The Inter-American Development Bank (IDB) approved a loan of $200 million to support the Dominican Republic’s efforts to improve the efficiency, financial management, supply and service quality of the electricity sector.
The program, approved by the IDB Board of Executive Directors on Wednesday, seeks to reduce generation costs and extend coverage of targeted electricity subsidies for poor families. It also aims to improve the managerial, operational and financial sustainability of power distribution companies, as well as to increase the reliability of services and to make them more affordable for the country’s low-income population.
The Dominican Republic’s three regional distribution companies (EdeNorte, EdeSur and EdeEste) have made progress in the last two years. The number of invoiced clients rose 53 percent from last year while the number of circuits without blackouts – a measure of service quality – rose 42 percent.
To cement this progress, indicators have been established to maximize operational and financial efficiency, including increasing the number of registered customers and customers with 24-hour service, and setting specific targets to reduce electricity losses.
To this end, the finances of the distribution companies must be strengthened in order to reduce government transfers to the electricity sector. In turn, this will benefit the country’s fiscal accounts, which are vulnerable to changes in international oil prices, and will free up resources for social investment and other priorities.
"Thanks to the progress achieved in the electricity sector, the quality of the management teams at the CDEEE (the Dominican power utility holding company) and the distribution companies, and the implementation of changes proposed by the IDB program, the outlook for the Dominican electricity sector is improving,” said IDB energy specialist Jorge Mercado, the project’s team leader. “We are starting out on a path that will lead to better financial and operational results.”
This is a policy-based programmatic operation, based on the achievement of policy and institutional improvements. The loan is for 20 years, with a five-year grace period and an interest rate based on LIBOR. The executing agency is the Ministry of Finance.
The new program complements the IDB's previous support of the Dominican Republic energy sector, including the development of the Electric Sector Modernization Plan, improvements in power transmission and the promotion of technical and operational reforms that this new program will continue. The IDB is currently executing the Electricity Distribution Networks Rehabilitation Project and studies to improve energy efficiency. At the same time, the Bank is financing private sector projects to diversify the energy matrix through wind power generation
IDB. News Releases.Nov 3, 2011
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