Bulletin ICCI No. 32, November 2001


Privatisation of the electricity-system

The dilemma

The president of the republic, his brother, and a number of employees of all levels, has, by using prudent analysis, merciless statistics, dubious lobbying, insults, and attempts at bribery, tried to convince us of the "rationality" of selling the electricity companies. There has begun a new crusade against the native Taliban, intending to bomb the towers of development, defended by the alliance of western civilisation, Christianity and globalisers.

In this new crusade, the Taliban are all those dinosaurs who oppose the sale of the electricity companies. This means: the indigenous movement, workers in the electricity plants, many municipal and provincial authorities, managers, and a series of NGO´s and social movements who oppose globalisation to the extreme. The western alliance, on the other hand, is formed by: Gustavo Noboa, president of the republic; Ricardo Noboa, president of CONAM (National Counsel for Modernisation) and for many years the lawyer of the company EMELEC; Heinz Moeller, Chancellor of the republic and sponsor up until recently of one of the multinationals that could take over the national electricity system; Ing. Alfredo Mena, during many years president of the electricity company in Quito which is presently being accused of being inefficient; various production chambers and further other minor figures.

Next we sum up the arguments that are being used to justify the sale of electricity distributing companies.

There exists a deficit in the production of electrical energy, for that reason there are sporadic power cuts.

The construction of the hydroelectric projects of Mazar, Toachi-Pilaton and others require millions of dollars.

The state does not have the necessary means, or anybody to borrow these from, to construct the new hydro-electricity projects.

Nobody is willing to invest in electricity generation if there is no guarantee that the distributing companies work efficiently.

The distributing companies cannot be efficient because they have enormous black losses (light that somebody consumes, but for which nobody pays), and because of the workers and their unions who have unfair collective contracts.

The resources that the state presently puts in inefficient companies will be directed to the solidarity fund, which serves to give health and education to the most poor.


All these points form a system of equations:

Inefficient Electricity companies and the state’s lack of resources result in an increasing deficit of energy and more power cuts. In the meantime, the sale of electricity companies would result in more resources for the solidarity fund and for that reason more attention to health, education and the construction of the hydro-electricity projects.

Solving these equations the president has given us the answer: all things considered, "Without the sale of the electricity companies, Mazar will not be constructed, it is that simple".

Why can’t we understand the rationality of the argumentation of the government?

The answer to this is also very simple: we don’t understand it because it is not our rationality. There does not exist one single rationality!

The process that the government has followed is close to both illegal (the constitutional Tribunal made a statement in this regard) and immoral. About this topic local authorities have spoken out, like the mayor of Cuenca, the prefect of Cotopaxi, indigenous leaders, electricians, popular leaders, and technicians.

So far, the government has not put a value on the sale. There are several rumours about an attempt to sell the companies for a fraction of their real value. Besides, the sale is in reality not a privatisation since the electricity companies, even though their actions are property of the municipalities, provincial councils, or the solidarity fund, are companies with private rights.

Several sectional organisations would be delighted to take charge of the efficient management of the electricity companies because the business is profitable.

The problems of the distributing companies are not because of the workers, unions, or the collective contracts, and the salaries that they earn are not exaggerated.

The hydro-electricity projects that we need should be constructed by means of the system BOT, which means that who constructs also finances and runs the projects, to get back his/her investment through a more just profit.

There doesn’t exist any guarantee that the means obtained by selling the electricity companies, which should supply the solidarity fund, are used for education and health because previous and present administrations of this country have shown us before how they really use the public money. The following two examples serve to show this: the dealing with the banking crisis which has already cost over a 4.3 billion dollars and the intention to erase the debt worth more than $ 50.000 owed to creditors of the Public Bank.

And, the last manoeuvre of the government, the offer to the workers of the electricity companies of 10% of the stocks of the companies in a ten years period, which should convince them to go along with the privatisation, without interest and to be paid with the performance/output of those same stocks, a gift. More immorality, we hope that the electricity workers don’t fall in the trap that will for good move them away from the side of those they suppose to be defending.

The faultless logic of the neo-liberal rationality always brings us to resolve the equation of development through the recipe that the IMF forces us to swallow; privatisation, opening up for the external markets and the law of supply and demand; a recipe always stained with corruption.

They say that Che Guevara, while he examined the residents of a Bolivian village found that all of them suffered from malnutrition, parasites and other consequences of poverty, which he was unable to solve. A little girl having been present all the time, said, "Mammy, this doctor prescribes to everybody the same recipe".

The logic of development, the globalisation recipe, is the same that during the past thirty years has been implemented in Ecuador, Malaysia, Brazil, Yugoslavia, Argentina, Russia, Africa, and Central America. Will it be that the International Monetary Fund, movedly observes how we die of underdevelopment without hope for salvation? Or will it be that the problem is not there where they are looking for it, but in the system that puts the private profit as sole aim, the private usefulness as only end.

The "protest with proposal", coming from the indigenous movement, has to spread out to the whole of civil society. We have to organise a national movement in which the local authorities, the urban population, women, and youngsters actively participate; a movement that does not only stop the privatisation of the electricity system, but which constructs an alternative economic, social and political model to give comprehensive answers to the diverse country that we are living in.

Prevent Ecuador from shutting down!