Faced with low water levels and power outages of an hour and a half that the country is facing due to the lack of electricity – the result of a statist model, investment in hydroelectric power plants with problems and mismanagement by the current authorities – the Government has put together a series of short- and medium-term measures to combat power outages . These measures could cost the state a hefty bill of $600 or $700 million, according to several experts. And this value plus the 309 million dollars that the Ecuadorian Electricity Corporation (Celec) dedicated to the improvement of the thermal park, which was included in the investment plan, gives a total of between 900 and 1000 million dollars.

The government has announced several measures ranging from the purchase of energy from Colombia and Peru, negotiations with private producers, contracting of barges, to the import of natural gas, in order to address the lack of energy production.

Power outages in Ecuador continue this Monday, November 6: these are the schedules of some cities and provinces

About the measures announced by the Government, Alberto Acosta Burneo, editor of the publication weekly analysis, believes that the purchase of energy from Colombia and Peru of 500 MW and 100 MW that would be obtained from private generators or private savings will be used to supply energy in an upcoming and immediate manner. And take into account that, on the other hand, the other measures (barges and gas) will last longer, but that they all need to be implemented because the dry season can be extended, so we will have a similar situation next year.

But how much would each of them cost?

One of the most expensive alternatives is to buy electricity from Colombia. According to Jorge Luis Hidalgo, energy expert and manager of Green Power (the company competing for Campo Amistad), Colombia sells us its most expensive energy, which is thermal energy. With an estimated price between 25 cents and 45 cents per kwh, and given that it would last three months, a total of 360 million dollars would be reached, he states.

It is still not clear how the payment will be made, as President Guillermo Lasso, who has been managing the delivery of more energy from Colombia, has announced that some kind of energy-for-energy or energy-for-oil exchange will be sought. This will be defined in the following weeks through technical tables.

Among the measures that would take a little longer is the contracting of new production of 465 MW via barges or ground solutions, which will be contracted by electric distribution companies. Marcelo Jaramillo, manager of Quito Electric Company, which is leading this process, spoke about the investment of 160 million dollars. The recruitment will be done through a public tender, which is a process that has already started.

The government assures that it will not increase the price of electricity due to low levels and announces that it has launched a tender for the supplementary supply of electricity distributors

Hidalgo also comments that the power companies would have problems meeting these costs. He believes that after these investments he will be “broke”. In this sense, he says, it seems inevitable that there will be an increase in rates. Indeed, last Tuesday, the Deputy Minister of Electricity (e), Juan José Espinosa, mentioned the need to revise the tariff to ensure the liquidity of the system. It is precisely in these days that an adjustment should be made. For Hidalgo, if the tariff is to be revised, it should start with a subsidy received by a group of large industrial, mining and oil companies that pay 5 cents per kWh at night and on weekends.

Meanwhile, Petroecuador has already started exploring the gas import market. In this resource, the price per million BTU is important, but a series of infrastructural adjustments must also be made so that it can effectively reach Termogas Machala. Hidalgo knows the gas business intimately and points out that a million BTU is now $18, which is more expensive than national gas ($3.6). But in addition to imports, a regasifier must be built or have. Judiciously calculating the 55 million cubic feet needed in three or four months, according to their estimates, about $120 million would be needed.

Additionally, the manager of Celec EP, Gonzalo Uquillas, explained that during 2023, at least 309 million dollars have been invested in the renovation of the thermal park. Included in this figure is the purchase of engines that were procured from South Korea and that have not yet made their way to Ecuador. The engines alone will cost $65.82 million and will generate about 54 MW. The rest of these funds were used for recovery, rehabilitation and engine replacement. Purchase of spare parts, machines, specialized services and additional fuel.

Alberto Acosta Burneo comments that beyond what would have to be spent to make these measures sustainable, blackouts have a cost to the commercial and industrial sectors. Based on data provided only by the Ministry of Energy, it shows that each kilowatt of power outage costs society $1.50, and considering that every day there is a power outage of at least an hour and a half, the monthly cost would be $242 million for the commercial and industrial sector.