ECUADOR Trends and Developments Contributed by: Félix Reyes, Lorena Barrazueta, Jorge Sicouret Zea and Karla Condo, Coronel & Pérez
Nonetheless, investors can still acquire mining concessions by purchasing shares in local min - ing companies. In such cases, any share transfer exceeding 10% of the voting capital must be reported – though not approved – by the Ministry of Energy and Mines. Private investors may also seek to acquire exist - ing mining concessions held by Ecuador’s state- owned National Mining Company ( Empresa Nacional de Minería ENAMI). To do so, they must obtain a suitability qualification from the Minis - try of Energy and Mines, which requires foreign individuals or legal entities to establish a legal domicile in Ecuador. Regulatory changes introduced last year regard - ing the “preferential right” and “first option” over ENAMI-held concessions could enable private investors to enter into partnerships, co-opera - tion agreements and operational ventures with ENAMI to explore and later exploit these mines. With increasing foreign interest and greater reg - ulatory clarity, the sector is poised for market consolidation and strategic partnerships. Com - panies looking to enter or expand in Ecuador may explore acquisitions, joint ventures or equity investments in local mining firms, positioning themselves for growth in an evolving industry. Energy Recent regulatory reforms in Ecuador’s electric - ity sector have created new opportunities for pri - vate investment, positioning it as a key industry for M&A. In Ecuador, private sector participation in elec - tricity has been limited, as public electricity service is primarily provided by state-owned companies. However, the 2024 energy crisis – caused by a drought that resulted in an imbal -
ance in the generation of hydroelectric energy, which accounts for 70% of the country’s ener - gy – led to major regulatory changes aimed at attracting both local and foreign private invest - ment in energy generation and transmission. The most significant reforms included the enact - ment of two new regulations: the Organic Law on Energy Competitiveness, which entered into effect in January 2024, and the Law to Promote Private Initiative in Energy Generation, which came into effect in October 2024. These laws expanded the capacity limit for private renew - able energy projects from 10 to 100 megawatts, allowing companies to develop solar, wind and geothermal projects without requiring a public bidding process. Also, new projects that are not part of the “Master Electricity Plan” can be proposed and developed by private entities with prior authorisation from the Ministry of Energy and Mines. Other key regulatory changes include eliminating the obligation to return assets to the state upon the expiration of an authorisation or concession for projects involving: • self-supply; • self-generation; • cogeneration; or • non-conventional renewable energy genera - tion of up to 10 MW. Additionally, new tax incentives were introduced, including a 100% additional deduction on depre - ciation and amortisation for investments in the machinery, equipment and technologies used in renewable energy generation. A ten-year income tax exemption was also estab - lished, starting from the first year in which reve - nues are directly and exclusively attributable to the
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