‘From the weekly sale of 20 million gallons of oil we provide the tax authorities with 700 million Dominican pesos’
Strategically located near the country’s main port of West Haina, the Dominican Petroleum Refinery S.A. – Refidomsa – handles crude oil and finished petroleum products from some of the largest producers in the world
Its current mission is to address the historic problem of lack of electricity in the country, which has forced the government to be given a US$1.3billion loan by the IMF. The company’s President Francisco Mendez Refidomsa, explains how it is one of the pillars of the economy one of the pillars of the economy and represents the new era in Dominican Republic
Where would you say the Dominican Republic is heading, with its current GDP growth is at 5.3% and Fitch Ratings has classified its economy as B+.
It is known that since the PLD came into in power, the growth of GDP has been at 7% throughout all of their years in charge; inflationary rates have dropped to single figures and foreign investment has increased. The changes in the economy have not been a coincidence; it has been after careful consideration that the objective of the government was the stability of the economy and the issuance of new laws and supervisions that have helped to achieve this current state of growth. That has been the historic state PLD developed, and Mr. Medina’s government will for sure follow this path, correct what is wrong, and implement what is right. Dominican Republic’s future is going to be very good, corrections will take place, the loan with the IMF might be renegotiated but all of the policies will have that same success story.
In the current booming economic situation please describe the role of the private sector and how it has adapted throughout the time.
Following Mr. Medina’s election he has stated, in accordance with all of the private sector, that there are three sectors where his attention is going to focus: energy, fiscal reforms and education. This can only take place once we establish the natural Dominican attitude towards entrepreneurship; this private sector has been a true equilibrium between the public sector’s policies and the way to create business.
The public sector has had the possibility to develop its policies and laws, but it has governed with no interference in the private sector, thereby letting it go forward, grow and become more competitive.
Independently of personal beliefs and personal gains, the public sector has been the one trying to establish the long-term reforms taking into account the benefits of the country as a whole and not those of small interested groups. The public sector has established a perfect equilibrium between the few and the general public.
In relation to the transformation of energy, the Dominican Republic is one of the strongest countries in Central America. Refidomsa sells 80,000 barrels of crude a day, where 30,000 are transformed into oil, and the rest is sold as a value-added good. Please explain the strategies Refidomsa is going to implement in order to develop this important sector.
Refidomsa was firstly established with the Shell Corporation. Afterwards, the latter disappeared as a shareholder and the Venezuelan PDVSA joined the company, being a binational entity. The Dominican government manages Refidomsa, and taking into account its very important role in the nation’s economy, after the Venezuelan joint venture it has learnt to explore other aspects of the sector that the previous administration could not develop.
Approximately 30,000 barrels of crude are turned into value-added goods. This crude mainly comes from Venezuela and Mexico, and 40,000 barrels are transformed into LNG, Gasoil, fuel oils or petrol value-added goods.
Along with our competitors, we distribute the 120,000 or 130,000 barrels per day that is the national demand. The responsibility of Refidomsa to distribute this oil is basic to the development of the economy because without this distribution the Dominican Republic would halt its productivity.
With regard to tax collection, due to the Law 112, a significant amount of this income is directed toward paying the IMF loan. From the weekly sale of 20 million gallons of oil we provide the tax authorities with 700 million Dominican pesos. Therefore Refidomsa contributes very heavily to the welfare of the Dominican economy, that is the reason why President Medina has stated the responsibility for Refidomsa to develop the sector and to increase its efficiency. This is the result of two issues: the economy of scale and the ideal geographical situation the Dominican Republic holds, having the possibility of turning into an international oli and gas hub where international players would have many interests in which to invest.
In a recent public appearance you stated Refidomsa could supply petrol to all of the Caribbean, please explain the plans developed accordingly.
We still hold a capacity that can be used to create more petrol. This would entail that the prices in the national market could be lower. It would also increase competitiveness and would lower the costs of processing as well, and the electrical sector could be more developed. Many clients demand this energy but we need to have a special operational equilibrium between the production, the sales and the storage. We can impact the local market, we can develop logistical construction and therefore enter that market. That is the interest both for the Dominican Republic, which would decrease its expense on foreign energy, and for Venezuela. That is one of my goals as President of Refidomsa and it is one of Mr. Medina´s goals as President of Dominican Republic.
There is great potential in development but also a lack of infrastructure, please explain the measures entailed.
We can benefit from the economy of scale we have in relation to the imports we receive. Buying a lower priced oil and then reselling it increases our margins which in the end benefits the country and consumers. We have an important storage but can even benefit more from its revitalization.
The energy sector is generally seen as very harmful to the environment, nevertheless, the companies of the sector are the bigger players of corporate social responsibility (CSR) initiatives and helping the country. Please describe Refidomsa’s policies in this area.
Our company is involved with the community where we operate, in Haina, in plans related to education and health of all the inhabitants and to improve living conditions. In addition, the cleaning procedures are very thoroughly and seriously considered as one of our main objectives. We have not had a negative experience in this sense since the time of Shell Corporation.
Under the current situation where all Latin American countries are trying to be the better ranked in terms of economic efficiency, please describe the competitive advantages of the Dominican Republic for American investors.
I could name the stable economy, the significant levels of foreign investment, the risks which diminish every year and the fact rating agencies are continually giving the country better ratings. I believe due to the public sector’s policies, foreign investors are very attracted to our market. Nevertheless there are still many sectors to develop, for example, in mining.
People associate different values and sectors to every country, the Dominican Republic has always been related to cigars, rum and tourism; please state the other attractive sectors the country has.
There has always been mining, aluminum, bauxite and nickel, which had a dramatic fall in its price but is slowly recovering, and gold, with La Rosario Dominicana and now Barrick Gold. This island has many micro-climates with different vegetation and fauna. There are many activities and many projects taking place. The mining actors can be our potential clients too. These projects are not only restricted to the tourism sector, there is a big diversification in the economy. As for the investments in the telecommunications sector, they increase our own competitiveness rates. As well, the electricity sector is a challenge but a great opportunity. This sector needs financing and time; it is for the long run so there is no time to lose. There is a huge potential. As stated before, this investment will benefit the country as a whole and it has always been an important objective for the public sector.
Rockefeller stated that good management implies being able to teach ordinary people the job of gifted men. Please explain your views as a man always related to important managerial positions, such as being ‘Superintendente de Electricidad’.
I was in the Central Bank helping with the privatization of the electricity sector and I thank President Leonel to having named me Superintendente de Electricidad and after President of Refidomsa. The results are there. Now, the ABC of private management is what directs my life, how to efficiently invest, how to gain better margins, how to achieve better productivity, how to train your people. When everyone drives in the same direction the impact is bigger. Between 1990 and the new century, the country was growing at GDP rates of 10%, even with the burden of the electricity sector – I often wonder where would the country be now without that problem. The private sector has to try to maximize its profits; if everyone tried to improve their activity it would definitely have a very big impact in the economy.