By Alexandra Valencia
QUITO, Aug 10 (Reuters) – Ecuador plans to repay a debt it owes French oil company Perenco at the end of this year and is open to a dialogue to determine how the payment should be made, it said on Wednesday. the country’s economy minister. .
Ecuador is required to pay compensation to Perenco after the World Bank’s International Center for Settlement of Investment Disputes (ICSID) ruled that the country had illegally terminated a production-sharing agreement with Perenco and owed him $391 million, including interest.
Ecuadorian President Guillermo Lasso promised to pay the debt, but after resolving outstanding tax obligations owed by Perenco for operations on two oil blocks.
The amount of tax owed by Perenco is around $50 million, Economy Minister Pablo Arosemena told Reuters, an amount the government hopes a US court will deduct from the ICSID judgment.
“What we’re hoping for is some sort of compensation or solution, but that’s not a condition, it’s just reasonable to wait for the New York court to rule,” Arosemena said. “Once this is defined, we will proceed with the payment.
“One is for the court to define how the (tax debt) is compensated, and on the other hand the conversation, which is independent of the amount, is… how we can pay,” the minister said. “We hope to close this (conversation) this year so that we can comply with this obligation this year.”
A Perenco spokesman said Tuesday that it had no contact with Ecuador and that the tax debt was separate from the judgment.
Perenco sued Ecuador in 2008 and was eventually awarded $412 million in May last year. ICSID ordered Perenco to pay compensation to Ecuador for environmental damage it caused in areas where it operated, leaving the company with net compensation of $374.3 million plus interest.
Late last month, a Luxembourg bailiff ordered 122 banking entities operating in Luxembourg to freeze assets held by Ecuador while the award is being paid.
“The Ecuadorian central bank has no assets or investments in Luxembourg, so there was no effect,” Arosemena said, adding that Ecuador had no problems paying the returns of its bonds traded on the Luxembourg Stock Exchange.
The payment to Perenco will put significant pressure on the country’s economy, Arosemena acknowledged, but the government is sticking to its target of closing this year with a budget deficit of 2% of GDP. (Reporting by Alexandra Valencia Writing by Julia Symmes Cobb Editing by Leslie Adler)