A modern, automated tollbooth marks the end of Santo Domingo’s bustling suburbs. Beyond that the dual carriageway of Route 1, the Autopista Duarte (named after the Dominican Republic’s founding father) sweeps smoothly north-westwards through tropical forested hills and orange groves towards the country’s agro-industrial hub and second city, Santiago.
The road’s importance is evident in both the quality of its construction and the amount of traffic it carries. In the absence of a nationwide trunk rail network, Autopista Duarte is one of half-a-dozen similarly well-built arterial roads designed to carry the bulk of the Dominican Republic’s freight and passenger traffic. They stretch about 350 kilometres (km) along both north and south coasts from Samana and San Rafael in the east to the Haitian border in the west, while Route 1 provides the principal north-south link through the central mountain ranges. With new flyovers planned or already under construction to ease traffic flow at busy junctions, these roads comfortably cater for the giant articulated trucks and fast Mercedes buses that ply the routes between major cities.
Interior road network
Turn off the main highways, however, and the situation changes. Secondary roads are typically single carriageway. Some are wide, well made and metalled, notably those linking large towns directly to the main highways. Others, however, are unmetalled or in need of much improvement before they would be suitable for heavy traffic. During the hurricane season – July to October – such roads are particularly susceptible to damage from flooding, making transport to some parts of the interior difficult. Everywhere road accidents remain a significant hazard, especially in poor weather.
Though traffic usually flows easily on the major highways and in urban centres, Santo Domingo, with a population approaching three million, and some other major cities face increasing traffic congestion exacerbated by weak urban public transport infrastructure, which has led to a reliance on private cars. The government has taken some steps to address this – an underground and overground metro system is under construction in the capital – but allegations that it is diverting money from important investment in education have left the completion date unclear.
Transport strategy
Ease of international air travel is central to the Dominican Republic’s ability to attract tourists and is therefore central to the government’s transport strategy. Six international airports, including a new one opened recently in Santiago, serve regular scheduled and charter flights from the US, Europe and the Caribbean basin. Railways, on the other hand, fulfil a relatively minor and diminishing role in the transport mix, with most of the country’s rail lines in private ownership and serving sugar plantations, notably in the east of the country.
Lying 20km east of Santo Domingo, the new port of Caucedo is one of the most important improvements to Dominican infrastructure in recent years. The facility has relieved severe congestion at the country’s previous main port, Rio Haína, and permitted the docking of larger vessels that were earlier precluded owing to draft or turning restrictions, enabling shipping companies to realise significant economies of scale. With two deep-water (15-metre) berths, each 600 metres long, and five gantry cranes capable of handling 27-35 containers every hour, the port can take ships up to the Panamax size.
As well as revolutionising seaborne trade with the Dominican Republic, Caucedo competes with the ports of Kingston (Jamaica) and Freeport (Bahamas) as a trans-shipment hub and distribution centre for the Caribbean and South America.
Telecommunications
Telecommunications are one of the Dominican Republic’s shining successes. The country has what is generally regarded as the best communications system in the Caribbean – so good that it is also the envy of many more developed countries. The system is based on a nationwide microwave radio relay network, with fibre-optics cabling in many of the cities.
Global telecoms providers, such as Verizon and Orange, have made significant investments and the resulting system’s utility is reflected in the fact that, by the end of 2005, about 2.8 million mobile telephone handsets were in use, one for every 3.2 people. Internet take-up has been somewhat slower, yet several international service providers have established a presence, while publicly accessible broadband connections run at speeds of up to 100Mbps.
Power weakness
In contrast to telecommunications, power remains the weakest link in the Dominican Republic’s infrastructure. For many years, blackouts of up to 18 hours daily plagued the country. While the situation now is markedly better, daily blackouts remain the norm. This can pose severe problems, not least for businesses that are reliant on air conditioning for cooling their computer rooms. A large number of firms have been forced to invest in expensive back-up generators of their own.
Ironically, the country’s generating capacity far exceeds its needs. “Nationwide consumption is around 1800mW and peaks at 1900mW,” says Kevin Manning, president of the local American Chamber of Commerce and chief adviser to power company AES Dominicana’s president, Manuel Perez. Yet the Dominican Republic has an installed capacity of 3000mW, mostly sold under contract rather than on the open market.
Moreover, the government has recently purchased enough coal to fire two new 600mW power plants to be constructed by a United Arab Emirates-based consortium by 2008.
Massive overcapacity in generation is likely to endure for the foreseeable future. Reforming the distribution system is now the key challenge in the electricity sector. “The assumption was that the distribution sector could be turned round by foreign investors, as had happened elsewhere,” says Mr Manning. But this proved much harder to achieve than was first expected. The government estimates that 30%-40% of electricity delivered to consumers is not paid for; AES reckons that losses to theft account for 32%-33%.
Illegal connections to steal electricity from the grid are commonplace. Although the distribution companies periodically crack down on it, people in every neighbourhood know where they can find engineers to restore the illegal connections, often on the same night that they are disconnected.
“The basic problem of theft has not been solved. There are mafias within the [distribution] companies that undo their own daytime work,” says Mr Manning.
Electricity reform
The government has begun to address the problem. It commissioned a study of the electricity sector from Adam Smith International (ASI), a London-based international development consultancy with strong pro-market credentials. ASI’s report concludes that an anti-theft strategy should be at the top of the list of reforms; the same point is echoed in a recent report by the Economist Intelligence Unit, a research and advisory firm. A draft law criminalising the theft of energy was presented to the president of the Dominican Republic last November.
Nevertheless, investors will take some convincing that real progress is being made. Government subsidies to the electricity sector still amount to about $600m annually and there are no votes in making consumers pay for that hole in the fiscal budget, especially when Dominican electricity is the most expensive in the region. “Political will is the problem,” says Mr Manning.
The row over the direction of reform shows few signs of early resolution. On the contrary, a long period of trench warfare looks likely. Yet optimists think DR-CAFTA might oil the wheels of a solution through improving public administration and by its Chapter 10 provisions on the rights of foreign investors.
Once a new government is in place after the 2008 elections – especially if headed by a president in his final term of office – it might then be bold enough to take on the reforms required.
