(Bloomberg) -- Ecuador ordered some industrial firms to slash their daily electricity usage amid its worst drought in decades, drawing backlash from major business associations and companies like Continental AG.
A group of industrial firms must reduce electricity consumption by 50% during the daytime hours as long as the drought-related crisis continues, according to a government document seen by Bloomberg. A separate document said that companies may have to stop using electricity from the national grid altogether if a crucial reservoir remains at critical levels.
The dam in southern Ecuador is key to allowing the state-run electricity industry to plan rolling blackouts amid the country’s worst drought in 60 years. The South American nation normally produces about 70% of its electricity from hydroelectric plants, most of which are fed by rivers that descend into the Amazon.
President Daniel Noboa’s office did not respond to a request for comment.
More than 200 companies have been cut off from power in the cities of Cuenca and Ambato, according to Maria Paz Jervis, president of Ecuador’s Entrepreneurial Committee, the nation’s umbrella business association.
The moves have generated criticism from businesses that say they will cause significant losses and were made without any industry input. Business leaders in Quito have requested an emergency meeting with Noboa’s government to seek a reversal, as well as regular talks with the administration to coordinate a response to the crisis.
The “unprecedented” move was “taken without prior notice or consultation with productive sectors” and “is absolutely unfeasible and disproportionate,” Jervis said at a Monday news conference.
German tiremaker Continental said in a statement posted to social media that electricity for its facility in Cuenca was shut off without prior notice at 1 p.m. Saturday, “causing a paralyzation of the factory and follow-through losses.” The company said it had decided to keep production offline through Monday.
Power cuts are also hamstringing Ecuador’s world-leading shrimp production and risk reducing monthly exports by $75 million, the Chamber of Aquaculture said, adding that the decrees have put the industry in “a critical situation.”
Ecuador is experiencing its second, deeper round of outages since Noboa, who is seeking reelection, pushed a bill meant to curb blackouts through congress in January.
Every eight-hour blackout costs the country’s economy $96 million, according to the entrepreneurial group. In the second quarter, the economy contracted by 2.2% from the same period a year ago, the central bank reported last week.
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