreign debt limit by 173%, according to the document that covers the fifth and sixth revisions of the Stand-by agreement. The government also promises to limit the subsidy to the electric sector and LPG for household use to between 1% and 2% of the GDP. The plan calls for a reduction in the money sent to municipal governments and a cut in capital expenditure. The authorities are looking to use these cuts as a way to recapitalize the Central Bank and to increase health and educational services.
See the agreement in Spanish at http://www.bancentral.gov.do/acuerdo_fmi.asp?a=FMI

OGM data bank
Today marks the tenth anniversary of the OGM Data Bank. This little-known resource for researching recent Dominican history contains articles from the entire publication history of El Caribe newspaper, as well as other newspaper and magazine collections. The OGM Central de Datos, to give the organization its proper name, was the result of collaboration between German Emilio Ornes, the former owner of El Caribe, eminent historian Frank Moya Pons, and banker Alejandro Grullon. The OGM data bank contains all the editions of "AHORA!" magazine, as well as "Renovacion" and "Patria" from the 1960s and 1970s, and the complete El Caribe collection from Antonio Perrota. Mr. Perrota purchased two subscriptions to El Caribe when it started publication in 1947. He would read one and save the other, which he had bound each month. This is a welcome resource for anyone with an interest in Dominican events over the last 60 years.

Forum looks at ideological stalemate
A forum in Santo Domingo with the imposing title of "Regional and cross-border environmental management: a challenge for international cooperation" has raised what, in the light of the speakers, might be called "ideological entrapment" on the issue of how Dominicans and Haitians think about each other. The German aid agency GTZ sponsored the forum and the featured speaker, Harold Dilla, stated that the predominant economic activity on the border consisted of short-term accumulation of capital, indiscriminant use of the environment and natural resources, and social exclusion and poverty. He said, "On the Dominican side nearly 60% of the population is poor and on the Haitian side nearly 100%." The specialist on cities and frontiers said that the manipulation of history and culture on both sides of the frontier have led to an inability to reason about the mutual benefits of the situation. Dilla said he was worried about the impact that these economic activities were having on the environment, particularly on water resources. He said that demographic pressures from the Haitian side were an important issue. Looking at the results of international cooperation efforts, the keynote speaker said that most efforts have been uncoordinated, piecemeal, and inaccessible for many groups along the frontier as well as having little social effect.

China is not the problem
Fernando Capellan, the president of Grupo M, a major industrial free zone company, has told reporters that the problem facing the free zones in the Dominican Republic is not China, but rather the lack of support from government authorities that fail to see the effects of the closure of free zone companies or the loss of competitiveness for Dominican industries. According to a report in El Caribe, 19 factories with 27,393 employees have shut their doors since 2004. Capellan says that major contributory factors to the current crisis in the free zone industries include the delay in the country's entry to the DR-CAFTA agreement, a lack of support from the National Training Institute (INFOTEP), the ineffectiveness of the social security system, the high cost of goods transportation and the non-fulfillment of the Energy Law. According to the business leader, Dominican industry has lost RD$4.0 billion as a result of these problems.

A drug bust with implications
The National Drug Control Office (DNCD) has announced the seizure of 51.7 kilograms of cocaine during an operation on the Puerto Plata docks. The big news is that the drugs were seized from an official of the Antillean Marine Corporation, and the drugs were recovered from a vehicle with an official license plate from the Chamber of Deputies. A total of 26 packages of drugs was found in a pick-up truck and a further 24 packages were found in the car with the official license plates. Yesterday, the Chamber of Deputies told the police that the vehicle was stolen four years ago and that the theft had been reported to the police on 17 December 2003.

Police talk to barrio leaders
Police chief Bernardo Santana Paez met with barrio leaders in Santiago yesterday to discuss the reports that self-defense brigades were being formed to combat crime. He met with representatives from San Jose La Mina, Hato Mayor and Barrio Lindo. Santana told the community leaders that he would be meeting with the president of the Fighting Barrio Committee, Jose Francisco Consuegra, as well as other brigade leaders. The chief told the barrio leaders that "citizens should trust the police and their work." As reported in Diario Libre, Santana Paez urged the leaders to cooperate and to report anything that caught their attention to the police. For their part, the community leaders complained that the absence of police patrols in the barrios was causing the current new wave of robberies. The police chief said that he would look into this and evaluate the work of the local police commanders.

DR wins Caribbean Series
Dominican baseball champions the Aguilas Cibaenas, representing the country at the 2007 Caribbean Series were crowned champions of the regional tournament as they defeated the team from Mexico 5-3. The 3-1 defeat of Puerto Rico by Venezuela guaranteed the team from Santiago de los Caballeros their fifth series title. The Dominican Republic has now won 16 of these events. If the Aguilas can manage a win today and finish the series undefeated, it would be their first undefeated victory in the series.
 
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