Energy Reform in the Dominican Republic – Investment and Restructuring

Date: 24 November 2014

Venue: The Caledonian Club, London

In association with the Embassy of the Dominican Republic, the Caribbean Council organised a round-table briefing event with leading figures from the Dominican energy sector to learn about the current electricity structure, opportunities for investment and future energy reform.  The Dominican Republic was at the time in discussions to deliver an “energy pact” between the Dominican Government, key stakeholders in the energy sector and civil society, in order to address the long-term structural challenges which the country has faced in its energy sector. Energy reform is one of the top three priorities of the current Dominican Government which introduced a new energy reform package of legislation into Congress this summer.

This round-table event provided opportunities for the participants to:

1. Develop an understanding of the energy sector in the Dominican Republic , the structural challenges which it faces and the steps which are being taken to address these by both the private and public sectors

2. Explore opportunities to support the process of energy reform in the Dominican Republic whether through investment, the introduction of new and innovative services and processes, or other policy approaches

3. Meet with senior figures from the energy sector in the Dominican Republic and have an opportunity to have a private exchange with them about potential business ideas or other collaborations

4. Share information about the UK experience of developing a regulatory and economic framework for energy production and distribution which has successfully maximised competition and introduced many market efficiencies with the result of increased quality of service and reduction in costs to consumers and industrial end users.

Our speakers included:

  • HE Mr Federico Cuello, Ambassador of the Dominican Republic to the United Kingdom and Northern Ireland
  • Mr Jose Rodriguez, President of the British Chamber of Commerce in the Dominican Republic and Director of Development at EGE Haina (the largest energy generator in the DR)
  • Amauris Vasquez Disla, Partner at Decamps Vasquez Valera and Board Member of the British Chamber of Commerce in the Dominican Republic

We were also joined by other delegates from the Dominican Republic including the Vice President of the British Chamber of Commerce in the Dominican Republic, Guillermo Alvarez, and the Executive Director, Laura Aguilar.

The meeting was well attended by a cross section of business sectors from investment companies interested in Energy, Large Energy Groups, Regulatory and policy organisations and Education.

You can view the presentations by clicking on the titles below:

Jose Rodriguez – The Dominican Republic Electricity Sector, Past Present and Future

Amauris Vasquez Disla – Energy Reform, Legal Issues

 

Introductory Note on the Energy Sector in the Dominican Republic

The power sector in the Dominican Republic has been, and still is, an obstacle to the country’s economic growth.

The sector faces many challenges: there are frequent blackouts, high operating costs of the distribution companies, large losses including electricity theft through illegal connections, high retail tariffs to cover these inefficiencies, low bill collection rates, a significant fiscal burden for the government through direct and indirect subsidies with a total electricity deficit of $1.3bn, and very high costs for consumers.

The energy matrix in the Dominican Republic has changed significantly over the past decade or so. In 2000 90% of energy came from oil and 10% from hydroelectric, whereas in 2013 40% came from oil, 30% from natural gas, 15% from coal, 13% from hydroelectric and 2% from wind.

A medium-term challenge is the country’s dependence on its agreement with Venezuela which allows them to receive oil at preferential prices through PetroCaribe, a scheme whose future is looking increasingly uncertain.

The Dominican Republic is looking to continue to diversify their energy matrix and move away from oil to natural gas, coal, and renewable sources such as hydro.  A major hydro scheme is under development, new LNG terminals are under construction as are two new coal power plants. The Government has stated a goal of obtaining 25% of its energy from renewable sources by 2025.

There is therefore much opportunity for British companies working in the traditional power sector as well as those in renewable energy to address the countries energy challenges, increase competitiveness and support efforts to reduce prices for consumers and business. Investment in the Dominican electricity sector has been increasing since the 2009 IMF agreement but nevertheless, it is estimated that the sector will need a $1bn investment over the next seven years.

 

 

 

 

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