Increased rates to end blackouts? - How about just fixing the problem!

Superintendent of Electricity Francisco Mendez said on Wednesday that the choice was between tariff rate increases and blackouts. According to El Nuevo Diario, Mendez did not specify by what percentage the government will be increasing the rates and when this would go into effect. "We are faced with a dilemma of either increasing the blackouts, or the government spending more money on the electricity sector, money it does not have, or readjusting the electricity rates which have been frozen for three years and five months," said Mendez in an interview with Claudia Fernandez for CDN2 television. The official said that over the last three years the government has paid out over US$550 million in electricity subsidies, US$487 million in 2008 alone. The official said that two power barges would be installed to serve the Cibao region, one in Samana and the other in Manzanillo. They are set to provide 240 megawatts for the region. As a result of the financial crisis in the electricity sector, energy supplies have fallen by 5%, now providing just 80% of demand.

Note from Dominican Watchdog;

Dominican Republic already have some of the highest electricity prices in the entire Latin America damaging quality of living and the production industry. Prices for electricity for a 3 bedroom apartment in Santo Domingo using air condition is easy USD 1000 per month!!! and most areas have daily blackouts!!!

Stop corruption and let those who use electricity pay for it. Nobody want to fix the real problem because it is one of the black holes producing most money from corruption for those involved!


New article from dr1 MAY 25,2009

The profits in the electricity sector
In his page 2 editorial column, Diario Libre editor Adriano Miguel Tejada shares what he describes as "a reasonable opinion" from an electricity expert. The expert has told him that the intermediation margin for power distributors is at 8 US cents per kWh, which should be sufficient to cover all financing, administrative, operation, maintenance and investment in infrastructure - and even yield a profit. He comments that the expert says that the increase in the rate suggested by the World Bank, the IDB and the IMF is just to resolve the fiscal deficit of the government that is now choosing to subsidize the sector with US$700 million to keep the present state of affairs, and bearing in mind fuel prices continue at the current rates. "The increase in the electricity tariff will not eliminate the subsidy to the electricity sector, as it did not eliminate it in 2005 when the rate was raised from an average 12 US cents kWh to 20 US cents kWh," he writes. "On the contrary, in 2005 when the rate was increased, the subsidy increased from US$250 million in 2004 to US$620 million."
He added that an increase in the electricity rate will only end up passing on the inefficiency of the distributors to the paying clients, and it is very likely that the subsidy will increase as it did in 2005, as a consequence of an increase in evasion even with the current law that criminalizes electricity theft.



Go back | Date: 26 May 2009
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