Dominican Republic looks to rid US$1.44B energy ‘leech’

Santo Domingo.- Dominican Republic’s State-owned Electric Utility (CDEEE) has hired a law firm aimed at canceling the contract with the San Pedro power company (CESPM), formerly Cogentrix, in a decision through which the authorities seek to put an end to paying at least US$4.8 million (RD$208 million) to that company each month regardless if operational or not.

Quoting Government sources, outlet elnacional.com.do said during the 12 year-and-4 months contract period Cogentrix has been paid US$1.44 billion, mostly when its generators are offline since they are too expensive to operate.

Citing figures to the end of July, CESPM had billed US$32.9 million to the CDEEE for just only 16 gigawatts, an average of US$ 2.06 per kilowatt. Since its incorporation into the interconnected grid in March 2002, Cogentrix became a headache for the CDEEE, due to its high cost to produce energy and the contract’s onerous conditions that binds the Dominican State for 20 years.”

The contract was signed during ex president Leonel Fernandez’s first term in office by then CDEEE -CEO Temistocles Montás, and Council president Celso Marranzini, and then Radhames Segura, who replaced Montás in the CDEEE.

Privileged contract

The original contract with the firms Cogentrix Energy and Scotia Energy was structured when Montás headed the CDE and Celso Marranzini was president of its Board of Directors, and César Sánchez, former head of the Utility during Hipolito Mejia’s Administration, signed for the power companies.

The former Cogentrix has been often labeled as the “leech” in the country’s electric utility, pillaged by companies such as the Canadian Hydro-Quebec-Sofati and Spain’s Union Fenosa.