DomRep Power Could Suffer Oil Shock

The Dominican Republic’s power generation sector is highly exposed to rising oil prices, according to Fitch. The vast majority of the country’s power, 82% of installed generation, comes from fuel oil and natural gas-fired thermoelectric plants, it says. That makes it the most highly exposed country in the CentAm and Caribbean. El Salvador comes in second place, as nearly 70% of power generation comes from fossil fuels, Fitch says. Less exposed to rising energy prices are Costa Rica, where 72% of power comes from renewable resources, and Panama, where 50% of total capacity is provided by hydroelectric sources. On average, the power generation system in CentAm generates more than half (54%) of its electricity is generated by thermoelectric sources, says Fitch. This exposure could translate into higher expenses this year. “Prices could briefly surpass $140 per barrel within the next 3 months,” Bank of America Merrill Lynch says. It expects the price of oil to average $108 per barrel for the year.