By Heather Walsh
Feb. 9 (Bloomberg) -- Ecuador may develop a $6 billion hydroelectric project to create energy supplies for new mines and avert power shortages similar to the ones the South American country experienced in 2009.
The Zamora, one of 17 hydroelectric projects Ecuador aims to build in the next decade to help end dependence on imported power project could include four dams, the first to be completed as soon as 2016, said Galo Borja, minister for coordination of strategic industries. The projects will require financing from state-run companies, he said.
“We are buying expensive energy,” Borja said in an interview in Quito on Feb. 3. “Not doing this will end up being very costly.”
A drought cut Ecuador’s hydroelectric power generation last year, prompting energy rationing that ended in January. The outages probably cost the nation about $1 billion in lost factory output, said Ramiro Crespo, president of Quito-based brokerage Analytica Securities CA Casa de Valores, in a telephone interview.
Zamora would help provide generation for copper and gold production by companies including Vancouver-based Corriente Resources Inc., Borja said. Corriente is developing the Mirador copper deposit in southeastern Ecuador, according to the company’s Web site.
In total, the Zamora project would generate 4,000 megawatts of electricity. Ecuador had generating capacity of 5,270 megawatts as of last June, according to data on the Web site of the state-run National Electricity Council.
Coca Codo Sinclair
A separate, $2 billion hydroelectric project to be built before Zamora, called Coca Codo Sinclair, will be funded by the government and the Export-Import Bank of China, Borja said. It will produce 1,500 megawatts of electricity, according to the Web site of Cia. Hidroelectrica Coca Codo Sinclair SA, the state-run company developing the project.
President Rafael Correa aims to extend the government’s control over the nation’s electricity and oil industries, said Crespo. Ecuador is negotiating contracts with oil companies by the end of March that will pay the companies fees based on costs and crude production, Borja said.
Current contracts don’t allow the state to benefit from higher oil prices, Julio Gonzalez, undersecretary of hydrocarbons policy, said last year.
Ecuador’s gross domestic product was about $53 billion in 2008, according to data compiled by Bloomberg. GDP contracted by 1 percent in 2009 and will expand by 1.5 percent this year, according to estimates by International Monetary Fund staff on the organization’s Web site.
Ecuador also seeks to expand exploration for natural gas and install more wind-powered turbines. The country is in early talks with South Korea about possible development of a nuclear power plant, Borja said. All new strategic energy projects will be government controlled, he said.