President Lasso traveled to China to renegotiate what we still have to pay on the debt with that Asian country. The conditions of this indebtedness were disastrous for the country
One of the main goals of President Guillermo Lasso during his official visit to China is to renegotiate the payment conditions of the more than $5,000 million that is still owed to that country.
Of that amount, around $2 billion is tied to calls oil presales, that is to say, contracts where Chinese loans were received in exchange for cash payments and the delivery of millions of barrels of crude at reduced prices.
Lasso has assured that his intention is for the government led by Xi Jinping to agree to extend the terms, reduce interest rates, and stop receiving barrels of oil as part of payment.
Adrián Domínguez, a petroleum engineer, commented that, between 2009 and 2016, Ecuador became massively indebted to China, by accepting unfavorable conditions that represented millionaires losses for the country.
“They accepted credits tied to projects with chinese companies. In the middle there were plots of corruption, works with Overpriced, like Coke Elbow Sinclair”, he pointed out.
The Minister of Economy, Simón Cueva, assured that debt renegotiation seeks to maintain good relations with China and leave the door open to new financing, but without falling into the serious mistakes of the past.
Ten keys to bad business with China
1.- Between 2009 and 2016, the Government of Rafael Correa signed thirteen contracts for oil presale. The deal was to receive $18,020 million in credits, and, in exchange, pay a part in cash at 8% and another with the delivery of barrels of crude at reduced price.
2.- For each dollar of credit, Ecuador promised to deliver five times more Petroleum until 2024.
3.- The Comptroller has established that the contracts from oil presale they were signed without support in technical reports and with harmful conditions.
4.- Investigations being carried out in the Supervisory Commission of the Assembly indicate that a network of corruption was woven with those contracts. Characters like Enrique Cadena Marín facilitated Chinese brokerage businesses: receiving Ecuadorian oil at a low price and selling it to others at higher prices.
5.- About 18 high-profile public officials, from former President Rafael Correa, participated in the approval and signing of the agreements. The most active was the former International Trade Manager of Petroecuador, Nilsen Arias.
Others involved were former Petroecuador managers Marco Calvopiña and Pedro Merizalde; the former Vice President of the Republic, Jorge Glas; former ministers Wilson Pástor, Rafael Poveda and Pabel Muñoz; and former Senplades official Adolfo Salcedo.
6.- To date, Ecuador has delivered 1,174 million barrels of crude to China, within the contracts of oil presale. There is still 156 million more to deliver until 2024
7.- Those barrels were delivered at prices below the market price. The damage is estimated to be around $3.6 per barrel.
8.- If it had not been given to China, that volume of crude could have been sold in international markets at higher prices. The country has lost at least $4,226.4 million due to the bad business done with that Asian country.
9.- An analysis by the International Monetary Fund (IMF) determined that at least 35% of chinese loans they were lost in corruption, inefficiency and overpricing.
10.- The Correa government had to resort to China for financing because in 2009 the doors of international markets and organizations were closed. This is due to the fact that he declared illegitimate, and stopped paying, a part of the Ecuadorian external debt. (JS)
