Energy South America

The President of Ecuador, Rafael Correa, announced today that ENARSA, the Argentine state energy company, will build the largest hydroelectric plant in the history of the country, with generating capacity greater than the total installed hydroelectric capacity to date. Why ENARSA is doing this is a mystery. ENARSA was formed during Nestor Kirchner's administration, which continues through the presidency of his wife, as a mechanism for the government to participate in any energy projects which seem attractive to the Kirchners, with no down side and plenty of up side. ENARSA has no experience in this type of project, which means that it will subcontract everything to companies which do.

The president of ENARSA is currently under a cloud because he chartered the Gulfstream jet which carried a bag full of illicit money destined for Cristina Kirchner's presidential campaign. The plane also carried executives of PDVSA. An Argentine judge is currently considering whether or not to issue an international arrest warrant for them; don't bet on the warrant. Odds are nothing will happen with any of this and business will go on as usual. The question is how much money will be available to be skimmed in Argentina and Ecuador. Will the project cost 25% more than it should, 50%, 100%?

The cornerstone of the project will be laid April 25 during Cristina Kirchner's visit to Ecuador.