Government enters electricity business to reduce subsidies
Danilo: Otherwise we have to renegotiate contracts
Diario Libre
PERAVIA. As he presided over the startup of the construction work of two coal-fired generators of some 769.9 megawatts, in Punta Catalina, Bani, at a cost of US$1.945 billion, President Danilo Medina defended the need for the government to take part in low-cost energy production in order to achieve to goal of blackouts "being a thing of the past."
He said that the main problem of the country is the energy system, after pointing out that the Dominican Republic cannot afford "to throw more than a billion dollars a year into the trash basket" as payment of the electricity subsidy, so that starting in 2016, the government will enter this business.
"What we are doing is not some crazy or improvised business, it is the conviction we have that if the state does not enter into the electricity generation sector, we will have to renew the contracts," he warned.
As he defended the construction by the government of the two generation plants, which will provide 7,.500 jobs, Medina said that the moment has come in which the state achieves some kind of energy independence, generating cheap energy, which will allow it to renegotiate the expensive contracts.
"We are entering the energy business in order to regulate the energy market, but as soon as it is regulated, the public sector will get out of there. It should be a business of the private sector; we will be there temporarily, until we can guarantee acceptable energy for society," he underlined.
The President indicated that the country's middle class, especially that which resides in the center part of the capital, cannot sustain another rate increase, but that also the high cost is taking the country out of competition.
"The moment has come to cut it at the roots, and this is the decision we have taken," he stressed.
The Chief of State recalled that when he took over the administration he found a US$600 million debt for electricity, which he tried to negotiate, but it was not possible.
He stressed the amount of the investment that the government would make in the two coal-fired plants, but he assured reporters that when these go into service (in three years) the electric subsidy payments will fall to US$400 or US$300 million. According to the President, more than 60% of the indebtedness of the country over the past few years is to pay the energy that cannot be collected for at the price it is sold for.
Agreement with Vicini
Medina revealed that he already has a pre-agreement with Juan Vicini to convert 1,000 megawatts of energy to natural gas. "We have even gone so far as to have another agreement to build a 400 mega natural gas plant associated with EGE Haina."
He added moreover that with government participation, Itabo will build another two coal-fired plants.
An accusation regarding producers
The President accused the companies that produce natural gas to want to sign agreements with the government in which the country will be the only loser. He said that these businessmen want to sign agreements with the government to build generation plants that use natural gas at the current prices of the fuel, knowing that these prices will be lower in the next few years. "If I sign a long term contract at the prices of gas today, when the gas goes down, I would be lynched in the country," he said. Government officials and special invited guests took part in the startup of the construction work.
He said that the main problem of the country is the energy system, after pointing out that the Dominican Republic cannot afford "to throw more than a billion dollars a year into the trash basket" as payment of the electricity subsidy, so that starting in 2016, the government will enter this business.
"What we are doing is not some crazy or improvised business, it is the conviction we have that if the state does not enter into the electricity generation sector, we will have to renew the contracts," he warned.
As he defended the construction by the government of the two generation plants, which will provide 7,.500 jobs, Medina said that the moment has come in which the state achieves some kind of energy independence, generating cheap energy, which will allow it to renegotiate the expensive contracts.
"We are entering the energy business in order to regulate the energy market, but as soon as it is regulated, the public sector will get out of there. It should be a business of the private sector; we will be there temporarily, until we can guarantee acceptable energy for society," he underlined.
The President indicated that the country's middle class, especially that which resides in the center part of the capital, cannot sustain another rate increase, but that also the high cost is taking the country out of competition.
"The moment has come to cut it at the roots, and this is the decision we have taken," he stressed.
The Chief of State recalled that when he took over the administration he found a US$600 million debt for electricity, which he tried to negotiate, but it was not possible.
He stressed the amount of the investment that the government would make in the two coal-fired plants, but he assured reporters that when these go into service (in three years) the electric subsidy payments will fall to US$400 or US$300 million. According to the President, more than 60% of the indebtedness of the country over the past few years is to pay the energy that cannot be collected for at the price it is sold for.
Agreement with Vicini
Medina revealed that he already has a pre-agreement with Juan Vicini to convert 1,000 megawatts of energy to natural gas. "We have even gone so far as to have another agreement to build a 400 mega natural gas plant associated with EGE Haina."
He added moreover that with government participation, Itabo will build another two coal-fired plants.
An accusation regarding producers
The President accused the companies that produce natural gas to want to sign agreements with the government in which the country will be the only loser. He said that these businessmen want to sign agreements with the government to build generation plants that use natural gas at the current prices of the fuel, knowing that these prices will be lower in the next few years. "If I sign a long term contract at the prices of gas today, when the gas goes down, I would be lynched in the country," he said. Government officials and special invited guests took part in the startup of the construction work.
Diario Libre
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