NewsWhore
10-18-2006, 04:20 PM
Renegotiations to the energy contracts will be the topics discussed during a meeting today with the Commission for Renegotiations of Contracts with the Private Energy Providers, as the government and the private sector look to end the country's energy crisis. Reforms to the Madrid Agreement and the contracts with the energy companies Cogentrix and Smith& Enron will be the main contracts discussed. The Commission is looking to reform some of the clauses of those contracts and looks for the change of the indexation formula to calculate prices and the reduction of the terms and length of the contracts. The government has proposed a different set of rules for setting the cost of a kilowatt/hour of electricity. The first one is not to use Fuel Oil #2 as the basis for setting the price. Another issue for the government is the obligation to pay for installed production capacity rather than for electricity delivered. According to Diario Libre, government negotiators will focus on the issues of fuel, energy capacity, adjustment in the power potential, costs of operation and maintenance, and reduction of the lengths of the contracts. Among the companies that will be represented will be the State Run Electric Companies (CDEEE), EGE-Haina, EGE-Itabo, EdeEstse, EdeNorte, EdeSur, AES Andres, Dominican Power, Union Fenosa, Compania Electrica de Puerto Plata, Cogentrix and Smith Enron.
Quoted in today's El Caribe, well-known electricity specialist Luis Arthur believes that the local situation is worse than ever. Arthur says that the government has not adopted the measures announced by President Fernandez in his inaugural speech over two years ago. In the face of a daytime demand of 1800 Megawatts, the electricity distributors are only supplying 1200 megawatts. As emphasized by Listin Diario, one of the major stumbling blocks for today's talks will be the existence of a persistent debt of over US$90 million that is owed by the government to the IPPs (the Independent Power Producers). This debt was due last 25 September and by the end of October another US$110 million will be due. According to Listin, some observers feel that the latest round of prolonged blackouts is simply a form of pressuring the government to pay up. Of course the document signed in Madrid, known as the "Madrid Accords" also presents some major problems for the government since that document was a binding agreement and stipulated a long-term price structure. The private sector apparently understands that the financial weakness of the electric industry is the major roadblock facing new investors. On the other side of the table the IPPs feel that the government came out ahead with the Madrid Accords since it freed itself of some major debts, reduced the subsidy that it gave electricity prices and allowed the CDEEE to extend its contract under better terms. Given both sides' hard-line position on this issue, it appears that an international court of arbitration may well have to decide the final resolution. Fortunately, such an eventuality was foreseen in the Madrid Accords.
More... (http://www.dr1.com/index.html#4)
Quoted in today's El Caribe, well-known electricity specialist Luis Arthur believes that the local situation is worse than ever. Arthur says that the government has not adopted the measures announced by President Fernandez in his inaugural speech over two years ago. In the face of a daytime demand of 1800 Megawatts, the electricity distributors are only supplying 1200 megawatts. As emphasized by Listin Diario, one of the major stumbling blocks for today's talks will be the existence of a persistent debt of over US$90 million that is owed by the government to the IPPs (the Independent Power Producers). This debt was due last 25 September and by the end of October another US$110 million will be due. According to Listin, some observers feel that the latest round of prolonged blackouts is simply a form of pressuring the government to pay up. Of course the document signed in Madrid, known as the "Madrid Accords" also presents some major problems for the government since that document was a binding agreement and stipulated a long-term price structure. The private sector apparently understands that the financial weakness of the electric industry is the major roadblock facing new investors. On the other side of the table the IPPs feel that the government came out ahead with the Madrid Accords since it freed itself of some major debts, reduced the subsidy that it gave electricity prices and allowed the CDEEE to extend its contract under better terms. Given both sides' hard-line position on this issue, it appears that an international court of arbitration may well have to decide the final resolution. Fortunately, such an eventuality was foreseen in the Madrid Accords.
More... (http://www.dr1.com/index.html#4)