Coal plants: Energy Solution or investment "sunk"?

April 20, 2016

the end of March approached and haste was required. You had to "avoid"
at all costs a situation of "default" or quasi "default" that would force the
government to make a "new deal" with a pool of European banks led by
Deustch Bank. The "solution" of course, in addition to committing the
Dominican government financially with the private sector, further increases
domestic debt, and unsuspectingly multiplies the cost of coal plants Punta
Calina.

Thus, the risks of it would increase, showing that the largest project in the
energy sector is moving by leaps and bounds kind of investment "sunk".

Cornered by the current inability of Brazilian funding for coal plants Punta
Catalina, the Dominican government, apparently, has had no choice but to
take from "own" funds to European financiers, all responsibility for payment
200 million, as "waiver agreement" received last December for payment to
suppliers, in addition to honoring the commitments of insurance risks
involved in a transaction, by which, of that number, only 118 million were
received, approximately .

Worse, according to Zdigital stated on 29 March last formalize the

proposal to the authorities, and are committed to paying 140 million but had
to give the Brazilians through BANDES, as established in the said agreement,
for that way disburse European banks, for the month of April, the 70 million

who spoke executive vice president of the Corporation of State Electrical

Companies (CDEEE), Ruben Bichara.

We must clarify that the said amount of 140 million dollars is a game of
650 that corresponds to disburse Bandes as part of the financing of the
"winning" company competition, in this case Odebrecht, which, incidentally,
to the time has not contributed a single penny.

So, the government completed 210 million to reactivate urging always

deficitariamente, jobs in Punta Catalina.

Thus, I informed Z-digital by a source close to the negotiations, totally

different with what was said by Bichara, who "denied that the government is
obliged to repay the sum of US $ 200 million to a group of European banks
participating in financing coal plants Punta Catalina ".

But where will the resources in this case reach the sum of 340 million
dollars ?. According to the source, to obtain the funds to consumers who pay
according to official data and information 96% of the energy billed by the
Distribution Companies is sacrifice, and would stop paying the energy billed
again to all generators, including state, as was said resources would be taken
from a batch of 700 million pesos including, as a subsidy in the budget for
this 2016 used to pay power generators.

If so, the government would overload with high consumer rates and affect
its payment commitments with the private sector, including generators,

thereby increasing the debt again that, to the current date, in the case of the
latter, It amounts to 147 million dollars.

The crossroads becomes evident. It would rise again unpayable figures

debt with generators, the interest paid by it and consequently the government
borrows internally added, while new conditions are created to enhance the
danger of the stability of the premium dollar, with all that implies for the
Dominican economy.

The road then is to increase domestic borrowing or apply the suggestive

formula of "new sovereign bonds" and thus continue the investment in tow
projected in Punta Catalina, "covering" the gap imposed by Brazil for the
scandalous case Lava Jato, it is pushing almost inexorably to convert the
project banilejo "a bottomless pit".

That prospect, as reported to this portal is reinforced by the fact that in the
current situation, the government, to meet the obligations to be done by
Brazilians, as established in the contested contractual agreements assigned
building the work the company Odebrecht has agreed not only to accept pay
with internal sources the full amount disbursed to international suppliers and
insurance companies risks, but undertakes to seek from own funds or other
means of borrowing, the corresponding obligations to counterparties, to
facilitate new outlays pool of European banks.

It's like out of a crossroads superior to another, seeking only to gain time
to the challenges of the electoral situation and the specific risks of the
Dominican economy.

This handling government work against the tide in the case of financing
Punta Catalina due to the severity of events in Brazil, which have paralyzed
basically the Odebrecht construction company, and neutralized almost
entirely the financial responsibility of the contract, in this case the BANDES
Brazil.

Meanwhile, the Dominican government debt multiplied, and the impact on

the stability of the Dominican economy and the financial and contractual
management Punta Catalina, grows and threatens to become unmanageable
in a difficult domestic context and an uncertain international situation.

One thing is certain, on March 31 the deadline of the "line of death"

referred to in the "document Waiver" signed by the Minister of Finance,
Simon Lizardo Amzquita, with the pool of European banks led by Deutsche
Bank, in which the Dominican authorities agreed to take the risk of paying
the 200 million European pool unless he received the contributions for the
project contracted with Brazil as of last March 31, and to overcome all arrears
in payment on account of project .

The government accepted the deduction of the amount awarded based on

the Waiver agreement amount "Risk Insurance" (about 82 million), while if
the Brazilian delay is not exceeded, the government would seek their own

account addition of the "developed" resources from their own financial

capabilities.

Apparently everything has gone premonitory way. However, it is the

government mounted the necessary transparency required by the
controversial business of Punta Catalina plants. Amen.