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Due to an over-reliance on hydroelectric power—the 1,600 MWe Paute plant alone produces more than 60% of Ecuador’s electricity—and seasonal droughts, rationing has beenneededyearlysince1992. Itisestimatedthatthese yearly shortages cost Ecuadorean businesses roughly $500 million per year. The seasonal generating shortages, coupled with the nation's already existingelectricitydeficit,resultina national deficit which can reach over 30% of demand. Subsidies for electricity were cut, raising the price by 25% in September1998. Alsoin1998,a peace treaty with Perú was signed, ending a long-standing border conflict which had existed between the two countries for more than half a century. InNovember1998,Ecuador and Colombia signed an electricity interconnectionagreement. Under theagreement, Colombiawillexport 15 MW of electricity to Ecuador’s power grid. Ecuador was slow to embrace the market-oriented economic reforms taking place elsewhere in Latin America and the electricity sector is only beginning to be privatized. The Government of Ecuador (GOE) expects that the privatization and capitalization program, which will include the partial privatization of electricity and oil assets, will generate US$1 billion by the end of 1999. It has been estimated that this demand will require investments of $3.5 billion to install 2.2 GWe at nine power plants through 2010, all on a BOT basis. EnergyCorpwonacontractinJune 1998 to supply Ecuador with 105 MWe of electricity. The energy will be supplied over two years at an average price of $.0758 per kilowatt hour. BySeptember1998,20permitsforpower generation projects had been awarded to private firms, including the Daule Peripa hydroelectric facility (213 MWe) scheduled to come online in 1999; the Toachi-Pilaton thermoelectricproject(190MWe)tocome online in 2002; and the 30-year BOT San Franciscohydroelectricproject(230 MWe). A $15-million World Bank project is being identified for Ecuador. Theprojectwillsupportstructuralandregulatory reform and privatization of the hydrocarbon, electricity, and telecommunications sectors (Development Business, 16 February 1999). Geothermal Resources in Latin America & the Caribbean 161PDF Image | Geothermal Resources in the Caribbean and Latin America
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