According to El Caribe newspaper, Union Fenosa struck a
very good deal with the Dominican government. In 1999 they paid US$210 million
for the rights to distribute power in the Dominican Republic. Five years latter,
the government agreed to pay them US$423 million for the right to rescind the
contract.
As reported in Hoy, the director of the Institute of Energy at the state
university, Jose Luis Moreno feels that the government should have been
intervened the companies for not meeting the contracted terms and then sell the
distributors for their real market value, not for a price agreed upon by
government negotiators. Diario Libre had reported that its sources indicated
that Hernani Salazar, one of the key promoters of the re-election of President
Hip?lito Mej?a, played key role in the negotiations.
The money will be paid to the Spanish company over a 12 year period from
revenues generated by the Union Fenosa affiliate, Distribuidora Dominicana de
Electricidad, that retains the right to Edenorte and Edesur derived income. For
more on the Union Fenosa press release on the deal, see
http://www.salacomunicacion.unionfenosa.es/nota.html?id=13139
In addition to Didoel, Union Fenosa keeps its power generation plants in the DR
(La Vega and Palamara) that operate at hefty profits thanks to the fixed prices
negotiated as part of the Madrid Accord signed during the Mej?a government.
Moreno said that the Union Fenosa violated the law when installing generators
here and registering them as property of the mother company. The company was
also granted a concession to install a 200 megawatt alternative energy plant in
Puerto Plata.
Commenting on the deal for El Caribe, Juli?n Nebreda of AES, the other power
distributor company, said that energy sector problems are structural. He told
Hoy newspaper that buying or selling a company is not going to change anything.
To get to the bottom of the problem, a structural solution is needed.
Namphy Rodr?guez, news commentator for CDN Radio program 120 Minutes, alerted
that the return of the company to the government comes right before an electoral
period. He was concerned that for the months leading to the election, the
government could subsidize the supply of power to gain votes in the May 2004
election, at a future cost to taxpayers.
For more on the deal, see
http://www.hoy.com.do/?module=displaystory&story_id=17448&format=html