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MeneameUS power company AES Corporation (NYSE: AES) plans to sell its 50% stake in Dominican Republic distributor Distribuidora del Este (EDE-Este) by end-2004, AES's VP of investor relations, Scott Cunningham, told BNamericas.
AES discontinued operations of EDE-Este in the fourth quarter of 2003 because the country's energy sector crisis made the business economically unattractive, Cunningham said.
AES bought EDE-Este for US$110mn in 1999 but the market will determine the value of the asset, he added.
"Despite our actions to improve the operations of EDE-Este, the crisis in the county's electricity sector has undermined the business and made it financially unviable," executive VP and COO for integrated utilities, Joseph Brandt, said in a statement.
"Given the current outlook, to remain in it would mean substantial losses that we are not prepared to incur," he said.
EDE-Este was involved in legal proceedings against state power company CDEEE for freezing its accounts in a dispute over debt payments.
EDE-Este serves some 2 million people and covers the entire eastern region of the Caribbean country, which includes part of the capital city, Santo Domingo.
In terms of its generation business, Cunningham confirmed that AES would not sell its plants in the Dominican Republic despite the country's worsening energy sector crisis.
Cunningham admitted that the generation business has been a "difficult environment" in terms of cash flow but said "we believe there is still going to be good value down the road."
The government has promised to pay power generators US$120mn over the next three months from World Bank and IDB loans in return for restarting plants shut down since late January.
"Hopefully the international funds will inject some liquidity into the country to help it to pay bills and buy fuel, that's the key thing," the AES official said.
AES owns the 210MW oil-fired Los Mina plant and the 310MW gas-fired combined cycle Andres plant in the Dominican Republic as well as a 25% stake in the Itabo generator.
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