First of eight new hydro plants goes on line, but national plan to convert to electricity appears to be far behind schedule

Dec 8, 2014

As the first of eight new hydroelectric plants began operations last week north of Quito, the country’s plan to convert energy use away from LP gas and to electricity appears to further behind schedule than ever.
chl hydro plant
On Wednesday, Ecuador’s Electricity Minister, Esteban Albornoz, gave the order to close the gates and begin filling the reservoir at the Manduriacu Hydroelectric plant located on the border of Pichincha and Imbabura provinces. Manduriacu is one of the projects that Ecuador is counting on to make the country energy self-sufficient by 2020.

As the gates were closed at Manduriacu, however, the electricity ministry was assessing the fact that the plan to convert to electric usage, especially for cooking, is in trouble.

Last year, President Rafael Correa announced that subsidies for LP gas would be eliminated and that Ecuador’s citizens would be encouraged to switch to electricity. The government announced a program of low interest loans to encourage households to purchase new electric induction cooktops and incentives for the country’s appliance manufacturers to begin production of the new cooktops.

The latest data shows that only 10% of households the government expected to make the conversion by the end of 2014 have actually done it and that domestic production is running far behind expectations. Acknowledging the slow start, President Rafael Correa last week said that the government was looking outside the country to meet the demand it expects to develop.

In 2013, the government said it needed to convert 3.5 million households to electricity and off of gas. The gas subsidy, which applies to all domestic LP gas, means that Ecuadorians pay about 15% of the international market rate. In his announcement last year, Correa said that the country could save $600 million to $700 million a year by eliminating the subsidy. He said the government would commit the savings to public education.

“We are behind schedule with this program,” said Correa. “We need to do a better job of advertising the change to electricity but we must also make sure we have the appliances to meet the need. To do this, we will need to import more cooktops,” he said.

Due to the slow conversion to electricity and the limited availability of electric cooktops, it is unclear when the gas subsidy will actually end. Another issue is construction delays with several of the hydro plants, two of which are near Cuenca. In the original announcement, the government said it would end in late 2015. Since then, it has said it would not happen until the end of 2016 or even the beginning of 2017.

One complicating factor, if Correa decides to run again for president under new constitutional rules, is that the gas subsidy could become a political issue. In 2004, when elimination of the subsidy was suggested, it faced overwhelming public opposition and the government backed down.

Photo credit: El Comercio.

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