ENERGY REFORM IN THE DOMINICAN REPUBLIC: INVESTMENT AND RESTRUCTURING EXPERIENCE IN THE DOMINICAN REPUBLIC ELECTRIC SECTOR

Amauris Vásquez DislaLondon, November 24th, 2014

KEY HISTORIC FACTS

DATEBefore 1954 Private companies where responsible for generating, distributing and

commercializing electricity

1954 Rafael Trujillo (Dominican dictator) nationalized the electricity Company (Compañía Eléctrica de Santo Domingo) into a public Company called Corporación Dominicana de Electricidad (CDE)

1955-1990 The Dominican electricity system was expanded through different plans which did not give the expected results

1990 Energy crisis worldwide – great impact in the Dominican energy sector

1990-1999 - Private companies were introduced to the electricity sector- Energy Reform – Capitalization process

1999-2013 In this period most of the capitalization achievements were changed due to what have been called as electricity sector counter reform

Law 14-90 Incentive for

National Electricity

Development

Enactment of Public

Enterprises Reform Act (Law 141-97). CDEEE

is created.

Enactment of Electricity

Law125-01.

Renewable Energy Incentive

Law

The National Council for Energy is

created under Decree148-93

ENERGY LEGAL FRAMEWORK

1990 1992 1993 1997 2001 20071993

Private Contracts (IPP’s) Electricity Reform (Capitalization)

RELEVANT ENERGY LEGAL FRAMEWORK

Law 125-01 Conventional

Energy Production & Distribution

Law 57-07 Renewable Energy

Special Regime

Law 112-00 Hydrocarbons Law

SPECIAL MANDATORY LICENSES & PERMITS

REGULATORY L & P FOR THE GENERATION OF ELECTRICITY

Executive Power:

1. Definitive Concession: a) Enforcement Regulation of Electricity Law, Art. 70; Enforcement Regulation of the Incentives to Development of Renewable Energy Sources Law, Arts. 37 & 53.

2. Import Terminal License: a) Hydrocarbons Law No. 112.

National Energy Commission:

1. Temporary Concession: a) Enforcement Regulation of the Incentives to Development of Renewable Energy Sources Law, Art. 242. Recommendation of Definitive Concession's Requests: Enforcement Regulation of the Incentives to Development of Renewable Energy Sources Law, Arts. 38; 46; 52

Superintendence of Energy:

1. Set up of electric works and services: a) Electricity Law, Art. 90; b) Enforcement Regulation of Electricity Law, Art. 1462. Recommendation report of definitive concessions: a) Art. 21 b) Enforcement Regulation of Electricity Law c) Enforcement Regulation of the Incentives to Development of Renewable Energy Sources Law, Art. 38; 43

CDEEE: 1. Certification of No Objection to PPA: a) Enforcement Regulation of the Incentives to Development of Renewable Energy Sources Law, Art. 65

ETED: 1. Certification of No Objection to SENI Interconnection: Enforcement Regulation of the Incentives to Development of Renewable Energy Sources Law,

Agreement the use of Land for

Superintendence of Electricity1. Electricity Law - Arts. 72 – 752. (Peace Magistrate) Regulations on the Electricity

Law Art. 125

National Energy Commission1. (Peace Magistrate) Regulations for the Law on

Incentives for the Development of Renewable Energy Sources and their Special Regimes - Art. 75

Regulatory P & L for Electricity Generation

General P & L for any kind of Infraestructure Project

Special P & L particular for each project given their geographic

location

Executive Power

Superintendence of Electricity

CDEEE

ETED

1. City Hall / Chapter Hall2. Enviromental License

(MIMARENA)3. Construction License (MOPC)4. No Objection Certificate

(MITUR)5. Ministry of Industry and

Commerce6. Dominican Institute of Civil

Aviation7. Firefighters8. Civil Defense9. Port Authority10. Navy

1. Project for the Development of Valle Juancho (PRODEVAJ)

2. Foundation for the Development of Samaná

3. Archaeological Institute of Dominican Man Museum / Cultural Heritage

LOS COCOS WIND PROJECTGOVERNMENT LICENSES AND PERMITS

Agreement the use of Land

Superintendence of Electricity1. Electricity Law - Arts. 72 – 752. (Peace Magistrate) Regulations on the Electricity

Law Art. 125

National Energy Commission1. (Peace Magistrate) Regulations for the Law on

Incentives for the Development of Renewable Energy Sources and their Special Regimes - Art. 75

Regulatory P & L for Electricity Generation

General P & L for any kind of Infrastructure Project

Special P & L particular for each project given their geographic

location

Executive Power

National Electricity Commission

1. City Hall / Chapter Hall2. Environmental License

(MIMARENA)3. Construction License (MOPC)4. No Objection Certificate

(MITUR)5. Ministry of Industry and

Commerce6. Dominican Institute of Civil

Aviation7. Firefighters8. Civil Defence9. Port Authority10. Navy

1. Project for the Development of Valle Juancho (PRODEVAJ)

2. Foundation for the Development of Samaná

3. Archaeological Institute of Dominican Man Museum / Cultural Heritage

GENERAL LICENSES AND PERMITS

FOR ANY INFRASTRUCTURE PROJECT

Dominican Civil Aviation InstituteLaw No. 491-06 on Civil Aviation

Firefighters BodyOrganic Firefighters Law No. 5110

Civil DefenceLaw No. 257 that creates the Civil Defence

Office

Port AuthorityLaw No. 70 that creates the Port Authority

NavyOrganic Law of the Armed Forces of the

Dominican Republic No. 873

City Hall/ Chapter HallLaw No. 675 on Construction and Public

Ornaments and subsequent modifications by Law No. 6232

Environmental License/ MITURLaw No. 64-00 on Environment and Natural

Resources

Construction License/ MOPCLaw No. 675 on Construction and Public

Ornaments Law No. 687 on the Creation of an

Engineering, Architecture and Related Systems

No Objection Certification/ MITUROrganic Law on Tourism No. 541

Commerce and Industry MinistryLaw No. 112 on Hydrocarbons

POSSIBLE ENERGY REFORMReform to Law 57-07 of Renewable Energy in order to reintroduce the tax incentive (income tax) to renewable energy, eliminated by fiscal reform of 2012

Special permits (ventanilla única or one-window service) to incorporate all regulatory and filling registry

Extrapolate the experience of efficient Isolated System (CEPM), which has a 99.1% rate of collection

Currently, energy debts are personal responsibility of the client (“intuito personae”); its necessary to assign such debts also to the real state

Enforce the technical tariff established by Law 125-01 in order to reduce the deficit of the sector

Proceed with the international bid of the 3 distribution companies, currently under the control of the Dominican State

ADVICE TO POTENTIAL INVESTORSDiscuss with all regulatory agencies the needs and their vision of the sector in order to avoid conflicting projects with the national agenda

Currently the CDEEE does not applies the energy rates established by Law 57-07 for renewable energy producers; its advisable to discuss this issue for developing any business model

If possible, find and select a strong local partner with experience in the energy sector

Currently the CDEEE pays outstanding energy invoice to producers with 4 to 6 months delay; its necessary to take this issue into consideration for developing any business model

Thank you!!Amauris Vasquez Disla

De Camps Vásquez & Valera

avasquez@dcvlex.com