It was all a misinterpretation, says Karl Huber, president of AES Distribuidora del Este, one of the two companies that are now in charge of the distribution of power in the DR. The general administrator of the CDE, Radhamés Segura, for months had promised Dominicans that privatization of power supply would not mean an increase in the amounts paid, and that the bills would be frozen for four years. Now Karl Huber of AES Distribuidora del Este, says the company has made a 5% adjustment compliant to contractual terms that permit it to make increases based on inflation, changes in the exchange rate, taxes and the cost of fuel. Now it is being made clear that when the government spoke of there not being an increase in the rate, it meant the rate structure. The present rate structure incorporates mechanisms for the above adjustments. As reported in the daily press, Huber says that the 5% increase reflects the differences in the exchange rate and inflation that occurred last year. This is difficult explaining to Dominican consumers, especially since accumulated inflation for the first semester of the year is below 0%, and the exchange rate has dropped as of late. Furthermore, in the months leading to the eventual privatization, residential, commercial and industrial sectors suffered steep rate increases. To make matters worse, the first days of privatization have been characterized by long power interruptions, as the private companies repair lines. Segura of the CDE, which is still in charge of power generation and transmission lines, says that there have also been communication, coordination and logistics problems, normal during a transition period. He denies there is chaos in the process, though. Esso, Texaco and Shell cut supplies to the CDE last week, charging lack of payment. CDE is now suffering from liquidity problems. The CDE contract with AES and Unión Fenosa (the other privatization bid winner) establishes they will be paid every 30 days, while the CDE has to make daily payments to its fuel suppliers.
