Ecuador schedules sale of electricity distribution companies

Ecuador’s plans to partly privatize its electricity industry took a further step forward last week when the government announced that 16 electric utility companies will be privatized in two separate groups. The companies’ privatization price will be unveiled on September 7.

Parties reportedly interested in the sell-off include AES, Union Fenosa, Pecom Energia (Perez Companc).

However, the government said yesterday that power company Empresa Electrica de Azogues would not be sold off, since its majority holders opposed the deal – the government holds a minority stake in the company.

The government listed the companies forming Group A as the utilities that operate in Bolivar, Centro Sur, Cotopaxi, Ambato, Regional Sur, Regional Norte and Quito, while Group B is formed by the ones operating in Esmeraldas, Manabi, Los Rios, Santa Elena, Emelgur, Milagro and El Oro.

Bidders will be pre-qualified up until August 3, 2001 and the bidding is scheduled for September 28, 2001.

In 1961, Ecuador’s 22 regional power companies were amalgamated into the Instituto Ecuatoriano de Electrification (INECEL), which controlled generation, transmission, and distribution of electricity in Ecuador until 1998. INECEL was then split into six generation companies (HidroPaute, HidroAgoyan, HidroPucara, TermGuayas, TermoPichincha, and TermoEsmeraldas), one transmission company (Transelectric), and 19 distribution companies. Fondo de Solidaridad, the newly created Solidarity Fund, owned these companies.

The companies under the control of the Solidarity Fund were originally slated to be sold by the end of 2000. It was intended that a single private company would purchase 39 per cent of each company, and this purchasing company will take over administration. The government will retain a 51 per cent stake in each company (plans temporarily called for a reduction of the government share to 39 per cent, but now have returned to the original 51 per cent), and the remaining 10 per cent will go to employees.

Empresa Electrica del Ecuador (Emelec), Ecuador’s private electric distributor, is to be sold by CONAM, the state privatization agency. Emelec is Ecuador’s largest utility, located in the Guayaquil area and serving 30 per cent of the population. The government is proceeding with the sale of Emelec by auction this year.

The majority of Ecuador’s electricity is generated from hydropower with half of the country’s demand met by one hydroelectric plant, Paute. Ecuador’s power demand is growing rapidly, but generation capacity is struggling to keep pace. About 25 per cent of the population remain without access to electricity.

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