lunes, marzo 13, 2006

DR1: Santo Domingo Dark and Other Stories

Very long blackouts hit most of Santo Domingo over the weekend, interrupting the normal flow of daily life. Households, industries and traders were affected by the 16-hour outages. The recent spate of energy losses is affecting most Santo Domingo neighborhoods, from Los Alcarrizos to Piantini and Naco, causing families to change their daily habits. Those that can afford the luxury sleep in hotels and motels around the city. The smaller businesses are the ones that, according to El Caribe, are bearing the brunt of the energy crisis. Barbershops, hair salons, ice cream parlors, bakeries, corner shops and clothing stores have all been seriously hurt.

And the newspapers all carry articles focusing on electricity. Over the weekend, the National Association of Young Entrepreneurs (ANJE) took out a full-page announcement on their position in relation to the current situation. They called the! piece "Reflections on the Electricity Sector." In it, they ask just who is suffering from the crisis. They answer that everyone is suffering, but some are benefiting, too. The entrepreneurs who don't steal electricity are suffering, paying bills that are several times higher than their competitors from other DR-CAFTA nations. These entrepreneurs also have to spend large sums on "stand-by" generators and another small fortune purchasing fuels and paying for maintenance. The ones that steal electricity don't have this problem and have a distinct advantage over others in their fields. The entrepreneur that qualifies for the status of a "non-regulated client" also suffers, as permits are not issued in clear violation of the law. The generators also suffer, as do the electricity distributors. ANJE's conclusion is that there is a lack of incentive as a result of the absence of real official interest. They say: "those that are suffering the crisis don't have the power, and those ! that have the power, don't have the interest." The article also takes on the subsidy issue and the Madrid Accords. One of the clearest points is that the Madrid Accords must be rescinded in order to solve the crisis. Their idea is that with lower costs come lower electricity bills, and as a result a higher collection rate. The higher collection rate would be a major assist towards the resolution of the crisis, since it would permit an end to the subsidies and the blackouts.

Editorialist Felix Calvo, a former top official at the Central Bank, says that the issue of electricity has the government efforts to conclude the last review of the IMF Stand-by Agreement at a standstill. He points out that the World Bank has said on three different occasions that the government's decision to maintain the current electricity subsidies does not enter into the agreements that have been signed. To make things tougher, Calvo points out that the IMF has said that the government cannot take on more debt to service the electricity subsidy, unless it modifies ! the electricity rates, increases collections, reduces the theft of electricity and pays the generators. Calvo looks at things from an economist's perspective and sees that the political aspects of higher billings and subsidy removal would mean very heavy penalties for the party currently in power.

And the administrator of EdeSur, Alejandro Gomez decries the destruction of thousands of electricity meters that is costing the company US$1.5 billion to replace. As a small piece of the problem, the EdeSur administrator said that his company has 416,000 service contracts as its client base. However, only 265,000 are billed each month. The company is currently carrying a debt load of RD$9.0 billion for energy provided but never paid for.

And Francisco Mendez, the Superintendent of Electricity told Hoy reporters that he trusted the electric companies to fulfill their part of the recent agreements with the government. He also announced that the government would begin grantin! g the permits for the "Non-regulated Client" status this year. The ele ctric companies have promised to reduce the internal debt that is currently a stumbling block for attenuating the crisis. This is the debt between the distributors who sell the electricity and the generators producing it.

Finally, Julio Ortega Tous, the government official who heads the National Commission for Commercial Negotiations, said that the electricity rates are a major obstacle, preventing the Dominican Republic from competing on the international market. Ortega Tous said that "with electricity rates at US$0.25 or US$0.30 a kilowatt-hour, we absolutely cannot compete with anyone."

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