Illegal connections leave losses of about US$200 million each year

Santo Domingo – Electricity fraud, which manifests itself through illegal connections in homes, stores and shopping centers to obtain energy, represents a financial deficit of about US$150 to US$200 million for the State, according to the president of the Unified Council of Distributed Companies (CUED), Celso Marranzini.

In general terms, the Government registers an economic imbalance of US$650 million, due to three challenges: technical losses, fraud, and billing problems. That is the approximate amount that the Government is forced to seek each year, according to the head of the CUED.

This year, the electricity distributors (Edesur, Edenorte and Edeeste) have identified and dismantled different illegal networks in multiple companies, Marranzini said. According to official data, the EDEs have 800,000 customers who receive energy that is not billed and, therefore, is not charged.

The most recent cases of electricity fraud were registered three weeks ago. Edesur, for example, dismantledillegal connections in several shopping malls that stole electricity and had 717 new customers under contract, with the aim of reducing losses and increasing collection, to optimize electricity service.

One such case took place in San Juan, where authorities dismantled 57 illegal electrical connections in the Sabana Alta municipal district and seized various types of cables used for electricity theft.

In an official document, Marranzini explained that illegal connections subject distribution transformers to an overload that they are not prepared to supply.

“This causes frequent cuts in the service due to breakdowns in the transformers,” Marranzini said, while specifying that this scourge occurs in sectors with “networks in optimal conditions.”

“Management must be improved there and also in sectors with non-existent networks. There the first weight is to lay the networks to provide an adequate service,” he said, and assured that work is being done in both types of situations.

Marranzini said that fraud not only increases technical losses – which amount to an average of 37% in distributors – but also overloads transformers, which has affected the quality of service for regular users.

“There is a lot of resistance in the places where the illegal connections are, because they have received free energy for years and now they are reluctant to pay for it,” the head of the CUED told reporters.

Marranzini, who spoke about the situation of the electricity sector at a conference organized by the National Union of Entrepreneurs (UNE), said that the goal is to reduce the 38% of losses that currently exist to 27% by 2027.

To do this, investments, better management and strict measures against fraud would be combined. In the case of Edeeste, the losses are around 56%; in Edesur by 32% and in Edenorte by 27%. “We have the obligation to lower the deficit,” he stressed.

As a short-term strategy, Marranzini said that the CUED has implemented operational and transparency measures, which have included the massive purchase of transformers and meters, the installation of mobile stations to facilitate payments in remote communities, and the creation of a portal for customers to monitor the status of their circuits.

“The year 2024 should be seen as a turning point to reverse the negative trend,” he said. To carry out these measures, Marranzini said that they have already obtained millionaire loans through the World Bank and other financial organizations.

What do businessmen say?

The president of the National Union of Entrepreneurs, Leonel Castellanos, pointed out that the big problem in the electricity sector is the losses that distributors have generated for years.

“That has become a financial burden for the nation’s budget,” Castellanos said, adding that last year the electricity subsidy represented 42% of the budget’s fiscal deficit.

The union leader has proposed including the local financial sector, replacing multilateral banks, to participate in the reconstruction and expansion of electricity grids, and to reduce losses.