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From: "Nicola Bullard"
Date: Fri, 8 Mar 2002
Ecuador president desperate to push through electricity sales

Ecuadorian President Calls On Carter Centre To Supervise Unconstitutional 
Sale Of  State Electricity Companies

(Quito, 7 March 2002) In a last ditch attempt to save the planned sale of the 
country's electricity distribution companies, Ecuadorian President Noboa
yesterday capped a day of lobbying chambers of commerce and provincial 
and local authorities by stating that he was prepared to bring in an 
independent agency to supervise the sale, mentioning that he had already 
spoken to the Carter Centre. 

However, despite the last minute arm twisting and promises, opposition to 
the sale (proposed for April 12th)  continues to grow. Provincial authorities 
>from the southern province of Azuay recently arrived in Quito to state their
opposition, while on the same day that Noboa launched his sales blitz, the 
Provincial Council of Pichincha and the Association of Ecuadorian 
Municipalities also declared their opposition. Indigenous leaders have once 
again reinforced their decision to stand firm and to “not allow the sale to go

ahead”, threatening to call a general uprising if Noboa attempts to push on
with his plans. Even the state Solidarity Fund, owner of the 51% of the shares

in the company in dispute, and up to the present time collaborator in the 
planned sale, has expressed its reservations now that the price of US. $375 
million has been made public. The resignation of the Fund's manager Luis
Burbano was announced today by the country's Vice President, Pedro Pinto.

A apart of the general dissatisfaction can be traced to the recent disclosure 
by the daily el Expreso de Guayaquil that the companies' new owners will be
a guaranteed a below market price for the supply of electricity in the coming 
years. The fact that the private sector owners will be able to quickly recover

their investment due to subsidised rates while the price to the consumer 
continues to rise by 5% per month in order to meet market conditions, has 
not been well received.  

The government does have its supporters however in the major industrial
and business groups in the country. Francisco Alarcon, the president of the 
Industrial Council of the Province of Guayas, the country's commercial
centre, recently placed his support behind Noboa stating that the most 
important aspect of the sale was not the price but rather that the country 
could no longer afford the “inefficiency of the unions” .

The union has its own response. Edgar Ponce, leader of the Quito Electrical 
Union, mentioned that amongst other options a number of organisations 
including his own were considering the possibility of legal action against 
Salomon Smith Barney, the U.S. based company which evaluated the worth 
of the companies and which will receive a percentage of the sale if it in fact

does take place. According to Ponce the action would be based on the fact 
that the company has participated knowingly in a  process which has clearly 
been ruled unconstitutional by the country's Constitutional Tribunal.

Salomon Smith has in fact warned the Ecuadorian authorities that the ruling 
of unconstitutionality is a serious barrier which has to be overcome. However,

their continued presence in a process already ruled illegal sparks not only 
legal but ethical questions, questions which may be hard for them to answer, 
especially in the aftermath of the Enron/Anderson scandal. 

Gerard Coffey
Centro de Informacion Sobre la Globalizacion
Quito Ecuador
Tel: 593-2-222-4018
"Centro de Informacion Globalizacion" 

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