The Ecuadorian government has announced that the Coca Codo Sinclair 1500MW hydroelectric facility will begin construction in mid-June.
This comes after financing discussions broke down completely in March.
The deal dropped off the radar when Ecuador’s discussions with the Export-Import Bank of China (China Ex-Im) fell through after China Ex-Im reportedly required the Ecuadorian government to provide state guarantees for the loan, a move which could have threatened the country’s sovereignty.
China Ex-Im will provide a US$1.7bn loan facility which is priced at a 6.9% interest rate and has a tenor of 15 years, including a five-year grace period.
Ecuador will pay the remaining 15% of the US$2bn price tag for the hydroelectric facility, and will no longer have to provide state guarantees.
Jorge Glas, Ecuador’s coordinating minister for strategic sectors, says: “The process was long, had some pitfalls, but now is a reality. [We have] reached an agreement satisfactory to the Republic of Ecuador.”
He adds: “It was part of a learning curve because you have to understand that China and Ecuador have different legal frameworks covering new rules and [each country] has its own peculiarities in terms of funding.”
The hydroelectric facility, which will be based 75km east of Ecuador’s capital, Quito, is projected to eventually save the country US$2mn a day, reduce the necessity for diesel imports by 533 million gallons annually, and reduce CO² emissions by 4 million tonnes per year.
Last Updated June 08, 2010
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