Quito-Beijing hydro project in doubt
- Source: Global Times
- [02:20 March 22 2010]
- Comments
By Yu Miao
Ecuador on Saturday accused China of jeopardizing talks on financing for a hydroelectric station project, threatening to seek money from Taiwan instead.
Negotiations on the financing of the Coca-Codo-Sinclaire hydroelectric plant, which would cover 75 percent of Ecuador's energy consumption, have lasted more than eight months and passed their March 15 deadline.
According to the website of Sinohydro Group, the company signed a $1.97 billion deal with Ecuadorian authorities in October to construct the plant. Based on the deal, through the Export-Import Bank of China (Eximbank), Sinohydro would provide 85 percent of the total financing as a loan, while the Ecuadorian government would cover the remaining 15 percent.
However, according to media reports, Eximbank has demanded that Ecuador's Central Bank put up its assets as collateral for the loan.
"Never before had anyone made such requests, which in any case are forbidden by law," Ecuadorian President Rafael Correa said in his weekly broadcast presentation.
"We will not forget the "mistreatment and the rudeness" that the Ecuadorian negotiators endured during the talks," Correa said. "We have shown much solidarity with China, supported the policy of one China ... but we will not forget how they treated us."
Correa insisted that there were "many alternatives" to obtaining finance for the project, including from Taiwan.
An official at the Chinese embassy in the capital, Quito, told the Global Times on condition of anonymity that the two sides' differences on collateral stalked the talks.
"After Quito rejected the proposal involving Central Bank assets, Chinese negotiators brought up another one involving plant assets, which was also rejected under Ecuadorian law," the official said. "In 2008, Correa declared a default on the country's foreign sovereign bonds, which might have caused concern among Chinese delegates."
"Correa unilaterally ended the talks Wednesday. However, as it is an important project for both countries, staff at the embassy are collaborating with Chinese negotiators to revive the talks. We remain optimistic on solving the matter," the official said.
He also denied that the issue would have any negative impact on other Chinese business in the country.
In fact, this is not the first time the talks have faced failure. In December, Correa complained that negotiating with China was like undergoing a "dental extraction," and threatened to reassess his policy toward China.
He also targeted the International Monetary Fund earlier that year, blaming the organization for harsh loan terms and calling for a single currency for Latin America.
In the declaration in 2008, Correa, a US-trained economist and ally of Venezuelan President Hugo Chavez, refused to make a $31 million interest payment on 2012 global bonds, saying the debt was contracted illegally by a previous administration.
Despite the disputes, China signed $4.7 billion worth of cooperation agreements in November during a visit by Jia Qinglin, chairman of the National Committee of the Chinese People's Political Consultative Conference.
The two countries also celebrated the 30th anniversary of their diplomatic relations in early January.
Agencies contributed to this story
