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PP RUEHWEB

DE RUEHDG #1166/01 1361731
ZNR UUUUU ZZH
P 161731Z MAY 07
FM AMEMBASSY SANTO DOMINGO
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UNCLAS SANTO DOMINGO 001166 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/CAR, EB/IFD/OMA; USSOUTHCOM ALSO FOR POLAD; 
TREASURY FOR OASIA-JLEVINE; USDOC FOR 
4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION; USDOC FOR 
3134/ITA/USFCS/RD/WH; DHS FOR CIS-CARLOS ITURREGUI 
 
E.O. 12958: N/A 
TAGS: DR PGOV EINV EFIN
SUBJECT: DOMINICAN POLITICS III #26: METRO PROJECT PLANS, 
SAFETY, FINANCES, COSTS 
 
 
¶1. (U) This is the cable 26 in our series on Dominican 
politics in the third year of the administration of President 
Leonel Fernandez. 
 
- - - - - - - - - - - - - - - - - - - - - - - - - - - 
Politcal Series III, 26: 
The Santo Domingo Metro - Plans, Safety, Finances, Cost 
- - - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
Two investigative journalists prominent in the Dominican 
media have forced onto the table facts about President 
Fernandez's favorite project, the Santo Domingo Metro. 
Because of the rush to construct, Metro authority OPRET 
neglected seismic studies and other safety concerns; and the 
President and his technicians have not been frank about 
construction costs.  By the time the Metro opens, perhaps in 
February, 2008, expenditures and financing will have reached 
at least USD 1.29 billion -- almost triple the casual initial 
estimates and more than double the figure of USD 550 that 
Fernandez was using just before he won the May 16 PLD primary. 
 
The Train of Happiness 
- - - - - - - - - - - 
 
In his February 2005 National Day speech Leonel Fernandez 
gaily urged the nation to board the "train of happiness" of 
the Santo Domingo Metro and on August 16, 2006 he invited 
congressional representatives to board with him in February, 
2008 -with the jovial warning, "No snack foods will be 
allowed!"  Under the driving force of Ing. Diandino Pena the 
work and contracting has gone forward with essentially no 
transparency in the planning and  general  silence about the 
costs of the megaproject. 
 
Spotlight: Planning and Safety 
- - - - - - - - - - - - - - - 
 
That has changed, thanks to two leading media figures.  As 
reported earlier via SIPRNET, broadcast journalist Huchi Lora 
successfully sued in Santo Domingo court to obtain an order 
for Pena and the Office for Transport Reform (OPRET) to 
deliver immediately "a copy of plans approved by the Ministry 
of Public works concerning the construction of various works 
related to the Santo Domingo Metro, including the elevated 
tracks in Villa Mella, the reinforcement of the tunnels; the 
peripheral avenue along the Isabela and Ozama rivers; as well 
as copies of the related geophysical and geotechnical 
studies, including specifically, seismic studies measuring 
the transmission of shock waves along the length of the 
planned route, studies of electrical resistance used to 
identify the presence of caverns and clay formations beneath 
the tunnel floor; geo-radar studies to identify the presence 
of pipelines throughout the route; and the effects of seismic 
acceleration estimated for the Villa Mella neighborhood in 
the event of an earthquake of measuring greater than 7 on the 
Richter scale." 
 
OPRET has huffed and puffed and filed an appeal, despite the 
court's instruction for immediate delivery.  Pena reportedly 
commented to journalists on May 13 that it was impossible to 
comply with the instruction, simply because some of the 
elements required did not exist.  OthQimilar studies were 
on hand, but not the items Huchi was asking for. 
 
Thereby acknowledging that Huchi was probably correct - that 
the rush to dig and to contract led the authorities to 
neglect at least some of the safety measures that might 
conceivably have been necessary.  And the implication that 
the Public Works Ministry was complicit in the risk taking. 
 
This was a dramatic illustration of the potential usefulness 
of the 2004 Law on Access to Public Information.  To 
summarize one writer's comments, it used to be that the 
Congress would simply pass laws and the government would take 
actions, without bothering to ensure compliance with the law. 
 Now, a court is requiring the executive branch to account 
for its actions. 
 
And the Cost? 
- - - - - - - 
 
The country's leading commentator and broadcast journalist, 
Juan Bolvar Daz, made a back-of-the-envelope tabulation of 
international financing packages requested of Congress and 
compared his figures both with Diandino Pena's estimate of 
USD 326.6 million in costs (February 7, 2005) and with 
President Fernandez's throw-away estimate of USD 550 million, 
made at a luncheon at HOY newspaper, just before his victory 
the May 6 PLD primary. 
 
Daz notes that the original 10-kilometer project was 
extended another 4 kilometers northward with the elevated 
trackway in Villa Mella; using the per-kilometer estimate 
given earlier by Pena, Daz reasons that the cost would have 
risen by USD 40 million, to USD 366.6 million.  But in 
December, 2005 Pena told El Caribe reporters that the whole 
project would costs about USD 700 million. 
 
EuroMoney 
- - - - - 
 
News reports document have successive approaches to the 
Senate of international financing for the project:  two 
approved on July 25, 2006, for 101.9 million euros and 
another for 14.145 million euros (total: 116.55 million 
euros); on December 30, 2006, approval of four more from 
financial institutions in Germany, France and Spain, totaling 
163.2 million euros (respectively, 40.78, 56.46, 28.45 and 
37.9 million euros). Presented by the administration in 
March, 2007 and still under study are three further financing 
packages from Germany and France for Metro equipment for 99 
million euros, 94.3 million, and 33.1 million (total of the 
three: 226.4 million euros). 
 
All of that, at a Euro/dollar rate of 1.35 to 1, makes USD 
682.630 million. Plus the 2007 budget assigns 10.7 billion 
pesos for the Metro, part of which is to be covered with 
Spanish export financing of 53.6 million euros - converted to 
dollars and added to the other amounts, this suggests a sum 
only for international financing equivalent to USD 754.9 
million. 
 
All of these contracts were awarded quickly and on basis of 
limited competition, before Fernandez's "bridge decree" on 
government procurement went into effect in June, 2006. 
 
Dominican Pesos into the Metro Hole 
- - - - - - - - - - - - - - - - - 
 
Investigator Daz acknowledges that expenditures from the 
government budget are difficult to estimate because of the 
discretion of the president's office to transfer between 
items up to 5 percent of the total budget.  He takes as a 
base the July 2006 published report of OPRET that 4.577 
billion pesos in government resources had been invested to 
that point, and he guesses that another 4 billion were used 
during the rest of 2006, in addition to the 3.6 billion in 
the budget.  Working forward, he calculates that by 2008 the 
domestic costs will have reached the equivalent of  USD 
539.29 million. 
 
 
Bottom line estimate:  USD 1.294 billion 
- - - - - - - - - - - - - - - - - - - - - 
 
The almost USD 1.3 billion figure is 135 percent more than 
Fernandez's casual comment and almost three times as much as 
Pena's initial estimate.  Daz comments that if the project 
is delivered for that amount it will come out at USD 94 
million per kilometer, in fact considerably less than the USD 
127.9 million per kilometer cost of the Metro in San Juan, 
Puerto Rico. 
 
Those are the capital costs.  Metro fares haven't been 
published, and neither Juan Bolvar Daz nor anyone else has 
calculated how much will be required in subsidies actually to 
operate the trains. 
 
- -  Drafted by Michael Meigs 
 
¶2. (U) This report and extensive other material can be 
consulted on our SIPRNET site, 
http://www.state.sgov.gov/p/wha/santodomingo/  
BULLEN