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Jorge Glas Espinel

ECUADOR - Energy & Mining

The View Ahead

Minister of Coordination of the Strategic Sectors, Ecuador


Jorge Glas Espinel studied Telecommunications Engineering at the Universidad Politécnica del Litoral. He led the directory of the Solidarity Fund from 2007 to 2009, and managed to consolidate the state telecoms and electricity utility providers. He went on to serve as the Minister of Telecommunications and Information Society between August 2009 and March 2010. In April 2010 he was appointed Minister Coordinator of the Strategic Sectors, where he coordinates policy in telecoms, electricity, mining, oil, and water resource management.

"The vision by 2016 is that 93% of energy sources in the matrix will be hydroelectric."

What are the main aspects and projects coordinated by your Ministry to change the energy matrix?

The vision by 2016 is that 93% of energy sources in the matrix will be hydroelectric. This is a small country where there is petroleum, nevertheless we bet on renewable energies and not only for the sovereignty of Ecuador in renewable energy, but also to be able to export energy. In 2010, Ecuador held the pro-tempore presidency of the Union of South American Nations (UNASUR), and we proposed taking advantage of our hydroelectric potential to export renewable electric energy to the region, not only to Colombia and Peru, but also to Venezuela, Chile, and Uruguay. We also promoted at the Andean Community level a transversal regulation that is valid for Ecuador, Colombia, and Peru. We now have eight new hydroelectric power plants under construction. We have also consolidated our thermal park through our energy sovereignty, to improve the reliability of the service. Our energy reserves have increased considerably and we have substituted a lot of the generating capacity that used diesel to fuel oil, a product available in Ecuador. The goal by 2013 is for Ecuador to consume no diesel in the electric sector. In 2012 it will already represent less than 1%, because we have been substituting it for fuel oil and natural gas. In the future, the country will have a strong hydroelectric component. By 2016 we will double the installed capacity of electric generation across the whole territory.

What has been the Ministry’s role in the recent changes to the telecommunications sector in the country?

In 2006 the previous government tried to conclude a contract with mobile telecommunications operators. The vision was to get $70 million for the licenses. We negotiated with the operators for $700 million plus 1% of the raw revenues for the IT development fund. Everyone thought that rates were going to increase, that the networks were not going to be developed, that service penetration wouldn’t increase, and that traffic was going to reduce, but at the end of the day the situation was the opposite. Rates actually decreased, companies pay corporate taxes, coverage increased, penetration grew exponentially, and the state will get $700 million over the next 15 years. Also, investment over the next five years will be around $900 million through the public company to improve services. Before, we had 1,400 kilometers of fiber-optic cable under the public company, and now we have almost 7,500 kilometers, while broadband prices have decreased. Public companies have managed to reduce the costs of the entire industry. For the first time in history, our 23 provinces are connected through fiber-optic cables. Before, this public policy didn’t exist. Despite this situation, the profits of the public companies have increased. Almost 4,000 schools are also connected to the internet through the Scholar Connectivity Plan.

“The vision by 2016 is that 93% of energy sources in the matrix will be hydroelectric.”

Currently the country is looking at the mining sector as the engine for the next economic boom. Is this a real possibility?

We are finalizing negotiations for contracts with two private mining companies. One is EcuaCorriente (copper) and the other is Kinross (gold). Foreign investment by mining companies will be at least $1.5 billion over the development periods, and I am sure that when the negotiations are done Ecuador will receive a significant amount of mining income. After that, we are planning to launch a bid for the exploration of new areas. The constitution obliges us to keep at least 50% of mining income for the state, with a tremendous respect for nature. These resources will be invested by the government in infrastructure and in development projects in nearby towns. This is a new issue in Ecuador; we are at the beginning, but now there is a clear legal framework. The takeoff of mining in the country is going to be very important.

© The Business Year



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