The Dominican government announced yesterday that it has initiated the process of restructuring the debt held by the Union Fenosa. The government wants to make changes in the clause whereby Union Fenosa receives revenues from the better clients of EdeNorte and EdeSur power distribution companies.
In exchange, the pending debt would be placed as a sovereign foreign debt and Union Fenosa would be removed from the local electricity market. The President’s economic advisor, Julio Ortega Tous and the Presidential Minister for Technical Affairs Temistocles Montas told reporters from Hoy that the proposal was handed to officials of Union Fenosa during a recent visit to Madrid.
During the administration of former President Hipolito Mejia, the government decided to buy back the shares of the Union Fenosa in both EdeNorte and EdeSur. In order to insure payment, Union Fenosa was allowed to collect the electric bills of the largest clients. According to Ortega Tous, there is a US$330 million debt outstanding. With this move the government feels that both EdeNorte and EdeSur will become more viable businesses with much improved cash flows.