THE PRICE OF FUEL HAS A FUNDAMENTAL IMPACT ON THE COST OF ELECTRICITY

“The most significant resolution to the high cost of electricity in Dominica is in the generation of electricity from geothermal,” says Hon. Charles Savarin 

 

Roseau, Dominica – September 17, 2008…….Minister for Energy, Hon. Charles Savarin has stated that the high cost of fuel has a “fundamental impact” on the cost of electricity in Dominica.

 

Hon. Savarin made the statement at a press conference last week. The rising cost of fuel continues to have a debilitating impact on non-oil producing countries like Dominica, reflected in the high cost of electricity locally.

 

In response to calls by some observers for government to remove taxes on electricity in order to bring down the cost of electricity locally, Hon. Savarin stated that the price of electricity is determined to a large extent by the price of fuel.

 

Mr Savarin also said, that contrary to what is being said in the media, the fuel surcharge is not a tax and does not come to the government as revenue. The fuel surcharge is another mechanism for determining what price the consumer pays to the utility company, the Minister stated.

 

The Energy Minister also pointed out that the impact of the 50 % reduction in the excise tax on fuel introduced in the 2007/2008 budget was quickly whittled down as a result of rising fuel prices internationally.

 

 

Mr Savarin sited that the inactivity at the Hydro power plant at Padu is another reason for the high cost of electricity in Dominica.

 

Prior to the passage of Hurricane Dean in August 2007, Dominica produced 35-40 % of its electricity through Hyrdo power. Following the suspension of operations at Padu as a result of Dean, Dominica is now producing less than 25 % of its energy needs from hydro. As a result of that more diesel is needed to make up for that shortfall.

 

The Minister also revealed plans by Government to increase the country’s generating capacity by building a 15 megawatt plant in phases financed by the Government of Venezuela. It is expected that heavy fuel will be used thereby reducing costs.

 

However, according to Hon. Savarin, the Government is convinced that the more fundamental solution to Dominica’s energy requirements is the pursuit of geothermal energy development. In recent months the Government has been pushing ahead with geothermal energy development in the Soufriere/ Scotts Head area and the Wotton Waven area.

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