Study shows distortions due to subsidy

[NewsWhore]

Research into the Dominican electricity sector by British firm Adam Smith International shows that the government's program against blackouts, called PRA (Programa de Reducciones de Apagones), has only served to distort reality and should be seen as just the "cost that arises from so many people stealing electricity." Adam Smith carried out the study at the behest of the Dominican government and the study shows that the PRA has been distorted by many traders and other clients moving their businesses to areas covered by the PRA in order to reduce their electricity costs. This obliges the government to use more resources than were originally budgeted for in the initial program. The study concluded that "the cost of the governmental subsidy is much greater than what is guaranteed by the benefits received by the population served." According to El Caribe, one of the recommendations made by the study consists of reducing the geographical areas covered by the subsidy program. The Adam Smith report also takes into consideration a study by USAID that listed several options and ended by saying that "the PRA is a poor mechanism for getting the subsidy to the consumers." The Adam Smith research also points out that consumers have a greater cost for the illegal connections, which they say is greater that the legal connections with regular service, and that the PRA simply institutionalizes this practice.

More... (http://www.dr1.com/index.html#5)