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Tuesday, April 06, 2010

Ecuador Halts Talks with China on Hydro Power Financing

QUITO – Ecuador has suspended negotiations with China for the financing of an almost $2 billion hydroelectric power plant, which would be the country’s largest, Finance Minister Maria Elsa Viteri said.

The Andean country is not going to allow “the government to be mistreated nor for conditions to be demanded that have never been demanded in the entire history of the republic,” Viteri told the official Andes news agency on Wednesday.

During the negotiations, Ecuador had been operating under the idea of “another type of relationship with China,” the finance minister said, without providing details.

“In so far as these elements are not respected, we’re not going to cede in terms of our sovereignty nor our fair conduct in the financing” negotiations, Viteri said.

Viteri’s announcement came two days after a March 15 deadline set by President Rafael Correa for concluding negotiations on the plant’s financing had expired, following eight months of talks.

Earlier this month, the Chinese government had requested that the deadline be extended.

Chinese Ambassador to Ecuador Cai Runguo said recently that Ecuador’s proposal to use a trust as collateral was something new for his country’s Export-Import Bank, which was to provide the funding.

Despite the announcement, Viteri said the government will seek “a parallel plan” to prevent delays in the construction of the plant.

A total of $1.97 billion is needed to finance the Coca-Codo-Sinclair hydroelectric power plant, 15 percent of which is to come from the Ecuadorian government and the rest from foreign sources.

The contract for the 1,500 MW plant was awarded to China’s Sinohydro last year, but under the terms of the deal a financing arrangement needed to be reached with Eximbank. EFE

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