World Bank approves $225 million project to revamp Dominican Republic’s electricity sector

Santo Domingo.- The World Bank has greenlit a new initiative in the Dominican Republic, investing $225 million to enhance the country’s electricity sector. This project aims to significantly reduce the high distribution losses in electricity by rehabilitating distribution networks, upgrading management technology, and curtailing power outages. Approximately 813,000 consumers, spanning both urban and rural areas in residential and commercial sectors, are anticipated to benefit from these improvements.

The Dominican Republic’s electricity sector has been grappling with substantial losses, primarily due to outdated and overloaded distribution lines, illegal connections, metering issues, and inaccurate billing and consumption estimates. These losses have averaged $1.2 billion annually over 2017-2021, equating to 1.4 percent of the nation’s GDP. The ongoing fiscal support to electricity distribution companies to offset these losses has been a strain on public finances. Reducing these subsidies will free up more resources for social programs and human development initiatives.

The Distribution Efficiency Improvement and Service Strengthening Project will bolster the Dominican Government’s efforts to tackle these issues. The project will collaborate with Edenorte, Edesur, and Edeeste (EDE) – the trio of state-owned companies handling the majority of electricity distribution – to revamp electrical infrastructure and modernize business processes. This will enhance the EDEs’ financial sustainability.

Alexandria Valerio, the World Bank Representative for the Dominican Republic, commended the government’s proactive approach to addressing longstanding electricity sector challenges. The World Bank pledges continued support to foster a more reliable, less carbon-dependent electricity supply, crucial for the country’s productivity growth, poverty reduction, and overall well-being.

Key project outcomes include the rehabilitation of 1,342 kilometers of lines, regularization of 225,826 non-paying electricity consumers, meter replacements and installations, and improvements in commercial and measurement data management systems for the EDEs. This will lead to improved billing, collections, and increased revenues, minimizing losses and reducing government subsidy dependency. Additionally, the project will alleviate overloaded transformers and renovate aging infrastructure, thus reducing reliance on fossil fuels and contributing to lower greenhouse gas emissions.

This initiative marks the first of three planned World Bank investments, supporting the Dominican Government’s vision for the sustainable development of the electricity sector. The multiphase program, envisioned for a ten-year span, proposes a total estimated financing of $505 million. The overarching goal is to enhance access to a more reliable, efficient, and environmentally sustainable electricity supply for the entire Dominican population.