QUITO – The Chinese government has asked Ecuador to push back a deadline for wrapping up a financing deal for what will be the Andean nation’s largest hydroelectric plant.
China’s ambassador to Ecuador, Cai Runguo, made the announcement in an interview with the state-run Andes news agency on Friday, saying his country’s Export-Import Bank needs more time than the March 15 deadline allows.
Ecuadorian President Rafael Correa last week said no agreement had been reached for financing construction of the Coca-Codo-Sinclaire hydroelectric plant after eight months of talks; he therefore set the mid-March deadline for concluding a deal.
But the ambassador said Ecuador’s offer to create a trust to serve as collateral was something new for Eximbank and it will need more time to study the proposal.
“It’s normal and understandable for there to be discrepancies, considering that this is the first negotiation” of this type conducted between the two countries, “which are so distant (geographically) and with different cultures and legal systems,” the ambassador added.
According to the diplomat, the Chinese bank has granted certain preferences to Ecuador but cannot accept all of the demands because “if it accepts them on this occasion, it would have to accept equal conditions with other countries.”
The ambassador said negotiators from both countries were working to finalize the loan-guarantee provisions and stressed that agreement had already been reached on interest rates and the timeframe for repayment.
“The door to negotiations, on China’s part, is always open, but it must be understood that both sides must share the risk,” the ambassador said.
He said, however, that he hopes that if the negotiations fail that will not adversely affect bilateral relations.
“We can offer a broader bilateral-cooperation path. Both the government and Chinese companies are interested in carrying out cooperation projects in Ecuador,” the diplomat said.
Ecuador plans to finance 15 percent of the $1.98 billion cost of the hydroelectric project, with the remaining 85 percent to come from foreign sources.
In October, the Ecuadorian government signed a contract with Chinese firm Sinohydro to build the 1,500 MW dam in the Amazon region. Once completed the hydro plant is expected to meet 75 percent of Ecuador electricity needs.
Correa recently said that every day before Coca-Codo-Sinclaire comes online Ecuador must spend $2 million to import fuel for generating plants, which use crude or derivatives.