| 06 SEP 2013, 12:00 AM

Electricity subsidy takes RD$32 billion in eight months

Assigned amount in 2013 Budget was RD$43.682 billion

SANTO DOMINGO. As of 31 August of this year, the electricity subsidy had reached RD$32.278 billion (US$750 million), which represents 96% of the RD$33.280 billion which the government had budgeted for regular transfers to the electric sector.

This amount of the electricity subsidy, information offered by the communications department of the Dominican Corporation of State-owned Electric Enterprises (CDEEE) represents 73% of the total resources that would be transferred to the sector in 2013, according to the National Budget, which set the amount at RD$43.682 billion for this year.

Nevertheless, the Regulations Director of the Superintendency of Electricity (SIE), Jose Ramon Acosta, explained that the government has paid RD$17,818 billion through the Fund for Stabilizing the Electricity Rates (FETE), with the idea of avoiding that the cost of the electricity rates goes up for consumers.

"This is a subsidy that does not go to the distributors, but rather to the consumers and is part of the US$1.050 billion that are assigned in the National Budget to subsidize the electric sector," said Acosta.

He said that these resources are what has permitted that instead of the consumer paying an increase in the electricity bill, the government takes on the increases that are produced month after month in the electricity rates and pays the electricity distributors the value created, when the indexation is applied.

"The distributors, given the situation of the high loss levels, do not have enough to pay the bills issued by the generators from what they collect from their customers, and for this reason what they are assigned in the Budget is not exclusively for the consumers, but also so that the distributors can cover other expenses," explained the SIE official.


The executive vice-president of the Regional Center for Sustainable Economic Strategies (CREES), Ernesto Selman, said that the electricity subsidy for this year will go over the amount assigned in the Budget and will reach US$1.250 billion.

As he spoke of the situation that the sector faces, the economist indicated that the energy problem in the country is not just limited to the expensive costs and that subsidies are granted, but rather that the consumers also are seen in the need to become "self-generators" of electricity. "What we have suggested is that there is a need to carry out a structural reform so that the state remains by itself as the regulator of the electric system, and not as a direct participant," he said.

Selman warns the state

The economist and executive vice-president of the Regional Center for Sustainable Economic Strategies (CREES), Ernesto Selman, warned that if the state continues with the intention to expand its share of influence in the sector with the construction of new generation plants, in the end the Dominican Republic will continue with a system that will keep generating losses, and requiring subsidies that it will have to pay. Selman feels that the government should only take part as a regulator of the system.
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