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Dominican Republic warned about lawsuit

The Associated Press

March 16, 2007

Dominican Republic warned about lawsuit


SANTO DOMINGO, Dominican Republic

Foreign energy investors said on Friday that they warned the Dominican Republic it had to mend its crippled power sector months before filing a US$680 million (euro510 million) lawsuit against the country for lost electricity revenue.

Los Angeles-based TCW Group Inc. advised Dominican officials in May 2006 it would sue if immediate steps were not taken to curb rampant electricity theft and raise customers’ rates, according to Blair Thomas, head of the firm’s infrastructure and energy business.

"We’re a business where half of our users steal from us ... and the government watches it happen," Thomas told The Associated Press by phone from Australia, where he was traveling. He said the Caribbean nation’s government was "well briefed" before the suit was filed.

TCW, which is owned by France’s Societe Generale, filed for arbitration at the close of business Thursday under a Dominican-French bilateral investment treaty.

The claim for lost revenue dates back to 2004, when TCW bought half the distribution company that powers six southeastern Dominican provinces and much of the capital of Santo Domingo. The other half is owned by the state-run electric company.

The lawsuit adds to the problems of the power sector that the Dominican government has been trying to rescue from a decades-old cycle of blackouts and bankruptcies. Analysts have estimated that fraud and theft drain half the electricity generated nationwide.

The state-run electric company’s spokeswoman did not return calls Friday. But in January, Rhadames Segura, vice president of the Dominican company, said it had not received any complaint prior to learning about the lawsuit and that it wanted to open a dialogue with the plaintiffs.

The case will be heard under rules of the U.N. Commission on International Trade Law by a three-member panel. The litigants will each elect one arbiter, who will together appoint a third, according to Thomas.

He said the tribunal, whose location has not yet been selected, will be in place within 30 days.

 source: Business Week