Mario M?ndez, the financial editor of Hoy, has published a note today that says the electric sector of the Dominican Republic is in very serious trouble. According to the note, the Superintendent?s negotiations with the
electrical generators and the electrical distributors are reaching a near impasse. The negative cash-flow of the generators is causing an increase in the debts owed to them by distributors. Although talks have intensified, the major stumbling block
seems to be the reluctance of the generators to let go of the terms of the Madrid Accord, which created artificially high prices for the sale of electricity benefiting the generators.
It appears there are two main areas for discussion. The first is the need to eliminate the debts that the distributors have been accumulating with the generators. The other is to find a long-term solution for the negative cash-flow situation. While
M?ndez refers to a US$160-million dollar debt owed by the distributors to the power generators, the distributors say they do not have the cash to pay the sum because the current electric rates do not correspond to the plummeting rates of currency
exchange.
The distributors recognize that electric rates cannot be elevated to the current exchange rates because this would cause a large amount of defaults from their clients. Already, some clients are calling it quits with the distributors, stating it is
cheaper for them to run their own smaller power plants.