Surprise!, is the word Gabriela Uquillas, executive director of the Ecuadorian Business Committee (CEE), used to describe the outgoing Government’s decision to end the night price subsidy that has been applied to the industrial sector since 2018. Even more so when the union leader stated that on June 26, during the meeting of the President of the Republic Guillermo Lasso with representatives of the manufacturing sector, the President assured that the cancellation of the tariff incentive was out of the question. electric.

“He gave his word, unfortunately months later we see that it has not been fulfilled, which also speaks volumes for the president’s management,” Uquillas said. He added that this decision was made without consulting the private sector. “This measure was never communicated, planned or socialized with the private sector, to be able to organize, to be able to anticipate and make the necessary changes to adapt policies and ways of working taking into account this measure,” said Uquillas.

Shrimp farmers and industrialists react to the end of electricity subsidies, classifying it as a ‘coup by the outgoing government’ and an ‘attack on the industry’

The current subsidy favors the industrial sector with a rate incentive during working hours of 10:00 PM to 8:00 AM.

The decision to cancel this benefit is known from a letter signed by the Minister of Energy, Fernando Santos Alvite, addressed to Luis Bonilla, Director of the Agency for Regulation and Control of Energy and Non-Renewable Natural Resources.

In the document, Santos points out that appropriate analyzes were conducted on information that corresponds to the stated incentive. Based on that, he ordered to “implement the cancellation of this tariff incentive for the consumption of electricity in the industrial sector”. It is stated that the measure corresponds to the mechanism of encouraging energy efficiency for large regulated consumers in the industrial, commercial and service sectors.

The text specifies that “there are no plans to issue savings certificates for 2024, but they will be received during the first quarter of 2024 with the aim of including them in the price list guidelines for 2025”.

Uquillas assured that “the current experience is a series of disincentives for production, job creation and national competitiveness. This is the latest blow by this Government which signifies or sums up what its interaction with the private sector has been, a complete lack of empathy, knowledge and support.”

The effects of the abolition of the subsidy will be reflected in exports

The CEE CEO predicted that if this elimination is implemented, it will affect employment, development and ultimately exports.

In this sense, the Ecuadorian Federation of Exporters (Fedexpor) rejected that the Government, without foreseeing the state of the electricity industry in the country and, moreover, without solving it, is now trying to solve the problem through the manufacturing sector, leaving the exporting industries again at a disadvantage in relation to the competition, according to the union.

“It will be a fundamental task of the next authorities to correct these and other measures that have affected the cost structure of production and competition in the country,” Fedexpor said in a statement on the night of November 18.

Exporters expect a 10 percent more impact on industrial production costs due to the removal of the electricity subsidy

The views of Fedexpor and the Business Committee join those of other unions in the manufacturing sector, such as the Corporation of Export Unions of Ecuador (Cordex), which have calculated that the impact of the measure will be reflected in a 10% increase in production costs. due to the increase in the price of electricity. But what is most worrying, the union says, is that 8,000 jobs are at risk in Ecuador.

“The purpose of this measure (subsidy) was to promote the creation of new jobs in the country, to encourage industries to use night shifts. Industries were paying a rate of $0.05 per kilowatt hour during those hours and will now have to pay $0.075 per kilowatt hour,” Cordex projects.