The Fernández administration inherited a US$70 million debt with the private generators, primarily Dominican Power Partners and Smith Enron Cogeneration Limited Partnership, when it took office in August 1996, according to El Siglo newspaper. As of 1 February, that debt had increased to US$102 million. The Executive Branch proposed to pay US$40 million to the generators this month, but wants to leave US$62 million pending to be paid by the government that takes office on August 2000. Thus it would be leaving about US$8 million less in debt than that inherited from the Balaguer administration in 1996. The private generators don’t like the idea. They have not accepted the proposal. Smith Enron’s general manager Kevin Manning told El Siglo newspaper that the 185 megawatt plant located in Puerto Plata would go off line as of 24 February if the government does not make payments of US$29.7 million. Manning says that of the US$40 million proposed by the government, they would only receive US$10 million, and have pressing debts for US$25 million with their own suppliers. Manning complains that the government did not fulfill previous agreements reached in May 1999, nor that reached on 23 November. In order to renegotiate an accumulated debt, Smith Enron accepted arbitration, which eliminated a clause whereby the government had to pay the company per installed capacity, not by energy served. Because the plant was installed at a time when it was considered a high-risk investment, the company’s contract provides for a much higher rate than that being paid companies installing themselves now. Thus, for Smith Enron it is important to collect now on the debt because as new plants go online, their higher priced power will not be as necessary as it is today. Today, when Smith Enron goes off line the country suffers long blackouts. But it is expected the dependence on that plant will decrease as months go by and new plants enter into operation. With the presidential election coming up in May, the power plants want to take advantage of the political interest on behalf of the government in providing citizens relief from power outages, to get paid now. Making matters worse, the presidential candidate for the PRD, does not like the idea of inheriting this debt. He is quoted today in the El Caribe newspaper advising the generators to collect now or cry later. "I have spoken clear: the generators need to collect their money and make the government fulfill its promises, because if they do not collect now, they will not collect later, and the CDE should also be clear on this," said Hipólito Mejía, presidential candidate for the PRD.
