Govt. Gives Petroecuador US$40mn Breather
Ecuador's state oil company Petroecuador has found a temporary solution to its debt problems, after it reached agreement Thursday with the ministry of economy in a deal that will generate about US$40mn in liquidity this month.
The agreement is based on non-retention of income from fuel sales in April - income that Petroecuador usually hands over to the economy ministry. Oil service companies association Asemser is "satisfied" with the agreement, which will enable Petroecuador to pay debts to the companies so they can pay their workers, some of whom have not been paid for months, Asemser president Fernando Pareja told BNamericas.
About 40 oil service companies, including US company Schlumberger, had threatened to stop production if Petroecuador did not pay them, but the new agreement eliminates that risk, Pareja said. Petroecuador's board will meet next week to hammer out the details of the company's cash-flow to meet its financial obligations during the next few months, Petroproduccion VP Patricio Lopez told Pareja at a Friday meeting.
Petroecuador's board has still not approved the company's 2003 budget, but is expected to do so in the next "couple of weeks," Pareja said, adding that the budget would include cuts in administrative and operating expenses, which will free up resources for the company to continue paying its debts this year. "They are trying to cut back where they can, without stopping the investment needed to increase oil production in the country," Pareja continued.
But even the income from April's fuel sales, about US$10mn a week, won't come close to covering the US$28mn a week Petroecuador needs to cover its debts and operating expenses, Petroecuador's VP Victor Hugo Jijon told BNamericas. Jijon argues that the economy ministry is squeezing the state oil company to free up resources for servicing Ecuador's national debt with the International Monetary Fund (IMF).
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