Pres. extends fuel credits for thermo generators

Ecuador's President Lucio Gutierrez has approved an agreement allowing the fuel distribution arm of state oil company Petroecuador, Petrocomercial, to temporarily reinstate fuel credits for struggling thermoelectric generators, local newspaper El Comercio reported. "The President has given a clear sign of support for the electric sector by allowing the thermo generators to have some payment relief for fuel from Petrocomercial," the government's deputy secretary of electrification, Remigio Maldonado, told BNamericas. The country's three main thermo generators - Termoesmeraldas, Electroguayas and Termopichincha - do not have the cash to pay for fuel during Ecuador's dry season, which starts in October, and had warned of possible shutdowns if the government did not bail them out. Petrocomercial suspended fuel credits to the thermo generators earlier this year due to the company's own cash flow problems, and was demanding upfront payment. But with the generators unable to pay, Petroecomercial found itself obliged to extend the credits, meaning that generators do not have to pay for fuel for 60 days. "This is to facilitate thermo generation in order to help maintain the electric service in peak hours of demand," Maldonado said, adding the President's decision would "calm down the population." The elimination of fuel credits was a condition of Ecuador's agreement with the IMF earlier this year, but "the President has decided to opt in favor of the reality of the country to avoid power shortages and blackouts," Maldonado said. The generators use a total of about 13 million gallons of bunker fuel and 8 million gallons of diesel a month, which, by today's prices, has a combined monthly value of about US$20mn, Maldonado said. In the long term, Ecuador hopes to reduce generation costs by about 30% by converting its plants to burn a mixture of heavy crude and diesel instead of more expensive bunker and diesel fuel. To that end, the government has hired Cuban experts to study a program to convert the thermo plants over the next three years as part of a technical agreement signed between the two countries. "In about a month we expect to have their initial report," Maldonado said. Ecuador has 3,600MW installed capacity, of which 40% is thermoelectric and 60% is hydroelectric. However, during the dry season from October to March, thermo generation must increase to meet up to 70% of the national demand.