Ecuador’s government has mandated significant reductions in electricity usage for industrial firms as the nation grapples with its worst drought in over 60 years. The energy crisis has led to substantial backlash from businesses, who claim the measures were implemented without consultation and will cause massive financial losses.
A government document revealed that certain industries are required to cut electricity consumption by 50% during daytime hours. If the drought persists, companies may be forced to halt their reliance on the national grid entirely. The power cuts are intended to alleviate pressure on a critical reservoir in southern Ecuador, which plays a key role in maintaining the country’s hydroelectric power supply.
The effects of the power cuts are already being felt. Over 200 businesses in Cuenca and Ambato, including German tire manufacturer Continental AG, have experienced sudden electricity shutdowns. Continental reported that its Cuenca facility was paralyzed without warning, leading to production halts and follow-up losses. Ecuador’s shrimp industry, one of the world’s leaders, is also at risk, with experts predicting a potential $75 million loss in monthly exports.
Business leaders have expressed frustration at the lack of consultation, with Maria Paz Jervis, president of Ecuador’s Entrepreneurial Committee, calling the government’s actions “unfeasible” and “disproportionate.” The group is seeking an emergency meeting with President Daniel Noboa to negotiate a coordinated response to the crisis.
The power cuts, coupled with recent economic contractions, pose a significant challenge to Ecuador’s economy, which relies heavily on hydroelectric power for around 70% of its energy needs.
