Ecuador industries complain of economic impact, lack of clarity about power blackouts

As Ecuador begins the first full week of industrial power blackouts, business leaders claim the cuts are being unequally applied and could have a drastic impact on the country’s economy. “Our sector is suffering information whiplash due to conflicting reports we are receiving from the government,” says Quito Chamber of Industries Vice President Gustavo Guzmán. “We are also concerned about confusion of who is affected by blackouts and who is not.”

The Continental Tire Andina factory in Cuenca is the city’s largest private employer.

Equally important, Guzmán says, is that thousands of workers could lose their employment as a result of the backouts. “It is too early to tell, but if the outages continue for an extended period, companies will be forced to terminate employment of some employees.”

Energy Minister Antonio Goncalves announced Thursday that the country’s industrial sector would be asked to “share in the sacrifice” of power cuts as a result of the electric crisis, saying it was unfair for residential and small business customers to bear the brunt of the blackouts. On Saturday, national electric operator Cenace, announced the 10-hour-a-day blackouts for the country’s industrial sector.

Until Saturday, the country’s industries had been exempt from blackouts.

María Paz Jervis, president of the Ecuador Chamber of Industries, says the Energy Ministry’s suggestion that industries switch to gasoline-generated power is not feasible. “There are some operations that can do this but most cannot due to the expense,” she said. “To maintain and operate industrial-scale generators is cost prohibitive for most of our members and they will have no choice but to suspend operations.”

Last week, Goncalves claimed that most large manufacturers had back-up generators that would allow them to remain open during the blackouts. He said the government would reimburse them for fuel expenses.

In Cuenca, Continental Tire Andina said it is suspending production for at least three days due to blackouts. “We are forced into this action because we have no backup power sources and also because of lack of scheduling clarity from the government,” the company said in a statement. “This was a last-minute decision by officials and our requests for information have not been answered.”

Besides national and municipal governments, Continental Tire is Cuenca’s largest employer.

In addition to Continental, other large companies in Cuenca’s industrial park include tile manufacturers and metal product fabricators.

Other complaints have come from small business organizations across the country. The National Chamber of Commerce says the “targeting” of industrial blackout areas is arbitrary and unfair. “For example, power suspensions have been applied to a most industrial parks in the country but many of the businesses in these parks are not engaged in manufacturing,” the chamber said. “We have packing and shipping companies located in these locations as well as some retail stores and even restaurants, and under the government explanation these should be exempt.”