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Daily News - Monday, 23 July 2007

Ex Im Bank again?
President Leonel Fernandez received John McAdams, senior vice president and head of export finance for US Ex-Im Bank and legal advisor Howard Schweitzer and Americas relations manager Dwight W. Herow, at the Presidential Palace on Friday. US Ex-Im Bank is a US government export-financing agency that guarantees commercial bank loans for US exports. The officers were accompanied by US Embassy charge d'affairs Roland Bullen and Ellen Dunlap of the US Embassy. As reported by the Presidency, the President and the Ex-Im Bank officers discussed future government-contracted projects that could be carried out with Exim Bank guarantees.
In the past government, US Ex-Im Bank has financed several controversial purchases in the DR. One of the most recent was that for a commercial bank loan for US$61 million for the construction 115 multi-use sports installations nationwide. No tender was held for the purchase and the credentials of the company that received the millionaire financing were extensively questioned in the local press. Today, with very few exceptions, the sports facilities that were built are abandoned structures planted all around the Dominican Republic. One of the principals of this venture is today accused of involvement in a major drug dealing-venture being heard in a New York City court.
During the Mejia administration, the Dominican Republic became the Ex-Im Bank's second largest market worldwide. Records show that as of US government fiscal year 2002, Ex-Im Bank had authorized US$788 million in financing for projects -- medical equipment, telecommunications, oil & gas, electricity, transportation, environmental, and manufacturing equipment and services.
The Fernandez administration has also taken on several BNDES supported loans, offered by the Brazilian export-financing agency.

More farmer's markets
The Ministry of Agriculture has opened 66 farmer's markets throughout the country, after the success of the initial 24. Minister Salvador Jimenez told El Caribe reporters that the increase in the markets is due to the support received from the public. He said while the new marketplaces are not politically motivated they do form part of the government's program "Eating comes first." There are 16 markets in the National District and Santo Domingo province; 12 in the north, three in the Northeast; five in the Northcentral district; eight in the Northwest; four in the east; three in the south and eight in the Southwest. Products of basic foodstuffs such as plantains can be purchased for more than 50% off regular supermarket prices.

Health plan still in trouble
Discounts to wages for the nation's health insurance plan (SFS) are supposed to begin in September, but it now seems that a political solution would have to be reached before anything happens. According to the Diario Libre, Public Health Minister Bautista Rojas Gomez assured reporters that the conditions are ripe for the start up and things should not be stalled. In addition to political interests, the minister said that business and personal interests are also acting as roadblocks to the process. Rojas said that the new health insurance would oblige sectors to offer services for which they have been collecting money but not providing complete service. In full page ads in all of today's press media, the Dominican Association of Health Insurance Providers (ADARS) points out that after a profound analysis of the scheme, they feel that the model that is being offered will not provide the quality of the services that their insured are accustomed to receive and, therefore, they cannot be part of the plan. As for reasons the ARS group says that the recently proposed idea of free access to health Service Providers is fine, as long as it is financially sustainable. However, their actuaries, as well as those working for the government, show an estimated deficit of between 30 and 46%, or RD$7.0 billion per year. Law 87-01 demands financial equilibrium in the system. Another point made by the ADARS was the fact that some requirements by the Treasury of the new system would eliminate as many as 600,000 of the current clients of the ARS, leaving them without and family health insurance.

Different opinions on "little boxes"
The Dominican legislators receive hundreds of thousands of pesos each month for what is called the "social Assistance Fund" or, more popularly, the "little box". Currently, civil watchgroups such as Participacion Ciudadana (Citizen Participation) and the Foundation for Institutionalism and Justice (Finjus) are questioning the practice as a source of official corruption. PC executive director, Javier Cabreja, told Hoy reporters that the resources now being allotted to the legislators should instead be handled by government ministries, such as Education, Public Works and Public Health. Servio Tulio Castanos Guzman, the executive vice-president of Finjus, said that the "little boxes" just promote the waste of public resources and contradict the principles that should reign in the National Congress.
PLD Senator Charlie Mariotti, Monte Plata, defended the practice as a way the legislators can service the needs of their constituents. The senator said, "It is not easy out there in the provinces with those levels of poverty..." Nonetheless, the senator admitted that other mechanisms should be used since the current practice just reinforces the age-old practice of patronage.

Price of fuel goes down!!
For the first time in many weeks, the price of gasoline and diesel has fallen by fairly important amounts. Gasoline prices fell by more than RD$7.00 and diesel dropped RD$2.40. What surprised most observers was that the decrease in fuel prices came during a week of increasing oil prices on the world markets. In New York, oil prices hit US$75.00 a barrel. The only international good news was the start up of the refinery in Beaumont, Texas, damaged by Hurricane Katrina.

Non-regulated users on hold
The theoretical lowering of the required levels of power usage needed to qualify a company for the privileged category of "non-regulated user (of electricity)" has been frozen at 1,400 kw/h for several years now in violation to the law. According to the Electricity Law, it should now be pegged at just 200 kw/h, but the Superintendence of Electricity has refused to enforce the law. The electricity distributors have convinced the Superintendence of Electricity that they could not afford to lose their bigger clients.
Ernesto Vilalta pointed out to Hoy reporters that the competitive situation of many large industries would improve if they are allowed to buy directly from the generators. According to Bernado Castellanos, a civil engineer that worked for the CDEEE for 15 years, if the law were enforced, becoming a non-regulated user would not be very difficult once the technical tariff was established. This tariff is the cost of using the transmission lines and the technical services of the CDEEE and the various distributors, but eliminates the need to build a costly sub-station, a requirement the Superintendence has supported to discourage companies from disconnecting from the distributors. At the present time, non regulated users are connected directly to the high tension power lines and have to build their own sub-station in order to be able to use the electricity.
Revisions to the electricity law presently under study in Congress would legalize the violation of the law.
The high cost of electricity served to industries and large companies in the DR, attributed by studies to political decisions, are one of the main reasons mentioned as to why the DR has not been able to compete with Central American companies.

Deputies and the IMF
The Chamber of Deputies is a sovereign entity, according to Julio Cesar Valentin, the chamber president. However, some of the questions raised by the International Monetary Fund, (IMF) are valid, although they cannot be forced upon the chamber. Involved in this issue are the changes required in the Electricity Law that will permit the criminalization of electricity theft. Valentin told Diario Libre reporters that the deputies would discuss possible solutions to the pending issues. Since the deputies defend the interests of their constituents, according to Valentin, the chamber has to listen to their positions. Currently, the PRD and the PRSC, although in the minority, are firmly against the suggested changes in the law. Those against the electricity bill, argue that the government padded the criminalization bill with several other articles that would take the country years back in any advances made in electricity sector reform.

Shell has a buyer
The Shell Oil Company will reveal the buyer of their 50% stake in the Dominican Refinery (REFIDOMSA) according to a "reliable source". The Listin Diario says that while the Shell Company is maintaining a strict silence as to just who the buyer is, there are at last four hopefuls awaiting word. According to Ruben Montas, the government's president of the board of directors of the REFIDOMSA, as soon as the Shell Company tells President Leonel Fernandez who the buyer is and at what price, the government has 60 days to meet that price or sell out to the new partner. Among the groups said to be in the running are the Vicini-Corripio group, the Trafigura Beheer B.V., of Switzerland, the Isla group, and a group of Santiago business leaders headed by the Bermudez family.

CONATRA in trouble
Internal strife seems to be at the throat of the CONATRA transportation syndicate, one of the nation's largest. An apparent war between two factions has brought to light accusations of corruption and mismanagement of funds. One group headed by Oscar de Jesus claims de Jesus as the new president of the syndicate, and accuses Antonio Marte of using RD$545 million in syndicate funds. Speaking to a national radio audience, de Jesus said that Marte has kidnapped the syndicate's offices, but he also affirmed that he would be sworn in as the new president of CONATRA on the 25 July.

Barahona tourism could grow by 50%
Listin Diario highlighted over the weekend that investment has been slow in coming to the Dominican South and the Southwest that remain practically unexploited for mass tourism. Two laws provide tax incentives to promote tourism in areas in southwestern Azua, Barahona, Bani, and Palenque, but these regions are moving slowly. Jaime Moreno, the tourism advisor to the National Competitive Council, told Listin Diario reporters that the Eco-tourism Cluster in the South is working to create new jobs for Barahona. Approvals are far advanced for the start of a 500-room wellness resort in the province that would almost double room capacity in that scantly populated region. The Maria Montez International Airport is expected to begin to receive international flights by 2009.

Bishop Felix Pepen
The Dominican Republic lost one of its historical figures over the weekend with the passing of Bishop Feliz Pepen, the first bishop of Higuey. The bishop was buried in the Altagracia Basilica in Higuey, and the funeral was presided over by Nicolas de Jesus Cardinal Lopez Rodriguez. The Dominican Council of Bishops assisted in the Mass celebrated in the nation's landmark cathedral. A man of extremely low profile, Pepen became famous after reading an Episcopal letter that sharply criticized the Trujillo dictatorship in 1960. Although the famous letter was signed by bishops Pepen, Thomas O'Reilly, Monsignor Panal and Cardinal Octavio Beras, the author of condemnation of the dictatorship was Father Vicente Rubio, also now deceased, a Spanish Jesuit based in Santo Domingo.

Wendy Cruz wins in cycling
More medals for Dominican athletes at the XV Pan American Games in Rio de Janeiro, Brazil. The biggest surprise of the Games for the Dominican team so far was the victory of Wendy Cruz in cycling, winning the gold medal in the 150-kilometer race. Cruz, 32 and the father of two, is very well known in Dominican cycling circles, but this is his first international major victory. Teofilo Diek and Maria Garcia (100kgs and 52 kgs) won bronze in Judo. Boxer Claudio Marrero is assured of at least a bronze medal, but he told reporters "Now I have a medal, but I am going for more now."
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