The Business Year

Pelegrí­n Castillo Semán

DOMINICAN REPUBLIC - Energy & Mining

Everyone’s A Winner

Minister of Energy and Mining, Dominican Republic

Bio

is the Minister of Energy and Mining. He assumed this position after a successful 20-year run in congress. He was part of the Commission of Jurors for Constitutional Reform, has been Vice-President of the Union of Latin American Political Parties (UPLA), and is currently the Vice-President of his political party, the Fuerza Nacional Progresista (FNP).

"The energy sector in the Dominican Republic must undergo major changes, especially in the electricity subsector."

What steps is the Ministry of Energy and Mining taking to help the Dominican Republic take full advantage of its mineral potential?

In many ways the Dominican Republic is a mini continent unto itself. It possesses an amazing diversity of renewable and nonrenewable resources, both metallic and non-metallic. We now have greater knowledge than before of our mineral potential, thanks to the System of Stabilization of Export Earnings from Mining Products (SYSMIN) Cooperation Programme of the EU, which provided us with multiple geological and resource-referenced maps, covering approximately 96% of the territory. It is a privilege for our geological service to hold so much information. As a newly-created ministry we are engaged in building our initial strength as defined by our strategic plan. As a key part of our agenda, we will seek to improve the overall management of the industry and the defense of public interests, raising the standards of regulation and control and increasing our arbitration capacity as a means of obtaining social licenses and attracting more qualified investments. We are integrating a highly qualified professional team and establishing partnerships with national and international institutions for the training of our human resources and establishing new standards for exceptional service for potential investors. In 2015, we hope to promote multi-sectorial consultation to improve the legitimacy of mining activities, and we hope to address important issues such as the definition of investment objectives, which must be financed with mining revenues. We must also finish the Extractive Industries Transparency Initiative (EITI) and establish a “win-win-win” strategy whereby the state wins, enterprises win, and so, too, do the communities. We are also engaged in reviewing and updating aspects as important as establishing the cost of exploration patents, expediting and providing further reliability to the Mining Cadastre, formalizing and adding value to small-scale and community mining, and simplifying legal proceedings of concessions with mining companies.

What initiatives is the Ministry undertaking to overcome expensive imported fossil fuels and an inability to purchase power from neighboring countries?

The Ministry promotes an energy security agenda that has a strategic goal: to reduce the dependency on imported fossil fuels, should we not achieve self-sufficiency. We are focused on simultaneously boosting oil exploration on land and at sea, and also on the state’s promotion of renewable energy. We are looking to promote partnerships with the business and industrial sectors, mainly as a tool for social inclusion in remote areas such as border and mountain communities. Hopefully by 2015, an effective energy efficiency policy will be put in place.

“The energy sector in the Dominican Republic must undergo major changes, especially in the electricity subsector.”

What is your view on the transformation of the energy sector in the Dominican Republic and what are your prospects for the future of clean technologies and renewable energy production in the drive for increased economic growth?

The energy sector in the Dominican Republic must undergo major changes, especially in the electricity subsector. Already the government has arranged a great Electrical Pact, as required by the National Development Strategy. We hope that in this electrical pact, strategic agreements involving the public, private, and social sectors can be signed. In particular the Ministry of Energy and Mines understands the profound reform that the regaining of the vertical integration of the industry moving on from state enterprises to public companies of open market capitalization would imply. This would entail a change in the nature of Dominican capitalism, as well as the rules of governance of public companies. Our aim is for management to be transparent, efficient, results oriented, and de-politicized. We also deem it a high priority to ensure the conversion of the electric park to natural gas, although this cannot be done without new infrastructure development policies and regulation of international standards that ensures access to third parties, neutrality, efficiency, and security in the installation and operation of terminals and pipelines. We believe in developing a network of pipelines on the southern coast, and also in the creation of an energy hub that includes terminals in the Northern region, preferably in the area of Manzanillo, near the border with Haiti. This last point would be of strategic value for ourselves, for Haiti, and indeed, for the entire region. The border area also has optimal conditions to become a renewable energy generation address as it has the best solar radiation regime, great wind resources, and significant potential for marine energy. Marginal lands owned by the state will be used for the production of biofuels and biomass. With this approach we also intend to impact Haiti’s energy consumption patterns, which essentially depend on firewood and charcoal, and therefore are unsustainable for both countries. With regard to the energy plan of the Dominican Republic we have certain precise goals. With the “Rooftops of Light” project, we aspire to have a good part of the public sector’s building’s rooftops generate electricity through the installation of photovoltaic panels. We have also advanced in the drafting of a regulation of co-processing and recovery of hydrocarbons that will essentially support the cement and electrical industries in the management of various wastes.

Could you talk us through the main highlights of the Dominican Republic’s National Energy Plan 2010-2025?

The government’s energy efficiency and savings plan is focused on achieving significant energy savings in the public sector with the use of various technologies, both in terms of fuel and electricity. In 2015, we will have an energy efficiency and government savings law that will provide access to this policy to the entire society. We aim to substantially increase the country’s fuel storage capacity, which is crucial in some categories. With a consumption of 140,000 barrels a day, it makes sense to increase the country’s refining capacity and take advantage of our geographical location and become a center of storage, processing, mixing, and regional and international distribution. We also aspire to advance with the Cultivando Agua Buena, or “Watershed Management” program developed in partnership with Itaipu and the Bi-National and the Brazilian authorities, and we have begun to implement this program in three river basins in the country. This program has a high component of renewable energy, energy efficiency, and sustainable and inclusive social development. We believe that much can be achieved with the modernization and resizing of the electricity distribution network. We support the Dominican Corporation of State Electrical Companies in implementing telemetry systems at industrial, commercial, and residential levels. I am particularly committed to this initiative because it was a proposed amendment, which I promoted as a legislator. With this initiative, the level of technical losses and fraud can be substantially reduced. However, we believe that we should do more with distributed generation, hence the importance we attach to the development of the northern energy hub and the implementation of special and differentiated energy policies for the border and mountain areas. The Ministry of Energy and Mining is well aware as to the importance of private, domestic, and foreign investment. We believe in progressively improving public sector institutions so that they can provide more legal security and attract more and better investment. That is why at the Ministry we have a specialized Investments Department to guide and accompany the processes necessary for the completion of the investment. We intend, alongside other institutions, to prepare relevant investment projects with international expert assistance to be tendered out for domestic and foreign investors, or even the materializing of public-private partnerships. What is decisive, however, is that with clear and transparent rules, all players agree to the “win-win-win” business model as the state, the communities, and the investors are strategic partners. The main objectives of the Ministry in 2015 are the further strengthening of our institutional capacities, integrating more trained personnel, and developing the necessary regulations in each of the areas under our jurisdiction. We also envisage the establishment of strategic alliances with reputable international institutions, especially in the field of science and technology. In addition, we aim to advance with the campaign of hydrocarbon exploration on land and at sea, and we expect to be able to request bids from exploration companies in late 2015, or early 2016, to establish the “Rooftops of Light” program in at least 30 public organizations, carry out the multi-sectoral consultation to consolidate the country’s mining policy, extend the “Cultivando Agua Buena” program to at least five river basins in our country, improve the development proposal for the Northern Port of Manzanillo, as well as approve the regulations for third party access to energy infrastructure. We also hope to strengthen ties with our affiliated and supervised organizations such as the National Energy Commission, the National Direction of Mines, and the National Geological Survey.

© The Business Year – December 2014

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