Electrical energy sector restructuring

The project will maximize private sector participation in the energy sector by improving the legal/regulatory framework, and by developing environmental standards and norms for new electric generation sites. It will also strengthen new supervisory and regulatory entities. TA will be provided by a U.S. contractor. The project will provide TA and training in privatization strategies to the Technical Group of the National Energy Commission (CNE -- created by an executive decree in 5/93 to carry out the GODR"s restructuring plan). Initially, the project will support presentation of the GODR"s new energy law to Congress. The law, which is expected to be passed by 1/94, will divide the Dominican Electricity Corporation (CDE) into three companies, and it will create a new institutional and regulatory framework for the energy sector, as follows: (1) the CNE, a government agency, will propose new legislation, perform policy making and strategic planning, monitor the sector, and approve new franchises; (2) the Superintendencia, an independent agency, will set rates, encourage competition, and supervise and enforce environmental standards; and (3) the Energy Coordinating Agency, a public/private agency, will coordinate generator/transmission operations. The project will assist in developing a transparent legal structure for the sector, making policy makers aware of privatization benefits, and conducting cost/benefit and tariff studies for restructuring CDE and enabling private investment and management. Extensive TA and training will be provided to create a capacity in the Superintendencia to function as the energy sector"s new regulatory agency. The project will help the new agency to develop regulations, including tariff structures, required to administer the Energy Law; provide training for agency personnel and Board Members; assess the needs of the Superintendencia through public and private sector opinion surveys; and finance U.S. training for Rate Analysts and Public Utility Commission members. Finally, the project will facilitate private investment in the energy sector, as well as World Bank and Inter-American Development Bank financing, by providing TA for (1) preliminary environmental assessments of proposed new projects (particularly the proposed Luperon power plant) and of coal handling contamination at Port of Haina (site of a World Bank project); and (2) the development of unified environmental norms and standards for new electricity generation sites, to eventually be incorporated into the procedures and bylaws of the Superintendencia. By the end of the project, the private sector will be responsible for all new energy generation, while electricity distribution will be privatized in part.