$78 million loan will support distribution grid program and reduction of electricity losses
The Inter-American Development Bank (IDB) has approved $78 million loan to the Dominican Republic to support financing of a program to modernize its electrical distribution grid and reduce electricity losses.
For some years now, the IDB has supported modernization efforts in the electricity sector of the Dominican Republic. This project, which is in line with the Integrated Electricity Sector Plan for 2013–2016, seeks to ensure the proper functioning of the entire commercial circuit, including not only the overhaul of grids but also the measurement, billing and payment collection for electricity that is delivered, with special emphasis on the institutional strengthening of the companies that provide this service to the country, by improving the technical and commercial management that they conduct.
The program is important because, despite progress made by the Caribbean country, electricity distribution in the Dominican Republic continues to perform poorly in its operations, with electricity losses averaging 33 percent at the close of 2013. This is far above international standards of efficiency and exerts a negative impact on the financial sustainability of Electricity Distribution Companies (EDEs in Spanish). The program will help ease the fiscal burden that the sector represents and enhance the country’s productivity.
The overall goal of the program is to boost the electricity sector’s financial sustainability by cutting total electricity losses in the distribution system and to improve the operation and marketing of services provided by Electricity Distribution Companies. Yet another objective is to enhance the quality of the supply of electricity to end users.
With this project the IDB hopes to contribute to the country’s Program for Losses Recovery and Commercial Improvement (PRPCM in Spanish) so as to reduce electricity losses, improve the system of cost recovery by raising the number of registered customers and promote payment for electricity services, as well as efficient use of energy and quality service.
With the implementation of this phase of the PRPCM,the idea is to reduce electricity losses by at least 10 percentage points, taking it from the 33.1 percent recorded at the end of 2013 to 23.1 percent in 2017.
In order to achieve this, the program calls for overhauling priority electrical circuits, improving measuring systems, strengthening commercial management and achieving continuity in institution-building.
The main results from the program are expected in the first three years and are related to improvements in Electricity Distribution Companies in three main ways: operational efficiency, commercial management and quality service.
The $78 million IDB loan is over 25 years, with a grace period of 4.5 years and an interest rate based on the LIBOR.