Purchase of Ede-Este was to get out of legal trouble

DOMINICAN REPUBLIC.- The Superintendent of Electricity, Francisco Mendez, confirmed yesterday the purchase of all of the stock of the Ede-Este by the Dominican state, after alleging that this represents a solution to a legal struggle in which they have already paid US$12 million to lawyers.

The government acquired yesterday all of the shares of the Ede-Este for a sum that is between US$20 million and US$25 million. The negotiation was headed by the vice resident of the Dominican Corporation of State-owned electrical Enterprises (CDEEE), Radhames Segura.

The Cardinal, Nicolas de Jesus Lopez Rodriguez, warned that the solution to the energy system was not in the purchase of Ede-Este, but rather in an effective plan of bill collection. In addition, he said, the way to solve the electricity problem in the country is with a healthy investment of money that they don't have, even though the distributors have not resolved the problem.

At the same time the National Council of Private Enterprise (CONEP) called the purchase of Ede-Este an involuntary act in that far from clearing up the panorama, now it adds another obstacle to a rational solution to the electricity problem for which they deplored the official attitude.

Ede-Este obtained income for US$20.38 million in its current operations in the month of February and it spent US$34.57 million in operating expenses for an operational deficit of US$14.19 million, some US$2.22 million less (13.55%) than the programmed deficit of US$16.41 million.

In order to finance the cash flow deficit, Ede-Este received government payments for RD$288.78 million (US$8.09 at the official rate of exchange). The deficit after the financing in February was US$6.10 million.

Mendez, the superintendent of electricity, said that what the state has done is acquire the shares of the other partner and with this measure it has removed the lawsuit for indemnity that Ede-Este had filed against the state and eliminate the payment of the administrative commission of US$7.0 million a year that the government paid to the company.

"So what I am objectively seeing is that with the purchase of the shares of Ede-Este there are no more excuses from the personnel that will now have greater motivation to work and increase their collections and the state will not have to give resources or fiscal contributions to a private company, but rather to one that they own," said Mendez.

Business community

The Conep hopes that the government thinks a bit, and corrects the course adopted in the case of Ede-Este, since the signal they are giving out to national and foreign investors is contrary to the productive cycle that the nation needs. They deplored the fact that the government is increasing its participation in the national electric sector and called in an involution, since in its judgment instead of facing the problem of the sector in an integral manner, they went back to the mistake of continuing state participation even more, according to Lisandro Macarrulla.

Diario Libre