President Hipolito Mejia and First Lady Rosa Gomez attended the grand gala hosted in their honor at the Palacio Real in Madrid yesterday. King Juan Carlos and Queen Sofia, were joined by Prince Felipe and Princess Cristina and her husband, Inaki Urdangarin to welcome the guests of honor. Prime Minister Jose Maria Aznar was host for the Spanish government.
The government of Spain announced it would lend the Dominican Republic 140 million euros (approximately US$173.8 million) to be used for environmental and social programs. Foreign ministers Ana Loyola Palacios of Spain and Frank Guerrero Prats made the announcement as part of the program of President Hipolito Mejia's official visit to Madrid. Carlos Despradel, Technical Secretary to the Presidency, who is traveling with the official Dominican delegation accompanying the President in Spain, said the loan would be due in 16 years, with six year's grace and an interest rate of 2% per year.
Hoy newspaper announced that the Dominican government will transfer the use of the erstwhile governmental Telecommunications building to the government of Spain. The site is located where the Banco de Reservas had been operating and is an art-deco architectural jewel of a building, located at the Isabel la Catolica Street in the Colonial City. The Spanish government has been hosting and coordinating very successful cultural events at its Centro Cultural Espanol situated at the Arzobispo Merino, also in the Colonial City. The new building would provide increased space for the cultural activities. Foreign Relations Minister Frank Guerrero Prats said that the new building would be used as a base for a Spanish center to promote Iberian culture throughout the Caribbean and Latin America.
El Caribe newspaper has been following the story of the RD$1.2 million the Ministry of Education does not have to retrieve 10,000 school desks for public schools from the port of Haina's customs. Likewise, the newspaper reports that the breakfast program at the public schools - a major incentive for parents to send their children to school and vital in giving the children a good start for the day - has not yet begun. In the transfer of funds recently requested by the Executive Branch and approved by the Senate, hundreds of millions that would have gone to pay for the school breakfast program will now be diverted to be used for pension plan and social assistance programs to benefit select groups if the bill gets Chamber of Deputies approval.
The Executive Branch sent several bills to the Senate requesting the approval of two new loans. One of them would be used to purchase pharmaceuticals and medical materials for public hospitals. The vendor company is the little known C.I. Promotora de Intercambio, S.A. and the US$18.6-million financing would come from the Banco de Comercio Exterior de Colombia. Another loan would be used to upgrade the data systems of the Drug Control Department (DNCD) at a cost of US$2.6 million. The funding would be provided by the German commercial bank Deutsche Bank and the service by Advanced Software Technologies.
The government published today the contract to be signed between the governmental power agency, Corporacion Dominicana de Empresas Electricas Estatales, and Union Fenosa in El Caribe newspaper today. Honorato Lopez Isla, vice-president of Union Fenosa, S.A., was the signatory for the Spanish company and Finance Minister Rafael Calderon represented the Dominican government with his signature. In terms of what was agreed, the government commits to buy back the 50% share of the Spanish company affiliates in the power distribution business in the Dominican Republic. As payment, the Dominican government accepts to recompense the Union Fenosa affiliate, Distribuidora Dominicana de Electricidad (Didoel) with 144 monthly payments from October 2003 to September 2015, to begin at US$4.021 and gradually increase to US$5.566 million by 2015, or US$535 million if payments are made on time. To guarantee the payment, the Dominican government agrees to transfer to Didoel the right to the revenues of the better clients of the distributors.
Diario Libre reports that government negotiators Hernani Salazar, Rafael Calderon, Andres Dauhajre, George Reinoso and Antonio Almonte were on hand yesterday during the announcement of details of the Union Fenosa-Dominican government deal that conveys the management of the power distributors to the governmental Corporacion Dominicana de Empresas Electricas Estatales (CDEEE). Speaking for the government, Finance Minister Calderon said the assets of Edenorte and Edesur in the Dominican Republic have been valued at US$943 million, pending revision of an audit of the operations up to 31 August 2003. The CDEEE recognizes Union Fenosa's debts amounting to US$362.5 million, to be paid during a 12-year period using revenues generated by Edenorte and Edesur operations, and guaranteed by the best-paying clients accounting for 115% of the monthly payments. The agreement recognizes the following debts: Interamerican Development Bank (US$139.3 million); Citibank (US$35 million); local commercial banks (US$11.5 million); Palamara/La Vega generation companies (US$106.1 million); Union Fenosa International (US$70.6 million). The deal also recognizes an investment of US$212 million attributed to Union Fenosa at the moment of capitalization, and another US$40 million increase in capital made by the company. The government commits to pay US$15 million to close the deal, with the remaining US$347.5 million set to be paid in 144 monthly quotas over a period of 12 years and at an interest rate of 12%. The government promises to place the contract on its web page at http://www.cde.gov.do
Former general manager of the CDE, Pedro Manuel Casals Victoria says Dominicans should not get their hopes up high regarding an improvement of power service in the near future. In a letter to Hoy newspaper, Casals Victoria says that all the maneuver has accomplished is to transfer Union Fenosa debts to the government, serving the flesh to Union Fenosa while leaving the government to lick the bones. To help readers understand the maneuver, he puts it in the form of a simile: A slick person purchases a herd of cattle from a farmer but does not pay the $207 million agreed upon price. But he takes the cattle to his farm, changes their branding and milks them for four years. Then, he returns the cattle to the original owner and in cohoots with the new manager of the farm, sells them back to the original owner, asking the double of the original agreed upon price for the same cattle that he never paid for in the first place, or US$427 million. As part of the deal, the new manager agrees to pass on the right to collect revenues for milk sales from his best paying clients for the next 12 years. The original owner of the cows gets to keep the right to demand payment only from the poor clients. Likewise, the original owner is obliged to pay all the debts contracted with the workers, taxes and feed suppliers, equipment, medicines, etc. Speaking on an radio interview on CDN Radio, Casals Victoria described the deal as "a great fraud." He says that the government instead should have let the Union Fenosa affiliates go bankrupt for non-payment of their obligations, and then intervene them, call in auditors to establish their real financial worth, determine the real investment in capital made by the company, and subtract the expenditures that he says Union Fenosa irregularly registered as investment to only then determine the true worth of the Union Fenosa affiliates. He also says the government could reduce from the total the overbilling made by the companies and effect legal deductions for blackouts. He also suggests the appointing of a Power Superintendent that does not respond to the interests of Union Fenosa and the other distributors. Negotiate with the IDB the obligations regarding the Palamara and La Vega plants, guaranteed by the state, and transfer the property to the Dominican state and urges that the government revise the Madrid Agreement.
El Caribe editorial says that the blackouts will continue because the government, as was the case of Union Fenosa, does not have the money to pay the power generators for power supplied. The editorialist recalls the negative track record of the former government utility CDE and forecasts paying consumers should expect increases in their power bills if the peso does not appreciate. Meanwhile, economist Francisco Mendez, in an interview for Hoy newspaper, was pessimistic about the deal. "For purely political and electoral reasons, the government has reached this deal, which will have similar or worse consequences for the country than the Madrid Accord signed by the government with Union Fenosa in year 2001," he said.
With the governmental retaking the management of Union Fenosa property in the Dominican Republic, a partial vertical integration of the power sector has occurred, which could be positive. When privatization was being considered in the mid 90s, economists and businessmen had pointed out that the Dominican Republic was too small a territory to be split up into so many players, and called for vertical integration. A major Florida-based utility was one of the companies that would have been interested in bidding if the operation had been vertical when capitalization first occurred in 1998. Power expert, Jose Luis Moreno San Juan, of the Power Institute of the state university, says that the semi vertical integration should favor the government putting it in a position to reduce power generation prices, as reported in Hoy. Economic editor Mario Mendez explains that now the government would be in control of 50% of the capital of Haina and Itabo power generation companies, it controls 100% of the hydroelectric companies, transmission of power, and two-thirds of power distribution. He says this would allow the government to transfer benefits of generation of power to the distribution sector, which could ideally mean rates need not go up. He estimated that residential consumers, for instance, are paying 40% more than they should. He recommended the government establish cooperatives of power consumers in the barrios, to encourage the neighbors to pay up and increase collections. He says what happens in the future will depend on whether matters are handled with a technical criteria or a political criteria. As reported in El Caribe, the government will not call a tender for the power distribution operations for at least another year.
The Dominican Liberation Party (PLD) has accused four key officials of the Central Electoral Board (JCE) of participating, in association with high-ranking members within the Dominican Revolutionary Party (PRD), in the adulteration of the list of eligible voters and committing fraud to favor the ruling political party, reports El Caribe newspaper today. The charges include a claim that the voting stations of 980,000 eligible voters have been changed, without the electorate being duly notified. The allegations of these relocations would have affected the 2002 congressional and municipal elections, and even more so the voters in the upcoming May 2004 presidential election. Moreover, Franklin Almeyda, spokesman for the PLD, says that there are 100,000 people with duplicated cedulas, not 21,000 as was admitted by the JCE. Those accused of such political partisanship actions by the PLD are Gilberto Cruz Herasme, director of elections; Franklin Frias, informatics; Mayra Goris, electoral registry, and Juan Carlos Sanchez, of ID cards. As reported in Hoy, the PRSC had already requested the removal of these officers in documentation sent to the JCE. For details of the accusations, see http://www.hoy.com.do/?module=displaystory&story_id=17781&format=html
Tourism Minister Rafael Subervi is confident the PRD party will unite and choose him as the candidate to vie against Hipolito Mejia for the PRD presidential candidacy. He feels he is the best option for the party to continue in government. The other leading contenders for the ticket are President Hipolito Mejia and Vice-President Milagros Ortiz Bosch.
Listin Diario reported that Judge Eduardo Sanchez Ortiz, who is in charge of preparing the case against the executives of Baninter for fraud and asset laundering, visited Baninter's main branch to personally witness the extent of damages to documents caused by a fire last Friday. The bank is under governmental intervention.
Canadians and Dominicans fought to the last minute, with Dominicans coming out ahead in their first match of the North America / Central America / Caribbean Championships yesterday. Dominicans lost the first and third sets. The scores of the exciting game were: 22-25, 25-20, 25-21, 21-25 and 15-8. This is the second win for the Dominican team following their previous defeat of Puerto Rico. The games are taking place at the new Volleyball Palace, built for the Pan Am Games, at the Juan Pablo Duarte Olympic Center. Eight teams will compete for two spots to participate in the World Cup scheduled for next year in Japan. Teams are grouped as follows. Group A: Dominican Republic, Canada, Puerto Rico and Trinidad Tobago. Group B: Cuba, United States, Mexico and Costa Rica. Meanwhile, the president of the Dominican Volleyball Federation complained that the Sports Ministry and the security director for the Sports Ministry are sabotaging the finances of the tournament by creating difficulties for fans arriving in vehicles to enter the Juan Pablo Duarte Olympic Center. As a result, the arena has been only half full for the games.
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