Dominican Republic

Energy

The Tavera Dam
Courtesy Inter-American Development Bank

The cost and the availability of energy became major impediments to development in the 1970s and the 1980s. An oil importing nation, the Dominican Republic saw its import bill for petroleum multiply tenfold in absolute terms during the 1970s. Although oil prices eased during the 1980s, the country faced a new energy crisis as a result of a critical shortage of electrical-generating capacity. Inadequate supplies of electricity resulted by the late 1980s in frequent power outages, frustrated consumers, and disrupted productive activities.

The country's aggregate consumption of energy was low, even by Latin American standards. For example, Costa Rica consumed more than half again the amount that the Dominican Republic did on a per capita basis in the 1980s. The energy consumed by the nation came from a variety of sources: petroleum and petroleum products (49 percent), wood (26 percent), biomass (20 percent), hydropower (3 percent), and coal (2 percent). The country continued to be dependent on imported crude oil and related petroleum products, and its narrow domestic energy resource base satisfied barely half the nation's energy demand. The potential supply of hydropower, the most promising resource, was estimated at 1,800 megawatts (MW), but less than a quarter of that amount was being tapped in 1989. Wood and charcoal use was constrained by the small size of the country's remaining forests. Biomass, mostly bagasse from sugarcane residue, was getting more use but had limited potential as a fuel. Deposits of lignite (brown coal), were known to exist in the Samaná Peninsula in undetermined amounts, but exploitation of this resource was considered unprofitable in the late 1980s. Nontraditional energy resources, such as geothermal and solar power, were also being considered, but they, too, promised little return on potential investment in the 1980s.

United States, Venezuelan, and Canadian oil companies began prospecting for oil in Dominican soil in the early twentieth century; these efforts met with little success, however. Only small deposits were known to exist at Charco Largo in the 1980s, and the prospect of new oil finds appeared poor. Consequently, the country imported crude oil and certain special petroleum products that could not be refined locally. Mexico and Venezuela, under the San José Accord (see Glossary), met about one-third of the country's oil needs at concessional rates. Under pressure from urban consumers, the government traditionally had subsidized gasoline prices; sudden price increases, like those of 1984 and 1989, often triggered unrest.

The Dominican Electric Company (Corporación Dominicana de Electricidad--CDE), a parastatal that replaced a private company in 1955, operated the country's national electrical system in 1989. The CDE supplied two-thirds of the country's 1,573 MW electrical capacity in 1986. Private and public production--used to power mines, sugar mills, cement factories, other industries, and residences--accounted for the balance. Oil-based thermal plants generated most of the nation's electricity (62 percent). Smaller amounts were produced by gas turbines (14 percent), hydroelectric dams (14 percent), and other sources (10 percent). Residences consumed the most electricity (41 percent), followed by industry (28 percent), the public sector (19 percent), and commercial users (12 percent). Prices ranged from the low subsidized rates afforded households to the much higher tariffs the CDE charged its large commercial customers. Only 38 percent of Dominican homes had electricity in the late 1980s, a low percentage by Latin American standards; for example, 54 percent of Jamaicans had such access.

Generally dilapidated and outdated, the CDE's facilities suffered from inadequate maintenance and inefficient, politicized financial management. For example, approximately one-third of all electricity generated in 1988 was lost because of maintenance problems or unauthorized use. Not surprisingly, by the late 1980s the country was facing a huge deficit in electrical capacity that was substantially hindering economic development. Some areas suffered as many as 500 hours of outages a year, which often caused damage to appliances because of drops in voltage and other irregularities. Because of this unreliable service, many businesses, especially in free zones, ran their own generators. With assistance from the World Bank and the Japanese government, the CDE attempted to improve efficiency by increasing tariffs, upgrading infrastructure, and expanding capacity. The Balaguer administration in the late 1980s considered privatizing portions of the CDE's operations. Nevertheless, demand was expected to outpace supply for years to come.

Data as of December 1989

Dominican Republic - TABLE OF CONTENTS