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Govt's electric sector bailout hinges on IMF negotiations

Bnamericas Published: Wednesday, October 06, 2004
The Dominican Republic government is planning to inject new funds to bail out the country's energy sector if and when line-of-credit negotiations with International Monetary Fund (IMF) are finalized, a source from electricity regulator SIE told BNamericas. Negotiations with the IMF are in a very advanced stage and could wrap up as soon as this month or next, the source added. If approved, the government could obtain a US$200mn loan from Spain's government that would be invested in the country's electricity sector to guarantee fuel supplies, the source said. The main problem facing Dominican generators is that they no longer have credit with countries such as Venezuela and the US to buy fuel, the source said, adding that generators are announcing shut downs on a daily basis. President Leonel Fernández has pumped US$100mn into the country's electricity sector since mid-August to guarantee a stable supply of electricity for 16-18 hours a day though year-end. The government acquired US$50mn through a loan and the other half from local banks to finance the cash injection, the source said. With this payment, the current administration reduced the electric sector debt to US$300mn. The debt, which the Fernández administration inherited in mid-August when it took power, is the result of the last government failing to pay US$25mn a month in electricity subsidies for nearly a year, the source said. Furthermore, in 2005 an international tender could be called to privatize the state-managed distributors Edenorte and Edesur, which Spanish power company Unión Fenosa handed back to the government in 2003. Unión Fenosa bought 50% of the two distributors in a 1999 privatization. On October 5, the Caribbean nation had 1,243MW of installed capacity online with a 400MW deficit at the 9pm peak hour, the source said.

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