Quito – Ecuador expects to receive millions of dollars in additional income starting Tuesday after the entry into force of a law giving the state a 50 percent share in the windfall profits of multinational oil firms operating in the Andean nation.
With the measure, Ecuador will receive some “$2 million per day,” according to Wilfrido Lucero, speaker of Congress, which had originally passed a bill claiming for the state 60 percent of the extra revenues flowing to the oil companies because of surging international prices.
President Alfredo Palacio scaled the levy back to 50 percent, up sharply from the 20 percent Ecuador’s government receives under its current contracts with the foreign firms, which have threatened to take Quito to court over the retroactive change.
Despite the legal objections of the oil firms, the reform was published Tuesday in the official gazette, according to a statement issued by the unicameral Ecuadorian congress.
National legislators say that in enacting the reform they have applied “justice and equity” to the processes of petroleum contracting “so that (those elements) are enshrined in the principles of economic equilibrium and juridical security for the parties.”
The speaker expressed his hope that the additional resources to be received by the state will be used “not only to dynamize the country’s economy, but also to attend to unsatisfied social demands in the areas of health, education and housing, among others.”
A total of 15 foreign oil companies operate in Ecuador, the biggest being Spain’s Repsol-YPF; Italy’s Agip; the Andes Petroleum consortium, headed by China’s CNPC; U.S.-based Occidental Petroleum; and France’s Perenco.
The multinationals account for 64 percent of Ecuador’s daily output of roughly 550,000 barrels.
Ecuador’s oil exports, which last year totaled $5.4 billion, are by far the country’s biggest source of hard currency, and oil revenues finance almost 40 percent of the central government’s budget. EFE
