Social transformations
The 228-km Northwest Aqueduct and the 50-MW Pinalito hydroelectric plant are taking water and power to the interior of the Dominican Republic Affinities with Brazil
written by ◦ Karolina Gutiez photos by ◦ Holanda Cavalcanti

Ever since Odebrecht began operations in the Dominican Republic it has focused on the water and power sectors. As a result of this strategy, the company is currently leading two of the largest infrastructure projects now underway in that country: stage 2 of the Northwest Line aqueduct and the Pinalito hydroelectric plant. “When these projects are completed, they will have a huge impact on the local communities,” says Odebrecht CEO (DS) Ernesto Baiardi.

The second stage of the Northwest Line project got started in October. The contractor responsible for building the aqueduct is a joint venture of Construtora Norberto Odebrecht and Andrade Gutierrez. The project will expand existing water distribution lines and replace the rusty old pipe with PVC equivalents. This measure will solve the problem of leakage and take water to over 800,000 people living in the provinces of Mao Valverde, Dajabon, Montecristi, Santiago Rodríguez and Santiago. Its sphere of influence covers 3,000 square kilometers in the northwestern part of the country, near the Haitian border.

The contract also includes building over 58 km of supply lines to transport water to several towns and cities, thereby expanding the system built during the first stage of the aqueduct project, which was delivered in March of this year. The client is the National Institute for Potable Water and Sewers (Inapa), an agency run by the Presidential Branch. During the initial stage, the joint-venture contractor built the 170-km supply system as well as a water treatment plant and four reservoirs. “The challenge now is to ensure that the water reaching people’s homes is clean and pure and flows from their faucets without a hitch,” explains Contract Director Marcos Machado. He adds that the second stage of the project, which will be completed by June 2007, will supply as much water as the communities will need for over two decades.

Leidy Almonte, 21, lives in Mao Valverde, where she studies Business Administration. Not long ago, she and her neighbors used to buy water from tank trucks that would stop there once a month to fill their cisterns. They could only have running water with the help of an electric pump. This increased their light bill, and electricity is already very expensive in her country.

In addition to water, the project is also creating jobs for people living in the vicinity of the construction sites. Just 17 of the 190 workers involved in the aqueduct expansion project are not Dominicans. When the work reaches its peak, it will provide employment for 900 people, all of whom will be local hires. Leidy is one example. She is now responsible for the aqueduct project’s technical archives.

The contract is worth USD 90 million, including USD 65 million financed by the BNDES, Brazil’s national economic and social development bank. Deutsche Bank is financing the remaining USD 25 million. Because of the terms of the financing, all the materials used to expand the water supply system are imported from Brazil, which requires sophisticated logistics. Supplies must be ordered at least 75 days in advance. The project will require 100 km of cast-iron pipe and 1,100 km of PVC pipe in a range of diameters. Tigre, a Braskem client, will supply the PVC pipe. When its products arrive in the Dominican Republic, Tigre will run a two-month training program for the people working on the project.

Projects in the Dominican Republic

Complex logistics are also one of the outstanding features of the Pinalito hydroelectric plant project in the city of Constanza, which is located in La Vega Province. The construction site is in a mountainous region, 1,250 meters above sea level and 150 km from the nation’s capital, Santo Domingo. Like the aqueduct project, Pinalito is importing all its construction supplies from Brazil. Again, it takes 75 days for orders to reach the Dominican Republic, which requires careful planning to ensure that everything arrives on time. This is especially tricky because the jobsite is a long drive from the capital (see map) on rough roads. “The main highlight of Pinalito is the technical and logistical challenge involved,” underscores Contract Director Heitor Azevedo. For example, the project is importing 3,800 tonnes (metric tons) of steel from Brazil. It has already spent USD 15 million on Brazilian imports and is set to spend USD 35 million more.

“Pinalito is a complex project, although it has a relatively low installed capacity of 50 MW,” explains Heitor. This is the first time the Dominican Republic has invested in hydropower in 12 years. The plant will increase the nation’s installed capacity by 10%, producing 157 gigawatts/hour of energy per year.

When it begins operations, Pinalito will allow the country to reduce its annual oil imports by 387,000 barrels, because most of its power plants run on that fuel. As a result, the Dominican Republic is vulnerable to changing oil prices on the world market, and final consumers pay a high price for electricity. A family of five that uses 900 kW per month spends the equivalent of USD 520 on their light bill. And blackouts are a daily routine. Anyone who can afford to uses a generator, but that is also costly because generators run on gasoline.

An important stage of the project was completed in July: the diversion of the Tireo River, which rises in La Vega Province and runs as far as the neighboring province of Monseñor Noel. The river is not deep, but the steep terrain makes it a good place to build a hydroelectric plant, which will have a 540-m fall. A 700-person team, including 640 Dominicans, is breaking ground to build the dam while the water intake tunnel (35% complete) and a supplementary tunnel are being excavated. The powerhouse is also under construction (see infographic for a step-by-step look at the project). The contract is worth USD 185 million, including USD 101.5 million in BNDES financing for Brazilian exports of goods and services. The first turbine will begin generating energy by September 2007.

Since the project began in January 2005, Odebrecht has been carrying out social programs that are already changing the hard lives of local residents. These include restoring the Pinalito Educational Center, where the children of some of the company members building the hydroelectric plant are enrolled. Another example is the construction of a bridge between the districts of Pinalito and Tireo Abajo in Constanza, to allow residents to cross the Tireo River and get their produce to market. One beneficiary is potato farmer Alejandro Ortiz. The hydroelectric plant is being built in one of the nation’s main farming areas, and Ortiz sells his produce in Santo Domingo. Before the bridge was built, he says, his children had to wade across the river with sacks of potatoes on their backs.

In Tireo Abajo, 38 families living near the construction site managed to get a transformer from the government, but had no way to install it. Odebrecht stepped in and installed two electricity poles and household connections. Two local homemakers, Rita Quezada and Miguelina Adamy, are thrilled with the arrival of electricity: “We couldn’t iron clothes, listen to the radio or watch TV. Life is much better now.” Light has also arrived in Constanza’s Anacaona city park since Odebrecht restored it and installed public lighting, which is helping cut down on street crime in that area.

The company plans to do much more by the time the project is completed: expanding and building schools, repairing access roads leading to the jobsite, which are in poor repair, and restoring local water supply systems in partnership with the client to ensure that it reaches people’s homes. Juan Tactuck, the Director of the Constanza Department of Tourism, plans to use the project to develop the tourist industry in that area, which is a popular attraction for visitors who enjoy the mountain air. “The reservoir formed for the hydroelectric plant can also be used for water sports, which will drive adventure tourism,” he says.

The Pinalito facility will also attract more investments in hydroelectric energy generation. “Odebrecht has signed another contract with the Corporación Dominicana de Empresas Eléctricas Estatales, the client for the Pinalito project, to build the Palomino hydroelectric plant in San Juan de La Maguana Province in the southwestern part of the country,” says Ernesto Baiardi. The plant will have 100 MW of installed power. Odebrecht is working on the financial engineering, studying the design and producing an environmental impact report, which will include social programs, along the lines of the company’s work at Pinalito.

The plant will increase the nation’s installed capacity by 10%, producing 157 GWh of energy per year. When it begins operations, Pinalito will reduce oil imports by 387,000 barrels annually

The Pinalito project is also the setting for Odebrecht’s first Young Partners Program in the Dominican Republic. Nine Dominicans selected from 365 applicants are taking part. They are now carrying out their Action Programs and meet once a month with Júlio Cruz, the officer responsible for Administration and Finance, to discuss the Odebrecht Entrepreneurial Technology (TEO).

Ernesto Baiardi observes that this is the best way to establish Odebrecht’s presence in that country: “We need to integrate people into the company and groom them by sharing TEO and the Group’s culture with them, because we take a long-term view of our operations in the Dominican Republic.”