September 2017 – @alvaroriosroca Corruption is one of the most despicable scourges that afflicts humanity. It makes wealth concentrate in few and poverty in many. It generates susceptibility, discomfort and distorts fundamental values such as effort, study, innovation and hard and honest work. Therefore we must fight it and reject it.
If at the existence of corruption, we add that the projects contracted by the State are executed with deficiency and are not productive nor profitable, the impact for citizens is tremendously perverse. Following is a quick review of some events that occurred in previous years in the energy sector in Ecuador.
In the electric sector, the construction of 8 hydroelectric projects began with a lack of serious technical studies and of future demand. While some of the projects were necessary for the unfulfilled supply and to replace costly petroleum by-products in power generation, the sequence of implementation is quite difficult to understand.
The installed generation capacity in 2009 was 2,760 MW. Between 2010 and 2012, it was decided to build 8 hydroelectric plants with a combined capacity of 2,832 MW and an investment of 4,564 MMUSD, all charged to the State. This means, overnight it was decided to double the capacity with hydroelectric generation that has seasonality.
The current result is an ample oversupply of hydroelectric capacity. The announced export markets are scarce and in the spot market. Thus, overnight the “kitchen and induction cooking program” is launched (very sui generis on the planet) to make use of that over supply of existing generation capacity and to replace LPG. The improvisation and speed (to inaugurate) have resulted in technical problems and excessive delays in the construction of the plants. Some of them have not yet entered into operation.
A large part of these hydroelectric projects were financed with future oil production, embargoing the country and landing in the current critical economic situation in which President Lenin Moreno is.
There is much more to analyze about projects with high deficiency. Recently an international audit has been initiated by the State to detect technical and operational deficiencies in infrastructure of: Esmeraldas and Pacific refineries, the Bajo Alto natural gas liquefaction plant, the Pascuales – Cuenca pipeline and the LPG complex of Monteverde – El Chorrillo.
If on top of all we add the various corruption scandals that are being unveiled in the Ecuadorian energy sector, where managers, executives and officials of Petroecuador, ministers, vice ministers, authorities and prebendary entrepreneurs are imprisoned, fugitives and many others under investigation, the equation for the ordinary citizen becomes grotesque and unacceptable.
We applaud President Moreno’s initiatives to make the real economic situation transparent and reveal the extensive network of corruption that had been mounted around the multiple projects carried out, mainly in the energy sector. The future revelations of the former manager of Petroecuador and the Vice President of the Republic (now that he doesn’t have immunity), will surely show the parody of what happened. Ineptitude and corruption when facing projects and investments executed by the State are detrimental to the welfare of a country’s citizens.
* Current Managing Partner of Gas Energy Latin America