President Luis Abinader dedicated the first part of his weekly press conference on 2 September 2024 to present actions being taken to achieve efficiencies in the distribution of power in the country. President Luis Abinader for his second term named as Minister of Energy his trusted former Minister of the Presidency Joel Santos.
The power distributors that are owned by the government are under the National Unified Council of Power Distribution Companies, now head by Celso Marranzini. Marranzini gave an overview of the present situation and the objectives for 2027 during the press conference.
The focus is on the power distribution companies that are government-owned – EdeEste, EdeSur, and EdeNorte. Marranzini presented his plan characterized by transparency with regular audits and reporting on advances in finances and operations. The general public will soon have access to a new technological platform that will enable a person entering the electricity meter number to know when there are blackouts programmed, their consumption and other details.
The overall goal is to gradually reduce the losses of the power distributors and convert consumers to paying clients. He said the plan is to create a power distribution system that is “different and efficient”. He mentioned they will be bringing back, with modifications, the system that the Spanish company Union Fenosa had implemented in the country as of 1999, when the power system was privatized.
Union Fenosa entered to manage EdeNorte and EdeSur during the first Leonel Fernandez government with the privatization of the service. But with the change of government and in the midst of the banking and financial crisis of the subsequent Hipolito Mejia government, Union Fenosa was bought out so that it would leave in 2003. The power distribution companies would continue in public operation during the subsequent Fernandez (2004-2008, 2008-2012) administrations, and those of Danilo Medina (2012-2016 and 2016-2020).
Marranzini apparently wants to rescue what Union Fenosa did well in the country and improve on this. Union Fenosa that set up operations in 1999 was ousted in August 2003 during the Hipolito Mejia administration at a time when the country was immersed in a major financial crisis. The government would take out a sovereign loan and Union Fenosa would sell back EdeNorte and EdeSur to the CDEE for US$300 million. Union Fenosa controlled the better-paying major clients but was not successful in setting up systems so that more consumers paid for the power service.
Marranzini said that the decision of whether to increase power rates will come from the Superintendence of Electricity, and is outside his realm of decision-making.
Marranzini mentioned that demand for power service has grown 27% for EdeEste, 24% for EdeSur and 23% for EdeNorte when comparing 2019 to 2023. He said this means demand has grown more than the economy, that has been growing at an average of 5%.
He said during the first Abinader administration investments needed to improve the distribution sector were not made because the country was impacted by rising fuel prices and electrical inputs costs due to the Russia-Ukraine war that would have required a significant increase in electricity tariffs. The government chose to subsidy the tariffs.
Marranzini spoke of the need to install new transformers where demand is greater and refit the smaller transformers for areas where demand is less. He said blackouts many times are caused by excess demand on the transformers. He said the grids also require major investments including new substations.
Marranzini said the plan is as of 2025 to invest US$300 million a year to upgrade the distribution system. This also includes new meters and systems are being installed ensure that consumers are paying for the service, at both the micro level for the smallest customers and at the mega level for the country’s biggest consumers. He mentioned Greater Santo Domingo, San Cristobal and La Romana as where a larger percentage of non-paying customers are located with numerous illegal connections that are part of the problem. “There is a historic high of persons illegally connected that are not paying or being billed,” he said. He estimated these at around 800,000. “There is no sustainable business if what is being sold is not billed,” he said.
He said 2024 has been dedicated to purchasing of transformers and meters, and installation of new technological platforms. He said the multilateral banking is providing US$650 million in funding to assist in the program. This includes:
US$155 million for substations for EdeSur from the Interamerican Development Bank
US$120 million for EdeEste and Edenorte for substations from OPEC Fund for International Development (OFID)
US$36 million from the Japanese Cooperation Agency (JICA) for public lighting
US$39 million from IDB for public lighting
US$175 million from CAF Development Bank for grid rehabilitation
US$225 million to change the commercial systems of the power distribution companies to one similar to what Union Fenosa installed in 1999.
Marranzini says the plan is to reduce the power distribution losses:
EdeNorte now at 26% losses to 20% by 2027
EdeSur now at 32% losses to 20% by 2027
EdeEste now at 56% losses, to 41% by 2027
“There is no reason, they can’t reduce their losses in three years,” said the head of the power distribution companies.
He mentioned that the government channels RD$1.45 billion to the power distribution companies, including RD$800 million to keep rates down. He expects this subsidy to drop by RD$600 million by 2027.
The power distribution companies are now to be subject to monthly audited financial and operation statements, purchasing budgets and must keep their payments to generator companies on time to avoid interest payments on arrears. Inspections are being intensified to catch electrical fraud.
He also said the intention is to better serve customers with a response time of 30 minutes for electrical failures. The plan is also to make it easier for customers to pay their bills with more offices in commercial centers and mobile offices in areas of difficult access.
He highlighted transparency with the presentation of monthly financial and operation statements so everyone can know the situation of the power distributors in regards to their service contract.
President Luis Abinader spoke at the press conference accompanied by most of his cabinet ministers, including Minister of Economy Pavel Isa, Minister of Industry & Commerce Victor Bisono, Minister of Hacienda Jochi Vicente, Minister of Labor Miguel de Camps, among others.
In the evening, during the Esta Noche con Mariasela TV variety show, the president of the Association of Electric Industries (ADIE) Manuel Cabral valued the presentation saying that what was needed was planning and political will, as apparently President Abinader is showing. Cabral stressed the importance of taking politics out of the operation of the power distribution companies and making the correct investments in the distribution sector.
Follow the story in Spanish:
La Semanal – 2 September 2024
Diario Libre
Esta Noche con Mariasela – Manuel Cabral
El Pais
El Pais
Diario Libre
3 September 2024