San Pedro, Dominican Republic. - The San Pedro power company CESPM, and AES Dominicana signed a letter of intent to build a gas pipeline between the AES Andres natural gas reception terminal at the Port of Andres, to the CESPM power plant in San Pedro, said the CEOs of the two companies today, who added that the pipeline will be operated by AES Dominicana.

Roberto Herrera, president of CESPM, and Marco De La Rosa, AES Dominicana signed the agreement Wednesday which establishes the necessary conditions to convert the CESPM power plant to natural gas, to be piped from AES Andres.

In a statement, the executives said the signature shows the two companies’ interest in a close strategic collaboration in the next few years, centered in the use of natural gas to generate power. “In that regard CESPM and AES Dominicana are working jointly to take the steps needed to optimize the resources available to bolster the generation sector’s efficiency in response to the projected demand.”

“Currently the CESPM, as part of the group headed by Basic Energy, is one of the companies with the highest installed capacity in the Dominican Republic. And this is the second gas pipeline AES Dominicana promotes, turning the company into the country’s top natural gas dispatch manager,” the executives said.

They said the pipeline will take from 12 to 15 months to build, starting from the signature of the letter of intent.

The 40-kilometer long, 12 inch duct will sustain a maximum pressure of 100 Barg (unit of measure) for the use of the nonpolluting fuel, which maintains a competitive price in international markets.

Herrera said the signature of the letter of intent with AES Andres is part of the Basic Energy Group’s Strategic Plan 2008-2012, whose main goal is to convert the three 100MW  the CESPM units to natural gas, contributing and additional 300 megawatts to the national grid and because of its significant advantages in cost and cleaner production. “Moreover the Government, through the State-owned Electrical Companies (CDEEE), will obtain benefits that‘ll bolster the national power sector’s advance toward self-sustainability.

He said CESPM is committed to carry out the necessary physical modifications, according to manufacturers recommendations, for the generation units’ operation with liquid natural gas (LGN), instead of the heavy Fuel Oil No. 2 curently used.

For the AES Dominicana group, De La Rosa said the project is another strategic advance to develop the country’s natural gas market, complementing the existing options to supply all customers in the Dominican Republic. “For 2009, investment to develop the natural gas market will be around 50 million dollars, if we consider this new gas pipeline and the cryogenic terminal for the LNG tanker trucks now under construction and expected to be in operation by year’s end.”

“These investments, even in difficult times, are a clear demonstration of AES Dominicana’s commitment to the country’s sustainable development,” De La Rosa said.

Among natural gas’ advantages AES Dominicana says it’s the most viable option to reduce the country’s almost absolute dependency on oil; competitive price; efficiency, yield and versatility in electricity generation and other uses, for which it has been displacing other fuels such as gasoline, propane, butane, diesel, residuals, coal and firewood at the global level; its use by countries subject to strict environmental and safety norms because it’s nontoxic; has a high calorific value (9300 kCal/m3 (991.3 Btu/PCS) and cleaner production.