Psychologist and social activist, Wendy Santos Berroa presents point by point several of the key contract clauses that she says seem to make evident that the proposed Punta Catalina Trust “is worse than a privatization.” Her comments are regarding the 752 KW coal-fired power plant built by the former Danilo Medina administration with taxpayer money. The power plant was the most important infrastructure built during the Medina administration and was constructed by a consortium led by the Brazilian firm, Odebrecht.
Government officers of the Banco de Reservas, spokesman for the Presidency Homero Figueroa and Energy & Mines Minister Antonio Almonte have stated there will be no privatization during in the government of Luis Abinader.
Wendy Santos Berroa proposes that the government instead of continuing with the fast-tracking of the Punta Catalina Trust through Congress carry out an open debate to analyze the 43-clauses of the contract that is pending approval in the Senate. The contract already passed in the Chamber of Deputies. The ruling Modern Revolutionary Party (PRM) is majority in both houses.
The Punta Catalina Trust contract is irrevocable and is for 30 years. To revoke major penalties are established — before five years 1% of the last annual billing, 6-10 years 0.5%, and 10 years, 0.2%. The state is also obliged to pay all the debts of the trust. Annual billings of the Punta Catalina thermoelectric power plant are estimated at US$500 million a year.
Santos Berroa observes it is possible President Luis Abinader, Vice President Raquel Peña and president of the Senate Eduardo Estrella are not aware of the real implications the contract establishes regarding the government-owned and built 752 MW coal-fired Punta Catalina power plant. She says the Punta Catalina Trust contract has clauses that would make it worse than the deal with shadow payments regarding the Samana tolls contract recently rescinded by the Abinader administration after the payment of billions of taxpayer money to the beneficiaries of the irregularly drafted contract.
Among the points Santos Berroa raises are:
The power plant was built on private land that was later purchased from the owners in March 2020 for almost RD$500 million when the government had extensive lands where it could have been built.
There is no ruling specifically for public trusts in the country. The trust law was created for real estate trusts and is being used as a framework for public trusts.
The Fiduciaria Banco de Reservas that on paper would be the owner is presided by Samuel Pereyra who she says is the same person who spent more than US$2 million on a Christmas party for the government bank and had spent several million dollars on an anniversary celebration.
The Technical Committee is to be presided by Celso Marranzini, a former general manager of the Public Electricity Corporation (CDEEE) and father of the today president of the Association of Industries of the Dominican Republic.(AIRD). The contract establishes that a Technical Committee has full control of the operation signed with the Banreservas Trust. The Technical Committee is even authorized by the contract to replace the Banreservas Trust.
The technical committee is authorized by contract to place 100% of the assets of the power plant as guarantee for loans. If there are arrears, the lender can repossess the assets.
Another clause authorizes the trust to accept private investment through the figure of adhering trustee. The contract does not establish the conditions for the payment of these investors.
The technical committee is fully authorized to spend freely with no limits. On the order of priorities, the fees to be paid to the executives are tops and will be revised annually. The power plant operation and maintenance are on the bottom tier of the payment priorities. The contract establishes the government will pay RD$100 million and US$1 million without establishing the term.
She says that after 30 years the Punta Catalina Trust is mandated to return to the Dominican government the left over assets of the trust.
Wendy Santos Berroa on her twitter account says that the Dominican government should learn from the negative experiences with government-created trusts in Mexico. In Mexico the government is in the process of extinguishing at least 281 of the 354 trusts that the government had created.
Santos Berroa is daughter of former Central Bank governor Jose Santos Taveras. His Planeta Azul water plant had major differences in the operation and ownership of the power plant with the Vicini investors. The Vicini’s were the vendors of the land where the Punta Catalina power plant was built.
Others that have analyzed the contract and said it is markedly against the collective interests of the Dominican people are electricity expert Bernardo Castellanos and prestigious lawyer Laura Acosta.
At present, the Punta Catalina Power Plant is operated by private management and falls under the supervision of the Ministry of Energy & Mines and the Controllers General Office. It is subject to all government controls.
The Wendy Santos Berroa 15-minute video
20 January 2022