Interview - José Oscar ORSINI-BOSCH, Luz y Fuerza Company President

José Oscar ORSINI-BOSCH, President of Luz y Fuerza.

Why the price of KWh is so high ? In which point are the works’ realizations ? What are the projects for the future ?

José Oscar ORSINI-BOSCH is President of Luz y Fuerza, private energetic company which is producing electricity on the Samaná Peninsula for the cities of Las Terrenas, El Limón and Las Galeras.

He obtains his diploma as electrical engineer in 1978 at the Madre y Maestra University of Santiago and starts to work at Falconbridge Dominicana, the mine of ferronickel which is in Bonao. He remains 2 years there, then he takes his independence to create a company called “Ingeniera and Servicios Tecnicos” which proposes electromechanical services, of line construction, electrical installations, of air-conditioning, refrigeration and maintenance. Later, in 1990, he leaves this company to come to Las Terrenas, with the vision to electrify the entire Northern coast which did not have electrical energy yet. He begins working in 1992 and the electric production starts in Las Terrenas on January 5, 1994. Since this date and until now, the company Luz y Fuerza developed there in Las Terrenas.

LTL

Good evening Mister ORSINI. How started the development of Las Terrenas at your level ?

José Oscar ORSINI-BOSCH

At the beginning, a plan called “Integral Plan of Electrification of the Samaná Peninsula” was conceived. It included the installation of “power plants” of Las Terrenas, of Las Galeras and later, a step that we did not conclude yet, which will relate to the installation of a power station in Arroyo Barril, for the entire peninsula.

LTL

In which year are we ?

José Oscar ORSINI-BOSCH

We started very early regarding the development of the province since in the years 1992 and 1994, there was nothing here. In 1992, the development of other zones like Punta Cana, which includes 30000 hotel rooms, started. Of our side, the project is to have 3000 rooms in the whole province.

LTL

This development is related to the work of Luz y Fuerza but the real development of the Peninsula took much more time…

José Oscar ORSINI-BOSCH

Last year, the El Catey International Airport was inaugurated and one month ago, it was the Santo Domingo Samaná highway, so it is now that Samaná is developing.

LTL

With the feedback of the years, what do you think of this premature work of Luz y Fuerza ?

José Oscar ORSINI-BOSCH

This premature starting was beneficial on one sense but bad from a commercial point of view, from the point of view of the businesses, since we had to invest a lot and wait a long time before compensating for this investment. But beneficial because that made it possible for Samaná to have now 300 kilometers of electric lines of distribution and there is electricity everywhere. It is important to be prepared for the development by having the electric service, but from a commercial point of view, which we have done was stupid. That involves a large investment since each kilometer of line costs more or less a million pesos, that represents 300 million to sell energy and it is not profitable. But what is important is that we contributed to the future.

LTL

But it had been interesting to make it at that time because the work forces and the material was less expensive ?

José Oscar ORSINI-BOSCH

It is true. But it was the only way to start creating the development, because when a place does not have electric service which brings also the water service (with electricity we can obtain underground water), it cannot have development there

LTL

Today which measures were taken to try to reduce the cost of electrical energy ?

José Oscar ORSINI-BOSCH

The development is very interesting since we concentrate now on finding a production at a lower price. Everything we made until there was to build lines, to look for customers, to invest in meters and we perhaps generated electricity in the least effective way. The lack of customers and the form of production make that the price is a little high. We did not invest enough in the production because we preferred to concentrate on the electric lines. Now that consumption is growing, we have the means for going in a bank and for explaining that electricity is sold, but that we need now to sell it less expensive. But with this intention we need an investment, in order to pass for example from “diesel plant” to “gas plant”, or to buy news Donker Safe plants which is a heavy and less expensive fuel and finally to also invest in the wind park of Las Galeras. In this moment, we concentrate on the change of technology of production so that we can produce electricity at a lower cost. Everything is in place, but we need capital and our capital in investment is limited, this is why we must dedicate ourselves to the chance of the financing. We are now in reorganizing the production in order to have a less expensive production next year. However, I do not like much to speak about less expensive production because of the fuels prices nowadays, but I can speak about stabilization of the price. We have oil which increases every day until more than 200 dollars the barrel; this is why I cannot affirm that we invest with an aim of making the production less expensive, considering that the fall will not arrive inevitably to the user. In four years, the oil price increased by 4 times, whereas the price of electricity did not multiply by 4. It is a compromise since the costs increase but one cannot increase at the same rhythm the price of electricity, moreover the benefits are affected. And if we present a financial status which does not have benefit in order to ask for a financing so that the financial transformations are carried out, it will not be granted. It is a little like a vicious circle.

LTL

Do you have other projects for the province development ?

José Oscar ORSINI-BOSCH

In 4 months we would like to have the 50% of the production of Las Terrenas and Las Galeras with natural gas since it proved it did not follow the same rhythm of increase as the oil prices. In one year, we hope to have 1.3 mega Watts in “Las Guasumas” of Las Galeras and now we try to obtain from the authorities the possibility of installing an hydroelectric station in El Limón, while benefiting from part of the water fall flow, without damaging the site and affecting the tourism. It would be possible to divert a third of water during the day for electricity and to deviate its totality during the night, since nobody goes to the Cascade of El Limón at night. We are working on this project.

LTL

Many people complain because the cost of electricity is much higher here than in other places of the country. Why this difference ?

José Oscar ORSINI-BOSCH

Regarding the electricity price, more than 2 pesos and 50 centavos per kWh paid by a user to Luz & Fuerza is for the taxes. It is something which does not occur in the other places of Dominican Republic since the State subsidizes the Edenorte, Edesur and Edeeste companies with incredible sums. For example, this year, this subsidy will cost 1 billion 200 million dollars to the Dominican State. During this time here, not only we do not receive a penny from these 1 billion 200 million dollars, but in addition the user must also pay 2 pesos 50 centavos to the Government for every kWh. It is an irritating discrimination. The tariff of electricity is closely related to the oil price in Dominican Republic. Most of the production (70%) is made with oil. EdeNorte and Edesur belong to the State whereas Edeeste belongs to him at 50% and they produce electricity for the whole island. In January 2006, the Dominican State, for political reasons, decided to fix the electric tariff and to subsidize with the national budget all the raising of fuel prices, in order to not transfer these additional costs to the users. That made 2 years and 5 months that the Dominican State subsidizes the difference between the real price and the selling price. We do not have this advantage and in addition we pay taxes in such a way that when you pay 15 pesos per kWh, 12.50 are for the company and 2.50 go to the State. It is all the opposite which occurs here and it is something that everyone must understand.

LTL

What can we do to improve the situation ?

José Oscar ORSINI-BOSCH

It is necessary to denounce the situation in front of the public opinion, to do what I am making in this moment with you. I also did it last week, whereas I spent more than 4 hours in front of the television and the radio, by explaining the situation. We can protest. I am against the violent protests and the strikes but it is good to speak in the national newspapers and wondering: Why one makes this to us ? It is the message that we must transmit so that at a given time the situation can be solved.

LTL

Clean or green energy became an ecological priority on the whole planet because of its warming due to pollution. Luz y Fuerza does have certainly its role to play here as an energy producer, what do you think ?

José Oscar ORSINI-BOSCH

With regard to the wind parks, that makes one year that we asked for the authorization to build it. The generator which is there is there illegally because I already set it up but it is all that I can do, because until there is an official licence I cannot go in a bank in order to apply for a loan to built a wind park, they will ask me the licence. And with regard to the hydroelectric station of El Limón, that made two years that we try to obtain this licence to install 500 KW in El Limón. Do you know how much it would be beneficial ? But there is no mean to obtain the authorization. This is why I cannot say which mechanism to use to make pressure and to resolve the situations. But we must be conscious that once this mechanism is engaged, those which make the public opinion will have to help us to say that what we need because many things that are said come of the misinformation.

LTL

And with the new natural gas system, can we hope that the price of kWh drops ?

José Oscar ORSINI-BOSCH

If the oil price does not continue to increase, we can have a reduction of the price of kWh of 10% in the current conjunctures. But if the oil price increases by 30 percent, we will have an increase of 20% of the price of kWh even with natural gas. If a reduction of 10% came, it would be under the current conditions.

LTL

Thank you Mister ORSINI.

José Oscar ORSINI-BOSCH

You’re welcome.

 Interview Sylvain MAUFRAIS for Las Terrenas Live