China's Investment in Energy in Ecuador

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China and Ecuador was upgraded to an “integral strategic partnership”, representing the highest level relationship China has with any country

In November of 2016, the previously defined “strategic association” between China and Ecuador was upgraded to an “integral strategic partnership” representing the highest level relationship China has with any country.¹ Especially during the presidency of Rafael Correa, the public sector has primarily worked with Chinese banks and construction companies to build up the hydroelectric sector, granting massive project contracts to Chinese banks and construction companies.

In 2008, the Ecuadorian government reformed the Organic Law of the National Procurement System. These changes allowed the government to sign agreements with public firms without a bidding process. A book titled, a culmination of a major university partnership between universities in China, Mexico, and the United States, has found that “these laws have disproportionately benefited Chinese investors, both the main contractors and those involved in the supply chain.

Being almost entirely reliant on Chinese creation of these projects has resulted in several challenges for Ecuador’s energy matrix, as problems have begun appearing. As of 2018, two of these seven projects are already projected to cost significantly more than previously anticipated. The Mazar–Dudas project is projected to cost 66% more in final than previously estimated, and Delsitanisagua is expected to cost 55% more than the original cost.

 

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