Economist Arturo Martinez Moya forecasts that the DR should be prepared for absorbing what he describes as an enormous subsidy in order to pay for the metro the government has undertaken to build. He says the metro will become the second big subsidy, inheritance of PLD governments of President Fernandez, in an article in Hoy newspaper on 2 January. The first major subsidy that has been cast on Dominican taxpayers is the electricity subsidy. He said that at the time of privatization, the Dominican government subsidy to electricity was at US$60 million. Privatization was to rid the government of having to pay the subsidy. But as things have worked out, today Dominican taxpayers have to fit the bill of US$600 million in electricity subsidies. He describes how six years ago, when the power system was privatized in a rush, without the government carrying out adequate studies, the rate averaged US$0.15 kWh. This has today increased to US$0.24 kWh, a rate that he says is almost twice the amount paid elsewhere in Latin America.
He comments that the US Ambassador Hans Hertell had warned about the implications of the construction of the metro in the short and long term, speaking from his experience as a Puerto Rican, where a metro was built just recently. The budget for that metro increased several times and the US Federal government picked up the tab. That is not to mention that its operation is heavily subsidized. Martinez Moya criticized the fact that President Fernandez has not carried out any studies to determine whether the metro is financially feasible.
He criticizes the use of funds to fast track the construction of the metro. “And all this happens, without anybody knowing its budget, in a country where the head of state preaches the need for transparency in government decisions in international forums.
In the article, Martinez criticizes the way in which the project is being implemented without the necessary technical studies, and this has resulted in what he describes as the temerity of opening holes here and there to remove and transplant 100-year old trees.
“At the start of 2006, there is not a single Dominican who has an idea of what the metro will cost, the sources of funding, its financial feasibility, its social and environmental impact, both during the construction period and once it is operating,” he writes, concluding, “but we will continue to pay the contractors, payments that no one controls.”
He is also critical about the fact that no one has an idea of the subsidy that the government will have to come up with for its operation.
Martinez urges Congress to reject the request for funding in the 2006 budget. He suggests that if the government wants to go ahead, it should take out a loan with an international organization that will demand pertinent studies for the disbursement, and will supervise the disbursements, reducing what he calls the “diversion” of funds. He is also critical of the option to go with supplier credit, and mentions a Brazilian offer. He says supplier credit is many times more costly than holding tenders.