Key infrastructure project gets off the ground
A $500 MILLION SOVEREIGN BOND ISSUE HAS ALLOWED THE DOMINICAN GOVERNMENT TO BEGIN THE CONSTRUCTION OF A ROAD INFRASTRUCTURE TO MATCH ITS IMPRESSIVE AIRPORT NETWORK

MIGUEL VARGAS MALDONADO Secretary of State for Public Works and Communications

Although the development of the Dominican Republic’s economy over the past decade has been the envy of just about every nation in Latin America, the country still needs a lot of infrastructure improvements in order to provide a viable foundation for future growth.
Last fall’s successful $500 million sovereign bond issue means that the government is now armed with the means to carry out much needed infrastructure improvements. And to ensure that those funds are put to good use and are not dispersed to a patchwork of projects, Secretary of State for Public Works and Communications Miguel Vargas Maldonado is working hard to set up an efficient management model within his offices that will safeguard against unwise spending and guarantee results. This includes a much improved road network, hydroelectric power plants and a modern seaport and transportation infrastructure.

According to Mr. Vargas, the funds provided by the international bond issue–which complemented national financing and funds from the World Bank–was the final touch needed to get many projects off the ground.
“With the magnitude of financing needed for road and highway construction and for hydroelectric power projects, governments have to resort to several forms of financing,” Mr. Vargas notes. “But I think it is much more convenient for the state and much more rapid in development terms if the government incorporates the private sector, both national and foreign, into the development of the country.
“Our job is to establish clear and defined rules with no distortions for this process. Obviously the best way to do that is through a judicial framework that gives the investor confidence and guarantees them that we are completely in favor of and support private sector participation in the country’s development plans.”

BUILDING BRIDGES Private sector participation has revitalized the Dominican public works program.

After being stalled for years in congress, a breakthrough Electricity Law aimed at constructing a framework for the private electric power sector was finally enacted last summer. The law, along with an agreement between the government and private generators–who are to reduce charges to consumers in exchange for long-term contracts–should put an end to the nagging power cuts that have plagued much of the nation. Several mega projects in the works to build dams, power stations and both oil and gas-fired generating plants will more than take care of projected demand.
Technically, electric power generation, transmission and distribution fall under control of the Corporacion Dominicana de Electricidad, a state-owned company that in practice enters into contracts with independent producers and acts solely as a mediator.

Perhaps one reason that the modernization of the Dominican Republic road network has fallen behind other public works efforts is the fact that the country has one of the most efficient air travel systems and airport networks in the region. Much of the credit is owed to Aeropuertos Dominicanos Siglo XXI (Aerodom), a consortium of Dominican, Canadian and Italian companies that is the country’s main concessionary/builder of airports, operating six airports throughout the nation.
“Aerodom has a 25-year concession to construct, remodel, and equip six airports: Barahona, Puerta Plata, Las Americas, Catey, Samana and Higuero in the capital Santo Domingo,” explains Aerodom president Abraham Hazoury. “With these airports we are going to have a system that, combined with the airports of Punta Cana and La Romana, will be the envy of the region. There will be no two points in the Dominican Republic that will be more than an hour’s flight away.”

The country’s air travel network is a strong selling point of airlines and international tour operators, who, when comparing other Caribbean destinations to the Dominican Republic, are able to offer their customers added value.
“Our airport system increases the country’s accessibility and competitiveness,” notes Mr. Hazoury. “It allows us to offer diversity: sun and sand tourism, eco-tourism, mountain tourism, etc. In other words, we have diversity that gives us a large degree of stability to confront variations in the industry.”