Government proposes creation of a single electric company

El Comercio - Quito - Ecuador | 2 de junio del 2008

http://tinyurl.com/52p6o6

The Executive plans to reduce electricity tariffs for industrial and commercial users. The Treasury would acquire 75% of companies presently administered by the solidarity fund.

Business Editors

The Government enacts an electricity bill. The political cost of the proposal and the complexity of the sector delayed presentation to the Constituent Assembly.

The project, of 39 articles, a general provision and six transitional elements awaits only the comments of the Solidarity Fund (FS), current administrator of 19 distribution, six generation, and one transmission company.

The comments will be presented tomorrow. Later they'll decide to send the text to the Assembly, according to sources close to the process. The most controversial points relate to the creation of a single company. This will absorb the electric companies where the state holds interests.

Today, energy distribution is the responsibility of corporations (state and private). Under the proposal, private participation will be liquidated and paid so that those assets pass to the State.

This will impact, for example, about 1.42% of the capital of industrialists and traders in Electrica Quito. For the manager of this firm, Carlos Andrade, this falls in the category of confiscation.

The text also proposed that the participation of the State be divided as 75% for the State, and 25% for regional governments. This is a point of contention, as today the state does not have a 100% participation in distribution.

For electrical (company) Riobamba, this would deprive the Chimborazo municipalities of 44.18% of their stock.

An expert on electrical matters, Jose Pedro Freile, warns that its contents could harm the regional governments.

He clarified that the rights today amongst local governments will join this great heritage that would run 75% to the central government and 25% to the regions. In his opinion, the latter "will be converted in practice to social symbols, without any participation in practice."

The former president of the National Council of Electricity, Alejandro Ribadeneira, warns that an infrastructure of this magnitude does not solve the problem of inefficiency. "This is resolved with structural reform in the administration of enterprises and investment."

Andrade said that between today and tomorrow the Mayor of Quito will issue a communique demanding that Electrica Quito be maintained. "This company was born in 1955 with capital of the municipality and the Ecuadorian Social Security Institute. With our management, we have yielded efficient results, and we do not want to enter an inefficient administration of the State ", he remarked.

For Andrade, first one must make companies efficient, one by one, then we can think about 'holdings' and, depending on the outcome, think about a single enterprise. "A process that can last no less than 10 years."

The minister of electricity, Alecksey Mosquera, acknowledged that the issue is complex and therefore insisted that the issue is still under analysis. In addition, the existence of a single enterprise requires the Law on Public Enterprises, whose staff is headed by the Senplades (National System of Planning), he said.

[translation - ebear]