US embassy cable - 04SANTODOMINGO3629

UNCLAS SECTION 01 OF 02 SANTO DOMINGO 003629 
 
SIPDIS 
 
DEPT PASS WHA/CAR MCISAAC 
DEPT PASS TO TREASURY LLAMONICA 
 
E.O. 12958: N/A 
TAGS: DR, ECON, ENRG, EINV 
SUBJECT: ELECTRICITY SITUATION IN THE DOMINICAN REPUBLIC 
CONTINUES TO WORSEN 
 
 
1.  SUMMARY.  The Dominican Republic's electricity sector has 
witnessed a steady decline in energy production over the last 
month, with blackouts in many areas reaching 15 to 20 hours 
daily.  The situation is expected to intensify Tuesday, June 
22, when AES' Andres plant goes off-line for lack of fuel and 
generation will equal approximately half of peak demand. 
Sector representatives have met with President-elect Leonel 
Fernandez to discuss the sector's problems.  According to 
Secretary of Finance Rafael Calderon, the GODR is 
 
SIPDIS 
implementing a plan now to assure payments for current 
monthly costs, which will keep the sector running until the 
end of August.  END SUMMARY. 
 
LET THERE BE LIGHT, PLEASE! 
 
2.  The Dominican Republic has witnessed a steady decline in 
energy production over the last month.  Blackouts have become 
a daily occurrence with many areas experiencing 15 to 20 
hours with no electricity.  The system is presently 
generating approximately 1000 to 1100 MW daily, a 30% deficit 
during peak demand.  This number will likely decrease 
significantly starting Tuesday, June 22, when the AES Andres 
plant shuts down for lack of fuel.  Andres has been 
generating 220 MW daily, out of a capacity of 300 MW, in an 
effort to lengthen the number of days it can produce 
electricity given their fuel supply.  AES is not the only 
generator using this tactic.  Cogentrix, El Paso, and others 
have been operating in a similar fashion.  The drop in 
production could result in a deficit of approximately 45% 
during peak demand.  (The system collapses at about 500 MW. 
The country suffered through 700 - 800 MW daily during parts 
of this past winter.)  However, this may be offset by El 
Paso, which received a fuel shipment last week and is looking 
to increase its production, and Itabo, whose two plants were 
shutdown for mechanical problems and are expected to come 
back on-line during the first two weeks of July. 
 
HE SAID, SHE SAID 
 
3.  The situation has been aggravated by the recent 
recurrence of the public dispute between the GODR and the 
generators over the status of debts.  According to a report 
presented by the generating companies to Leonel Fernandez and 
the PLD transition team Friday, June 11, the debt to the 
generators exceeds $413.7 million.  Of that amount, $260 
million is GODR debt and $154 million from Ede-Este.  That 
sum does not include debt owed between generators nor 
disputed amounts between the GODR and AES and Haina. 
According to the GODR, it has reached agreement on debt owed 
with all the generators except AES and Haina.  The GODR is 
arguing that it has no debt with AES or Haina and that it is 
the generators who owe the GODR for sale of energy and 
transmission fees from CDE.  In a meeting with Secretary of 
Finance Rafael Calderon Friday, June 18, DCM asked Calderon 
about the status of the debts.  Calderon noted that the GODR 
and AES planned to meet this week to discuss the matter. 
 
COMPANIES PRESENT THEIR CASE TO LEONEL 
 
4.  On Friday, June 11, generating companies held a day-long 
meeting with President-elect Leonel Fernandez and PLD 
transition team representatives.  Independent consultants 
also attended.  The session was a brief analysis of the 
sector with the purpose of bringing the new administration up 
to date on pending issues.  The generators told the incoming 
administration that the government was its own worse enemy in 
the sector because it is too involved.  The GODR, they noted, 
controls 100% of transmissions, 83% of distribution, and 45% 
of generation.  The new administration was specifically 
interested in learning more about: 1) net amount owed by the 
GODR; 2) tariffs; and 3) Cogentrix.  Fernandez mentioned to 
the group that he is creating a sub-committee to concentrate 
specifically on the energy sector and that he would announce 
the committee members soon. 
 
CALDERON OPTIMISTIC ABOUT FINANCES 
 
5.  According to Calderon, the GODR is implementing a plan to 
assure payments for current monthly costs, which will keep 
the rest of the sector running until the end of August.  This 
includes paying the $13 million it currently owes Cogentrix 
before the deadline of July 9.  With Cogentrix and El Paso 
on-line now, and Itabo coming on-line in July it seems 
possible the system will sustain itself for the next two 
months. 
 
6.  Port au Prince minimize considered. 
KUBISKE