Law 57-07
Law 57-07
Law 57-07
THE NATIONAL CONGRESS
In the Name of the Republic
Law 5707
WHEREAS: SECOND: It is the State’s duty to promote the development of renewable
sources of energy, in order to achieve the consolidation of the development and macro
economic growth, as well as the stability and strategic security of the Dominican
Republic; as it is a lower cost option for the country in the long term and therefore should
be encouraged and supported by the Estate.
WHEREAS THIRD: The Law on Hydrocarbons No. 11200 and its Regulations, have
implemented a fund originating from the tax difference on the fossil fuel, to be kept as
5% of such difference beginning on the year 2005, for being used in programs aimed to
the incentive of development of renewable energy sources and energy savings and such
resources shall be used and optimized efficiently and clearly for the purposes they were
created for;
WHEREAS FOURTH: The Dominican Republic does not have any known fossil fuel
sources that can be considered in trading volumes, and this contributes to increase the
dependency on external sources, not only in the consumption of imported fuels and non
renewable sources, but also in the technological and financial dependency in general;
WHEREAS FIFTH: The Dominican Republic is signatory and has ratified several
conventions and international agreements, such as the United Nations Framework
Convention on Climate Change and the Kyoto Protocol, whereby the country engages to
undertake the actions in producing renewable energy that reduce the effects of gas
emissions contributing to global warming.
WHEREAS SIXTH: It is on the State’s interest to organize and promote the
development of new energetic technologies and the local adequate application of known
technologies, allowing the competition between the cost of clean alternative energy
sources, coming from natural resources, and the energy produced by hydrocarbons and its
derivates, which provoke a negative impact on the environment to the atmosphere and
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biosphere. Consequently the research, development and application of such new
technologies must be encouraged.
WHEREAS SEVENTH: For the Dominican Republic, as a tourist destination, it is
important to exploit as an ecological attractive, the use of clean nonpolluting energies, as
this will enhance the ecotourism potential.
WHEREAS EIGTH: The country has a wide variety of primary sources of renewable
energy, amongst which are the ones originating from farming agriculture, and may
contribute to reduce the dependency on imported fossil fuels if its exploitation is
developed and hence, have a high strategic value for the country’s supply and or its
exportation.
WHEREAS NINTH: At present new alternative system of energy, fuel and
improvement are being developed not only in the country but worldwide, coming from
the traditional hydrocarbons as well as the system used by them, which shall be
encouraged as a method of economic compensation in order to make them competitive as
regards their countless environmental and socioeconomic benefits.
WHEREAS TENTH: The tolerable blending of carburant alcohol, biodiesel or any
other biofuel with the fossil fuels imported used by the motor vehicles and electric
generators, substantially reduce the contaminating gas emissions and the green house
effect, and therefore the environment degradation and at the same time reduce the
national expenditure in foreign exchange.
WHEREAS ELEVENTH: The actual conditions and future perspectives of sugar
markets and sweets are putting limitations, hindrances to the production of sugar cane
and the use of the wide portions of sugar cane plantations of national production and such
limitations have taken the sugar businesses to an uncertain situation, which has extended
to sugar cane communities and thousands of sugar entrepreneurs who have been in this
area for many years.
WHEREAS TWELFTH: The country’s high potential for the production of sugar cane,
in terms of land availability and skills of farmers in such tasks, facilitate the
implementation of a Program for the Production of Carburant Alcohol (ethanol) in
autonomous distilleries and or as part of the sugar mills, as well as other biofuels; and
WHEREAS THIRTEENTH: After the signature of CAFTARD/TLC shall come into
force mutual commercial opening agreements with Central American Countries, many of
which economies are based in renewable sources of energy which are a competitive
advantage facing the economy and the producers of the Dominican Republic.
ANALYZED: Laws 2071, of 31 July 1949, which enforces adding the anhydride
alcohol to gasoline sold in the country as a fuel of internal explosion; law 6400 dated 18
August 2000, on Environment and Natural Resources; Law 11200 dated 29 November
2000, which sets forth the Tax on the Consumption on Fossil Fuel and Petrol derivatives,
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(Law on Hydrocarbons); Law 12501 dated 26 July 2001 on Electricity and its
Regulations.
SEEN: Decrees Nos. 55702 on Electric Generation with Biomasse in Sugar Mills; Law
73202 on Carburant Ethanol Incentive; Law 5805 on the forming of IIBI from the
former INDOTEC.
ENACTS THE FOLLOWING LAW
CHAPTER I
First Article Definitions. For the purposes herein described and its application
regulations, the following definitions shall apply:
c) Biodiesel: Biofuel produced from vegetable oils originating from oil
plants, as well as any other non fossil oil;
e) Hourly Blocs: Periods where the generation costs are similar, determined
in function of the technical and economic characteristics of the system:
g) Cogenerators: Refers to those entities or corporations using the energy
produced in their processes in order to generate power for their own
consumption and eventually for the sale of their surplus;
h) Definitive Concession: .Authorization from the Executive Power
granting the applicant the right to build or exploit electric works,
according to this law or any other law regulating this matter;
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i) Provisional Concession: Administrative resolution of the Electric
Superintendence, granting the faculty to enter public or private domains in
order to carry on fact studies related to electric works;
k) Marginal Supply Cost: Cost incurred in order to supply an additional
unit of the product for a given level of production;
m) Updated Total Cost: The addition of all the costs incurred in different
dates, updated at a determined moment, through the corresponding
discount rate;
The procedure to determine the connection right is as set forth in the
Regulation for the application of the General Electric Law which replaces
it;
n) Right of Use: Payment to which they are entitled the owners of the lines
and substations of the system by third parties. The procedure to
determine the right of use is set forth in the Regulation for the Application
of the General Law on Electricity;
o) Distribution Company: Electric company which main objective is to
operate a distribution system and is responsible for supplying electric
energy to its final users;
q) Hydro Electric Company: An HydroElectric Generation Company
(EGEHID), State electric company in charge of constructing and operating
State built hydroelectric units;
r) Power: Anything that can be transformed into work;
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s) Firm Power: Maximum expected net energy production in a period of
time under dry hydrological conditions for the units or hydrologic
generation and of unexpected availability for the thermo generating units;
u) Measuring Equipment: Group of tool and technological equipment used
to measure and registering the electricity delivered at the measuring
points.
v) Availability Factor in a Generating Headquarter: Is the result of
dividing the energy that may generate the available power at the plant
during a certain period, normally a year, and the energy corresponding to
its maximum power;
b) moon and gravity origin, producing oceanmotor power (from sea
tides);
c) geologic origin, producing volcanic and geothermal power;
d) Atomic origin, which allows the development of nuclear power;
e) Others.
These sources may be divided in renewable (sun, wind, tides,
waves, biomass, geothermal, hydraulic, etc.) and non renewable
(such as petrol, natural gas, mineral carbon, and atomic power).
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y) Power Generation with Renewable Sources:: Generated power using as
primary source the wind, biomass, biogas, organic or municipal waste,
the waves, sea tides, water streams, geothermic power and any other
renewable source non used in significant proportions. Also includes the
small (micro and mini) hydroelectric operating streams and or hydraulic
falls and non conventional power sources equivalent to renewable sources
in respect to the environment and saving of imported fuel;
aa) Fermented Sugar Liquors: Those obtained from cellulose and ligno
cellulose material through hydrolysis and destined exclusively to produce
biofuel;
ee) Transmission Toll: Amounts to which the line and substation owners are
entitled in respect of the right of use and connection;
ff) PEER: Renewable Energy Power Producers;
hh) Hydro Plants: Plants for processing of starch , cellulose, and ligno
cellulose material from vegetable origin (biomass) through process of
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hydrolysis and fermentation processes exclusively designed to produce
sugar liquors for fermentation in ethanol biocarbon production plants;
ii) Connected Power: Maximum power required by a final user given the
connection capacity and its installation;
kk) Available Power: Means the available power at each moment, the higher
power that the generator may operate, discounting the programmed stops
for maintenance, the forced distensions and power limitations due to
installation failure;
ll) Firm Power: Is the power that may supply each generating unit during
peak hours with high safety, as defined by the Regulations for the
Application of the General Electricity Law;
nn) REFIDOMSA; Dominican Petroleum Refinery, an anonymous
corporation owned jointly by the State and Shell Co.;
pp) Easement: Lien registered on a real estate property which forces the
owner to allow certain acts of use or abstain of exercising certain rights
inherent to the real estate property;
rr) Transmission System: Group of lines and substations of high voltage
connecting substations to the generating headquarter plants with the bar
selector switch of the power transformer in the distribution substations and
other consumption centers. The power control center and the charge
dispatch are part of the transmission system;
ss) Interconnected System or National Interconnected Power System
(SENI): Group of installation of generating power units, transmission
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lines, power substations and distribution lines, interconnected, that allows
the generation, transporting and distribution of power, under the
operations programming of the coordinating body;
tt) Final User or Consumer: Means the natural or corporate person, client
of the supplying company, using power for its use;
uu) Cooperative User: Refers to the member of a generating and or
consumption group, of renewable energy or a group of distribution of
power in general;
xx) Wind Tower: Is a structure for support and transforming wind power
converted to mechanic power and electric through turbo generators in its
superior part, moved by rotating blades (of horizontal or vertical shafts)
activated or pushed by wind. Such structures can be from ten to sixty
meters high (micro turbines) and a capacity of two hundred to six hundred
(200 to 600) KW of power, there are also towers of over 80 meters high
(macro turbines) and with a several megawatts capacity;
CHAPTER II
SCOPE, OBJECTIVE AND LIMITS OF APPLICATION
Second Article . Scope. This law constitutes the main regulatory framework and shall
be enforced nationwide, in order to encourage and rule the development and investments
in projects that benefit from any renewable source of energy and aim to receive the
benefits of such incentives.
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Third 3. Objectives of the Law. Strategic and public interest objectives of this
regulation are the following:
a) To increase the country’s power diversity, in connection with the self
supply capacity of the strategic components which are the fuel and non
conventional sources of energy, provided they result more viable.
b) To reduce the dependency of imported fossil fuels;
c) To promote the private investment projects, developed through renewable
sources of energy;
d) To ensure that participation of private investment in power generation
supplied to SENI is subject to the compliance with the rules and
regulations of the competent bodies, according to public interest;
e) To mitigate the negative environmental impacts of the energetic
operations with fossil fuels;
f) To promote social community investment in renewable energy projects;
h) To contribute to the achievement of proposed goals of the National
Energetic Plan specifically to that related to the renewable sources of
energy, including biofuels;
Fourth Article . Regional Offer Limit. Only in the aspect related to the electric power
generation with renewable sources of energy destined to the network (SENI), the SIE in
coordination with CNE, shall set the limits to the offer concentration per province or
region, and the percentage of penetration of electric power for each substation of the
transmission system, with the objective of promoting safety in the stability of the electric
flow inserted to SENI in connection with the national and regional balanced development
of these sources of energy, when the infrastructures and the available resources allow it.
Such law regulations shall include a reference to the basic criteria of the regional offer in
connection to the available resources and necessary infrastructure.
Fifth Article . Scope of Application. Any project of public, private, mixed, corporate,
or cooperative installation devoted to power or biofuel production of the sources
described below, may apply for the incentives herein set forth, prior supplying sound
evidence of physical, technical, environmental and financial viability:
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a) Wind parks and isolated applications of wind mills with an initial installed
capacity (in total) that does not exceed 50 MW;
c) Electric and solar installations (photovoltaic) of any type and any power
level;
d) Electric plants using as a main fuel source primary biomass, that may be
directly used or after a transforming process to produce energy (a
minimum of 60% of primary energy) with an installed power capacity not
exceeding 80 MW per thermo dynamic or central unit;
f) Biofuel plants (distilleries or biorefineries) of any magnitude or
production volume;
h) Installation of oceanic exploitation, either from waves, sea currents,
thermal differences in oceanic waters etc. of any magnitude;
Paragraph I. The limits set forth per project may be enlarged or duplicated, provided
that the projects and concessions have installed at least 50% of the original capacity
required and subject to the compliance with all the deadlines set forth by the regulations
for the approving and installation process, and the financial process and purchase has
been completed in 50% of the original project. The concession enlargement shall follow
the administrative filing of the concessions, as set forth by Article 15 for concessions in
the special electric regime and the article regulating the special regime for biofuel.
Paragraph II. In the event of hydroelectric power not exceeding 5MW, the State may
allow and grant concessions to private or particular business, complying with the
regulations herein set forth, interesting in exploiting the existing hydroelectric power
either natural or artificial that have not been yet exploited, even if they are located in the
State infrastructure. As an exception to Paragraph IV of Article 41 and 131 of the
General Electricity Law. Such hydroelectric concessions to private enterprises or
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associations or cooperatives, shall be subject to the design and operation requirements
that safeguard the use of alternate and priority water resources, in a manner that may not
result in an adverse effect by the use of water for generating power, and in this respect,
the complementary regulations to this law shall contemplate and enforce this objective,
together with the environmental requirements for basin protection.
Sixth Article National Energy Commission: The National Energy Commission is the
State institution created by Article 7 of the General Electricity Law No. 12501, dated 26
July 2001, mainly in charge of creating the Dominican government policy for the energy
sector and responsible of following up the compliance of this law.
The advisory board shall have the following permanent members:
a) A representative of the Ministry of Industry and Commerce;
b) A representative of the Ministry of Environment and Natural Resources;
c) A representative of the Ministry of Economy, Planning and Development;
d) A representative of the Dominican Corporation of State Electric Enterprises
(CDEEE).
Paragraph I. The Advisory Board shall have the following adhoc members, that shall
be called as the case and project characteristic may require:
a) A representative of the Ministry of Agriculture;
b) A representative of the Ministry of Higher Education,
Science and Technology;
c) A representative of the Electric Superintendence (SIE);
e) A representative of the Institute for Innovation in Biotechnology and
Industry; (IIBI);
f) A representative of the National Hydraulic Resources Institute (INDRHI)
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h) A representative of the General Internal Tax Directorate (DGII);
i) A representative of the General Customs Directorate (DGA);
j) A representative of the Autonomous University (UASD) Energy Institute;
k) A representative of the Dominican Petrol Refinery;
l) A representative of the National Sugar Council (CEA);
m) A representative of the National Directorate for Norms and Quality
Systems (DIGENOR).
Paragraph III . CNE may also gather the opinion of the associate producers of
renewable energies.
Eighth Article Attributions of the National Energy Commission (CNE).
a) To authorize or reject, after a technical and economic assessment,
according to the type of project, every applications to the incentives
herein.
c) To monitor the correct application of the law as well as its regulations, and
guarantee the best use of the incentives herein created;
d) To undertake the administrative and judicial actions aiming to prosecute
and sanction the non compliance with the provisions and regulations
herein;
f) To submit an annual report, to the National Congress on plans and
programs execution of renewable sources of energy and
g) To comply with the regulations enacted by the Executive Power on the
procedures that shall regulate the application of this law.
Paragraph I. Amongst the attributions of CNE are the supervision , through the
application of the corresponding regulations, the clear and efficient use of the public
funds specialized by virtue of Law 11200 of 29 November 200, which sets forth a tax
on the consumption of fossil fuels and petroleum derivates and of the General Electricity
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Law, No. 12501 of 26 July 2001, which are specifically allocated to programs and
projects of incentive for development of renewable sources of energy at a national level
and for programs of efficiency and rational use of energy.
Paragraph II. CNE, as per the provisions that regulate the use of funds in the foregoing
paragraph, shall manage the necessary allocations for the adequate equipment and
training of the Biotechnology and Industry Innovation Institute (IIBI) as well as other
similar institutions in conditions of granting the adequate scientific technological support
not only for the research projects and development in the matter they are launched but
also for the assessment and controlling of the authorized projects.
CHAPTER III
GENERAL INCENTIVES FOR PRODUCTION AND USE
OF RENEWABLE ENERGY
Ninth Article . Tax exemption. The National Commission of Energy (CNE) shall
recommend the exemption of any import tax levying equipments, machinery and
accessories imported by the enterprises or individuals, necessary for the production of
renewable sources of energy as contemplated in Paragraph II herein, which , according to
the regulations related to this law, apply to the incentives herein created. The exemption
shall be of 100% of such taxes. This incentive also includes the import of equipment
devoted to transforming, transmission or interconnection of electric energy to SENI. For
those projects based in renewable sources which comply with this law. The equipment
and materials within this chapter shall also be exempted from payment of the VAT
(ITEBIS) and from all taxes levying the final sale.
Paragraph II. List of Equipment, parts and Systems to receive custom tax
exemption are as follows:
a) Individual Photovoltaic panels and solar cells to assemble the panels in the
country (custom subheads 85.41, 8541.40.10 and 8541.90.00);
b) Long duration stationary accumulators;
c) Invertors and or converters indispensable for the functioning of the
renewable sources of energy;
d) Fuel batteries and equipment and devices destined to generating hydrogen.
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e) Hydrogen generating equipment and its purifiers, rectifiers and meters for
production coming from water, alcohol or biomass.
f) Synchronic invertors to dispatch to the network the surplus power in its
neat measuring;
g) Hydraulic turbines and its regulators (entry No. 84.10, 8410.11.00,
8410.12.00 and 8410.90.00);
i) Solar water heaters or steam production that may be of rubber, plastic of
metal, and adopt any technology such as plain plaque, pipes, or parabolic
mirrors or any combination of the above. (entry 84.19);
j) Necessary part and components to assemble solar collectors to heat water
(entry 84.19);
k) Steam turbines with a power no higher than 80 MW and mixed steamers,
based solely in the combustion of biomass resources and municipal waste.
It may include equipment using auxiliary fuel in special applications,
provided this is not over 20% of fuel used (entries 84.06, 84.06,
84066.1.00; 8406.82.00 84.90.00 and mills: 84.02, 8402.90.00 and
8402.19.00 and 84.04; auxiliary devices of steamers entries 84.02n).
l) Turbines and accessory equipment for sea source energy conversion:
waves, sea tides, deep currents or ocean thermal energy (entries 84.10,
8410.11.00, 8410.12.00 and 8410.90.00);
n) Fuel Alcohol production equipment, biodiesel and synthetic fuel from
products and agricultural or industrial waste (entries 84.19, 8419.40.00
and 8419.50)
Tenth Article. Income Tax Exemption. A 10 years income tax exemption
commencing at the inauguration of the operations, until 2020, is granted to those incomes
deriving of the generation and sale of power, hot water, steam, motor power, bio fuels, or
synthetic fuel above described, generated from renewable sources of energy, as well as
from income originated from the sale and installation of equipment, parts and systems as
described in Article 8, paragraph II herein, produced in the national territory with a
minimum added value of 35% to the enterprises which installations have been approved
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by CNE, as set forth in Articles 5 and 7, paragraphs I and II respectively, devoted to
production and sale of such energy, equipment, parts and systems.
Eleventh Article. – Tax Reduction to External Financing. It is reduced to 5% the tax
applied to interest of external financing set forth by article 306 of the Tax Code, modified
by the Amendment of the Tax Bill 55705 dated 13 December 2005, for those projects
covered by the provisions herein.
Twelfth Article.Tax Incentive for Self Producers. In connection to the renewable
energy technology associated to each project, a credit up to 75% of the cost of equipment
investment to be deducted from the income tax, to those owners or tenants of family
houses, commercial houses or industrial that change or enlarge to renewable sources of
energy systems for the provision of their private power consumption and which projects
have been approved by the competent government bodies. Such tax credit shall be
deducted in the three (3) following years to the tax on the annual income to be paid by the
beneficiary in a proportion of 33.33%. The General Tax Directorate shall request a
certification from the National Energy Commission regarding the authenticity of such
application. CNE and Internal Tax Directorate shall regulate the procedure to obtain this
tax incentive.
Thirteenth Article. Community Project Incentives. Every and all institution of
social interest (community organizations, producers associations, registered mutual
groups) willing to develop renewable energy sources at a small scale (up to 500KW) and
destined to a community use, may access financial assistance funds at the lowest market
rate for developing these projects, for up to 75% cost of the works and its installation. To
this end, CNE shall affect annually 20% of the resources placed in the fund for the
development of renewable energy projects and energy savings, as set forth in law 11200
dated 29 November 2000, which establishes a consumption tax for fossil fuel and
petroleum derivates.
Fourteenth Article. Certificates and or Bonds for Reduction of Polluting Emissions.
The certificates or bonds for reduction of emissions (Carbon) executable according to the
Kyoto Protocol, and that may originate from the renewable energy project, shall belong
to the owners of such projects for their commercial benefits. Such certificates shall be
issued by the competent body in charge of assessing the reduced emission of these
projects, according to the official protocols of the clean development mechanisms, set
forth or to be implemented by the Ministry of Environment and other institutions.
CHAPTER V
SPECIAL REGIME FOR POWER PRODUCTION
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Fifteenth Article.Special Regime. The production of electric power shall benefit of the
special regime herein set forth, provided that installations do not exceed the limits set
forth in Article 5, and when the primary renewable energy sources used are within the
description thereof, and have been duly approved and registered as to benefit from the
provisions of this law.
The power production under a special regime shall be governed by the provisions set
forth by a special regulation and in the non regulated aspects shall be governed by the
general regulations on power production.
Sixteenth Article. Concessions. The construction, exploitation, substantial
modification, transmission and closing of power production installations under the
special regime shall be governed by the provisional concession regime, regulated as
provided by the General Electricity Law and the regulations herein set forth.
In order to qualify as a beneficiary of the incentives herein, the independent producer or
the interested company, shall file their preliminary application upon the National Energy
Commission, supported by the project’s technical and economic studies for a preliminary
approval to be submitted upon the Electric Superintendence. The applicants shall detail
the technical and safety conditions of the proposed installations as set forth by the
regulations herein provided and by the General Law on Electricity No. 12501 of 26 July
2001, as well as the corresponding compliance with the protection conditions for
environment together with the legal, economic and technical capacity required for the
type of production to be developed. The National Commission on Energy, upon
receiving the report from the Electric Superintendence shall register the project in the
Special Regime Registry for Power Installation and Production for beneficiaries therein.
The applications, permissions or concessions that have been submitted or granted prior to
the approval of this law, and that have not been adequately classified as an exploitation,
shall be reintroduced, reassessed and ratified –totally or partiallyin order to obtain the
definitive concession to be accredited and receive the benefits herein contained.
The exploitations of power production facilities from renewable energy sources, shall be
filed upon the Special Regime Registry for Installation of Productions.
Upon granting of the definitive concessions, the Electricity Superintendence (SIE) shall
inform periodically the National Energy Commission (CNE) regarding the data affecting
the conditions that determined the granting, according the regulations set forth for each
type of energy source. Definitive concessions may not be transferred or assigned to other
holders until the associated installations to the concession are operating.
The lack of express resolution of the authorizations shall have rejecting effects.
Seventeenth Article. Rights and Obligations of Power Producers. Any power
generating installation under the special regime interested in obtaining the benefits herein
set forth, after obtaining the registration in the Special Regime Registry for Installation of
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Productions and the pertaining permits of SIE, environmental permits as well as
environment impact studies of SEMARENA and its related institutions and any other
official institution as may be deemed necessary, in its relations with the distributors shall
have the following rights:
a) Right of connection in parallel of its generating group or groups to the
distribution and transmission network ;
b) Right to transfer to the system, through the electric distribution company,
its productions or energy surplus;
c) To receive the wholesaler price plus the incentives herein granted;
d) To the benefits granted by Paragraph III of Article 41, Chapter I, Title IV
of the General Electricity Law, regarding the reimbursement of the costs
incurred by the Generating Enterprises to transport (lines and inter
connection equipment) its power to the more adequate points, but this
article 41 being enlarged, in a way that its connection may be, with the
distribution companies, (as well as the Dominican Electric Transmission
Company (ETED) and receive the reimbursement from these companies.
Paragraph: Energy producers subject to the special regime shall have the following
obligations:
a) To comply with the technical generation, transport and technical
management system norms,
b) To adopt the security norms, technical and homologation regulations and
and certification of the installation and instruments set forth;
c) Abstain of assigning to final consumers the non used power surplus, if
they do not have the approval from SIE;
e) To comply with the norms regarding permits and environmental impact
studies required by the General Law on Environment and Natural
Resources No. 6400 dated 18 August 2000, and its regulations.
Eighteen Article. Retribution Regimes . The holders of installation with power levels
under or equal to the ones set forth in Article 5 thereof, and registered permanently at the
Special Regime Registry for Installation Production shall not have the obligation of
formulating offers to the wholesale market for such installations, but shall have the right
to sale the power production to the distributors at the power production market marginal
cost, complemented or divided by a prime or incentive for compensation for the positive
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external elements, not covered by the markets, or by a long term financial guarantee, as
per the fossils market circumstances and its determination in the medium and marginal
costs of the local market.
The term medium cost refers to the total cost by energy unit or power, corresponding to
the investment, operation and maintenance of an electric system in efficiency conditions.
Marginal cost refers to the cost incurred to supply an additional product unit for a given
level of production. The retribution obtained by the producers (Generators) subject to the
special regime by transferring power shall be as follows:
R= CM + Pr
Where
R= Retribution in pesos /KW hr, effectively served.
Cm= marginal cost of SENI
Pr= Prime for each type of renewable source of power generation.
CNE shall recommend SIE, a minimum price for each type of renewable energy handed
over to SENI. Such price shall cover the guarantee for a minimum value to pay for the
renewable energies that shall maintain the adequate incentives to investments.
Additionally, CNE is authorized to recommend SIE the maximum price corresponding to
each type of renewable energy. These reference values (minimum and maximum) shall
be revised annually.
The regulations that complement this law for each one of the activities of the special
power production regime from renewable sources shall define the primes applicable in
each case, on a periodic manner, and their main objective shall be the creation of a stable
and durable regulatory framework, securing the project’s financial profits on the long
term, according to international standards for each type and that guarantees the
compensation for the ecological and economic benefits that the country expects from the
renewable energy.
Nineteenth Article. Power Market Quotas. CNE previous consultation with the
Advisory Board, depending on the results obtained by this law, establish or reserve an
obligatory quota of the total power market and or the total fuel market –of the total
national annual consumption registered by SENI and REFIDOMSA, respectively, to be
secured to be accepted and paid outside the Spot Market in the case of electric energy or
the import market in the case of fuel to the renewable energy sources and or biofuels.
Twentieth Article. Power Surplus sent to the networks. The Distributing Enterprises
shall be obliged to purchase the surplus at prices regulated by SIE, prior to analysis and
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recommendation of CNE, from the regulated and non regulated users that install system
to benefit from renewable sources to produce power with the possibility of generating
surplus that may be sent to every SENI network.
The economic transactions related to these sales shall be adjusted to the provisions of the
General Law on Electricity, No. 12501, of 26 July 2001 and its Regulations.
Paragraph. In the event that any technological innovation allows new forms of
renewable energy not foreseen by these regulations, CNE may, in a provisional manner,
apply as an assessment period, within the regulations in force, the time that it considers
more appropriate to regulate the new source of energy.
Twentieth First Article. Every authority of electric subsector shall cause that 25% of
the service needs for 2025 shall be supplied from renewable energy sources. For 2015, at
least 10% of the energy purchased by the distributors and trading companies shall
originate from renewable sources of energy.
CHAPTER V
SPECIAL REGIME FOR BIOFUELS
Twentieth Four Article. Implementation of the Special Regime for BioFuels. A
special regime for biofuel is hereby created. The fossil fuels used in motor vehicles of
internal combustion for ground transportation in the national territory, shall be mixed
with specific biofuel proportions.
The mixing proportions shall be gradually established by CNE in collaboration with the
pertinent institutions, considering the country’s offer capacity of the above mentioned
fuels, the need to secure a market to local producers of such fuels and the tolerance of the
combustion motor vehicles to this mix, without the need of alterations to the mechanical
functions or structure of the referred vehicles.
The biofuel producers shall sell their final products to the wholesalers to make the
mixing of the fossil fuels and in their case including additives. The distribution functions
shall be executed by the wholesalers.
When national production results insufficient to secure the supply of an adequate service,
prior to the recommendation of the National Energy Commission (CNE), the Ministry of
Industry and Commerce shall authorize the necessary imports to this end.
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Paragraph: The regulations related to the special regime for the different biofuels shall
set the norms and quality standards and procedures for its blending and
commercialization. Such regulations shall be drafted by the National Energy Commission
and the Advisory Board.
Twenty Third Article. Tax Exemption. A 10 years exemption on income tax, duties,
contributions fees, import taxes, exchange fees and any other tax commencing at the
inauguration of the operations, until 2020, is granted in favour of those companies or
industries specifically and exclusively devoted to bioethanol and biodiesel production
as well as any other synthetic fuel of renewable source resulting equivalent to biofuels in
respect of its environmental effects and foreign currency savings, as set forth by articles
9,10, and 11 herein.
The biofuels or synthetic fuels of renewable source shall be exempted from the taxes
applied to fossil fuels, whereas the biofuels do not reach a production volume equivalent
to twenty per cent (20%) of the national consumption volume in each category, in which
case they might be subject to a differential tax to be determined and only when they are
applied for internal use.
Paragraph I. The aforementioned exemptions shall include machinery and other specific
components necessary for the production of biofuels, by the distilleries or biorefineries
or by the cellulose hydrolyzing plants, either autonomous or merged to the distilleries or
the sugar mills or other industrial plants.
Paragraph II. The exemptions herein described shall not apply to biofuels, alcohols,
vegetable oils and sugar liquors with non carburant purposes and not destined for the
local power market. Biofuel production destined to external market shall be granted
certain exemptions only if the purchase of basic local raw material (solid or liquid bio
mass: sugar cane, sugar liquors, oil bio mass or vegetable oils, etc.) in hard currency with
an operating system similar to the industrial free trade zones.
Paragraph III. To access to the benefits herein set forth, the biofuel producers
elaborated from the production in agricultural plantations, shall comply with the
programs for industrialization of crops to be formulated by the National Energy
Commission as well as the labour and immigration regulations.
Twenty Fourth Article. The Fuel Retribution Regime. Prices are only fuel prices are
only guaranteed in such biofuels subject to be blended with fossil fuels of local
consumption, and regulated by the Ministry of Industry and Commerce (SEIC) for the
percentages or blending volumes established for each type of fuel in the local market.
a) Prices to biofuel producers. The purchase price to be paid shall be
determined by the market through the offer and demand rule, to a
maximum price to be determined by SEIC.
P BioC= (PIBc + PPI)/2 + C
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Where
P BioC= Final price of local fuel
PIBc= International Market Price of the BioFuel
PPI= Parity Price of Local Import (SEIC)
C = Compensation prime or standard of the biofuel.
b) Prices to BioFuel consumers in gas station and or equivalents
in the national market. An official sales price shall be determined in the
gas stations or retail selling premises that contemplates the same
mechanism applicable to SEIC to determine the hydrocarbon prices, where
the Import Parity Price (PPI) shall be replaced by the Final Price of the
Local Bio Fuel (PBioC) and shall not include, the calculation to the final
price of the blended fuel, the proportion of taxes (the differential), to the
substituted fossil hydrocarbon, in benefit of the consumer, as it is not
applicable under the terms of Article 22 herein, as are not applicable the
associated import costs.
According to the following formula:
PvC m= PCf %PBc%
Where
The Pv Cm = Official sales price of the volume unit of the blended fuel.
PCf% = Official sales price of the hydro carbon, according to the existing
percentage in the volume unit already blended.
PBc %= Official price for the BioFuel (P Bioc) as per the existing
percentage in the volume unit already blended.
Paragraph I. – The regulations complementing this law for each one of the type of bio
fuels to be mixed or replaced by the fossil fuels of the Special Production Regime from
renewable sources of energy, shall define the value of the compensation prime –positive
or negative which shall apply in any case, in a periodic manner, having as an objective
the articulation of a stable and long lasting regulating framework which secures the long
term financial profits of the renewable projects according to the international standards
for each type, and moreover that guarantees the compensation for the ecological and
economic benefit (positive external elements) received by the country from those
renewable sources.
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Paragraph II. While the local production volume or biofuels does not exceed ten
percent (10%) of the national consumption for each item, the hydrocarbon blend shall be
mandatory in the available proportion as related to the production volume and as long as
the quality norms are complied with in every area of retail. Once this capacity of 10% is
exceeded these retails may discriminate the offer, selling separate blended or not blended
fuel, only when the blended fuel results in a lower price than the one for hydrocarbons
separately and in benefit for the consumer.
Paragraph III: As an exception and temporary measure shall be considered the
possibility of using pure biofuel, without blending with fossil fuels, in car pools
belonging to public organizations or in demonstrations or awareness meetings. CNE shall
provide the promotion and implementation of the Flex fuel system or any other similar
one.
Twenty Fifth Article. The companies devoted to the production of carburant alcohol or
biodiesel, or any other biofuel, and that have agreed to provide local market in order to
guarantee a quota of such market, may, once the agreed supply needs of internal quota
are satisfied, export the surplus, if there were any.
Twenty Sixth Article. The sugar companies installing distilleries close to their sugar
mills under the provisions of this law, shall comply with local and preferential sugar
quotas assigned for the market set forth by the Dominican Sugar Institute (INAZUCAR)
from which they benefit prior to this law.
Twenty Seventh Article. –Regulations, Terms and Elaboration. CNE in collaboration
with other institutions from the Advisory Board, and together with other institutions as
deemed appropriate, shall elaborate a Regulation for each type of renewable energy.
Each regulation shall be drafted in a term no longer than 90 working days, from the
enacted of this law. The energies with more request for development and investment,
shall have priority. Additionally, the CNE shall elaborate the regulations referred to in
Paragraph III of Seventh Article. 7.
Twenty Ninth Article. The National Energy Commission (CNE) in collaboration with
all the other institutions as deem appropriate, shall elaborate in a deadline no longer of 90
days, from the date of the enactment of this law, the regulation on the agricultural crops
that are renewable energy sources in 25% of the land property of the State Sugar Council.
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CHAPTER VI
PENALTIES AND GENERAL PROVISIONS
Thirtieth Article. The misuse or deviation of the equipment and machinery favored by
the tax exemptions herein described shall be penalized with a penalty equivalent of three
(3) times the amount exempted, non withstanding other penalties that may be set forth as
a result of other offences. The Court shall also order the confiscation of such machinery
and equipment.
The confiscated Equipments and machineries shall be sold in auction.
Thirty First Article. The non compliance by any of the concessionaries of the
obligations herein set forth shall be penalized with a penalty of 50 to 200 salaries of
public sector minimum wage. Reiterative breach shall entail the revocation of the
licenses or benefits granted. Similar sanction shall apply to biofuel producers incurring
in any breach to the obligations herein set forth.
Thirty Second Article. This law revokes Law 2071 of 31 st July 1949, on Ethanol, as
well as any other legal, administrative or regulatory provision in such aspects that may be
contrary.
Thirty Third Article. Validity.This law shall be in force as of the date it has been
passed.
PASSED at the Sessions Hall of the Chamber of Deputies, National Congress, in Santo
Domingo de Guzman, National District, Capital of the Dominican Republic, this
seventeenth (17) day of January of the year two thousand and seven (2007), year 163 of
the independence and 144 of the Restoration
Julio Cesar Valentín Jiminián
President .
María Cleofia Sánchez Lora Teodoro Ursino Reye
Secretary Secretary
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PASSED at the Sessions Hall of the Senate, National Congress, in Santo Domingo de
Guzman, National District, Capital of the Dominican Republic, this twenty fourth (24)
day of April of the year two thousand and seven (2007), year 164 of the independence
and 144 of the Restoration
Reinaldo Pared Pérez
President .
Diego Aquino Acosta Rojas Amarilis Santana Cedano
Secretary Secretary
LEONEL FERNÁNDEZ
President of the Dominican Republic
As per the attributions conferred by Article 55 of the Constitution of the Dominican
Republic.
PROMULGATE the law herein and order its publication at the Official Gazette for
public knowledge and enforcement.
PASSED in Santo Domingo de Guzmán, Capital of the Dominican Republic, this seventh
(7 th ) day of may of the year 2007, year 163 of the Independence and 144 of the
Restoration.
LEONEL FERNÁNDEZ
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