The blackouts will continue even with the coal-fired plants in 2016
SD. Last Tuesday Rubén Bichara revealed that by 2016 the country will have to have new electric generation plants that will contribute 1451 MW “in addition to those that we have today,” in order to be able to cover an estimated demand which each year grows by 125 MW.
As of today, this production capacity should be under construction, but the government is only working directly on the two coal-fired plants to be built at Punta Catalina, and which according to the contract awarded to the consortium of Odebrecht -Tecnimont-Estrella, will contribute all together 674.7 MW which is 46.6% of the additional generation that will be needed.
The private generation company AES Dominicana is also working on the conversion to a combined cycle and to natural gas at the Dominican Power Partners facility, which, once it is concluded, will contribute another 114 MW. This raises the offer of new generation to 54.4% of what will be needed in 2016.
This means that the investment in the two coal-fired plants will only maintain, with a delay of more than one year after 2016, “the current status quo”, that only covers what has been estimated as 84% of a demand which in real terms, neither the government nor the generators nor the distributors really know since it has never been covered at the prices of an open market.
For the ordinary Dominican, this only means that the country is still far from reaching that moment so desired when the blackouts disappear. The good news would be that this problem won’t get any worse which is what will happen if these projects are not built.
Also, and in a context of increasing demand, it is not very probable that for 2017 the generators that operate with fuel oil #2, which is the most expensive, will be taken out of service. This is “like champagne, fuel oil is the most expensive and costly,” commented Bichara.
Bernardo Castellanos, an expert on the Dominican electric system says that “in a dynamic electric system where the demand grows yearly at a rate between 3% and 5%, saying that the coal-fired generation plants will displace the generation based on fuel oil would not be valid.”
Rubén Bichara was asked: So there will be blackouts in 2016? He answered: “well while demand increases and your offer is frozen, there is no other way to read it.” He explains that the alternative would be to buy more energy “at the prices of this market,” and to put generation plants to produce electricity “far above 20, 25, 30 and even 40 cents.”
In 2013, the deficit of the electric sector was US $1.23 billion, although the average purchase price was $.17 of a dollar per kilowatt hour (KWH). At this price and with this deficit created, 84% of the demand was covered, according to statements by Bichara.
But this deficit is really larger, he said, because it doesn’t include the tax exemptions on the fuel used for electricity generation. For this year the tax expenditure is estimated at US $221.7 million, which elevates the estimated deficit to US $1.45 billion. For 2014 a greater amount is projected, given that in the 2014 Budget it is nearly doubled. The estimated amount of tax loss is US $427.5 million.
Therefore, he said that the average purchase price of $.17 of a dollar per KWH is maintained under a scheme which feeds a mountain of 100s of millions of dollars each year in tax exemptions, and by a policy that is based on blackouts to cover just one part of the demand. To inject electricity based on fuel oil, “which is 60% of the generation which is purchased” costs $.25 of a dollar per KWH.”
He added that on occasions this purchase price reaches as much as $.35 of a dollar “and on occasions $.42″ per KWH. One of these occasions was the 2014 World Cup when it was felt to be politically convenient to keep all the television sets in the country turned on. And as is the custom the same thing occurs on dates such as 24 or 31 December.
The CDEEE backs the tender
The Board of Directors of the Dominican Corporation of State – owned Electricity Enterprises (CDEEE) expressed yesterday its support of the tender carried out by the company for the construction of the two coal-fired generation plants and the actions taken as a result of this process as well as their disposition to defend the construction.
In a press release, the Board of Directors recalled, in addition, that it has authorized the executive Vice President of the CDEEE, Rubén Jimenez Bichara to carry out all the actions, processes and efforts needed in order to “achieve the objectives proposed by the Dominican state which is no more than to contribute the necessary solutions to the national electric problem.”
“In our condition as the maximum executive authority of the institution, we assume the responsibility both present and future and therefore we ratify without restriction and absolutely our complete adherence and support to all the decisions that have been taken within the framework of the execution of the International Public Tender,” the Board of Directors says in a press release published by the board which is headed by José Rafael Santana.
They expressed their conviction regarding the transparency of the process, indicating that it constituted “a selection process carried out in strict accordance to the principles of Law Number 340 – 06, on Purchases and Contracts.”
Category: DR News |