The Ecuadorian National Committee aims to promote sustainable energy development in Ecuador, as a part of the World Energy Council’s energy vision. As a member of the World Energy Council network, the organisation is committed to representing the Ecuadorian perspective within national, regional and global energy debates. The committee includes a variety of members to ensure that the diverse energy interests of Ecuador are appropriately represented. Members of the committee are invited to attend high-level events, participate in energy-focused study groups, contribute to technical research and be a part of the global energy dialogue.
Mr. Mauro Intriago is currently Viceminister of Electricity and Renewable Energy. He is an electrical engineer from “Escuela Politécnica Nacional”, and has studies in logistics, standardized management systems and certifications of quality, environment and social responsibility.
In the professional field, he has been linked to the private sector, especially in the area of services. In his experience, he has positions in the Electric Company of Ecuador (EMELEC) where he worked as a distribution engineer. In the international field, he worked in DHL International - Ecuador, having responsibilities in the western area of Latin America. He has been an advisor, auditor and consultant in business matters, especially in the electricity area in institutions such as CELEC EP - Hidronación, Electroquil, INPROEL, and Electrical Construction companies.
Energy in Ecuador
As an OPEC member, Ecuador counts with substantial oil reserves which provide for a major part of the country’s revenue. Although oil provide for both power and other energy uses in the country, Ecuador’s electric sector is increasingly incorporating hydropower as a major resource. In early 2018, a presidential austerity measure led to the merger of the Ministry of Electricity and Renewable Energy, the Ministry of Mining and the Secretariat of Hydrocarbons into the Ministry of Energy and Non-Renewable Resources. The new Ministry is tasked with recovering and attracting a diverse range of investment in the nation’s power and mining sector.
In this year’s Issues Survey, Ecuador’s energy leaders have identified Corruption, US Policy and Energy Subsidies as the key uncertainties and sources of vulnerability for the national energy sector. All three issues determine the investment landscape and the ability of the country to attract the desired level of international investment. In turn, action priorities are focused around renewable energies and hydropower, in line with the government’s objectives to diversify the national energy mix. China is also perceived by energy leaders as an action priority due to the high participation of Chinese enterprises in energy and infrastructure projects, and due to the country’s high dependence on Chinese loans.
Corruption scandals involving the state oil company Petroecuador and investigation over allegedly overpriced hydro and oil projects have been a major cause of contention over the past years. Large amounts of cash are unaccounted for and projects completion have been delayed due to unavailability of funds. In 2018, Argentinian, Brazilian, Chinese and American firms have been associated with bribery cases in exchange for oil and infrastructure contracts fed further into the high uncertainty environment created by corruption in the country.
Investments in energy projects in Ecuador are made in US dollars, and investors’ decisions are strongly influenced by the US government perception over Ecuador. In addition, the US is a key export market for Ecuador’s oil and oil-related products. As a consequence, US policy has a strong impact on the performance of Ecuador’s oil sector as it determines both government and private sector’s relations in the country. In 2018 Ecuador resumed diplomatic relations with the US after 10 years of complicated relations. This has contributed to an improvement in investors’ perception, but the landscape remains uncertain as the relations continue to depend on political decisions.
Total energy subsidies have fallen significantly in recent years, introducing significant cost changes to both energy investors and consumers used to operate in a traditionally subsidised sector. According to Interamerican Development Bank (IDB), after the sharp decline in prices for oil and oil derivatives from 2015 onward, energy subsidies in the country are estimated to have fallen to between 0.8% and 2.6% of GDP in 2016. At the same time, subsidies to the electricity sector have been lowered significantly as a result of initiatives in recent years aimed at increasing the share of hydroelectricity, reducing the volume of diesel and fuel oil used in thermal generation, and substituting GLP subsidies through the Energy Efficiency Program for Induction Cooking and Water Heating Using Electricity.
The Ecuador Electricity Masterplan for the period 2016-2025 places the focus on renewable energies a resource to optimise power generation. This strategy drives the reduction of reliance on fossil fuels to nearly complete self-sufficiency through renewable energies – particularly hydroelectric power. An important change for the management of the country’s renewable and conventional energy resources took place in May 2018, with a government austerity measure that put all agencies under or attached to the former ministries of electricity and renewable energy, hydrocarbons and mining to be part of the new Ministry of Energy and Non-Renewable Natural Resources.
The Ecuador government is carrying on a strategy of diversification of the energy matrix and is allocating significant amounts of national resources to the financing of hydroelectric generation projects. Electricity generation capacity has doubled over the period 2006-2016. This increase was achieved through substantial public investment in nine flagship projects, eight of which are hydroelectric. The most notable of these is the Coca Codo Sinclair hydroelectric plant, which was completed in 2016 and is the largest hydroelectric project in the country’s history. Investment in hydroelectric plants has helped to reduce the consumption of oil derivatives in grid-connected electricity generation, and, consequently, the imports and subsidies associated with this consumption.
Several Chinese companies – mostly state-owned – are present in energy development areas in Ecuador such as oil extraction and hydropower. Most recently, China’s participation in the country’s mining sector has expanded. China’s presence is also enhanced by Ecuador’s dependence on Chinese loans. Commitments have been made to use oil as an advance payment for credit, as the nation’s debit increase. One of the main concerns for private investors is the high interest rate required for such loans and the unequal competition environment in relation to Chinese companies.
Investment increase and energy mix diversification have been the main focus of attention of Ecuador’s energy leaders as highlighted by the 2018 World Energy Issues Survey. As action is being taken to ensure the country is less depended on oil for its energy needs, a sustainable progress will depend on Ecuador’s ability to create an attractive investment landscape and to reduce uncertainty on the political and economic fronts.