Dominican Republic

Power theft legislation to come into force, US$250mn for generators

Bnamericas Published: Wednesday, February 11, 2009
The Dominican Republic's law 186-07 that criminalizes power theft will come into effect on February 20, electricity regulator Superintendencia de Electricidad head Francisco Méndez announced. In 2007, President Leonel Fernández signed the law, which mandates fines and/or prison time. Energy theft along with technical losses and low bill collection are the power sector's principal challenges. The law also aims to improve service on the part of distributors, which may be penalized for lateness in reconnecting service or establishing new supply, or for consecutive bill estimates for metered clients, government news service CIG quoted Méndez as saying. Due to electricity fraud, the government had to allocate more than US$740mn last year to cover the deficit of distribution companies, he added. State power holding company CDEEE and the finance ministry agreed to pay generators US$250mn partially to cover debt distributors racked up with generators last year, according to a separate CIG release. Distributors' cash flow problems and technical problems have led to common outages in the country, CDEEE has said. Latest statistics released by the state company indicate, however, that the sector has made strides to improve performance. Technical and non-technical losses at end-November for the country's three distributors EdeNorte, EdeSur and EdeEste totaled 32.9% versus a high in 2008 of 45.7% in May and averages of 41.2% and 46.1% in 2007 and 2006, respectively. Nevertheless, the distributors' cash recovery index (CRI) averaged 59.7% in November and 56.9% for the 11 months ended that month. Index averages in 2007 and 2006 were 52.9% and 47.7%, respectively. The World Bank argues CRI, which measures the percentage of power purchases made by distributors that are paid for by consumers, should be at 70% to breakeven. The distributors' combined operational deficit in January-November 2008 reached US$1.01bn, with costs totaling US$1.99bn and revenue US$978mn. Energy purchases made up the bulk of total costs at US$1.66bn.

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