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Ecuador hopes to pay off debt to Perenco this year -minister

·2 min read

By Alexandra Valencia

QUITO, Aug 10 (Reuters) - Ecuador plans to pay off a debt it owes to French oil company Perenco at the end of this year and is open to a dialogue to determine how the payment should be made, the country's economy minister said on Wednesday.

Ecuador is obliged to pay compensation to Perenco after the World Bank's International Centre for Investment Disputes (ICSID) ruled the country had unlawfully ended a production-sharing agreement with Perenco and owed it $391 million including interest.

Ecuador's president, Guillermo Lasso, has promised to pay the debt, but after resolving pending tax obligations owed by Perenco for operations at two oil blocks.

The tax amount owed by Perenco is around $50 million, Economy Minister Pablo Arosemena told Reuters, an amount the government hopes a U.S. court will discount from the ICSID judgment.

"What we hope for is some type of compensation or fix, but it's not a condition, it's just sensible to wait for the New York court to define," Arosemena said. "Once that's defined we'll 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 that (conversation) this year so we can comply with this obligation this year."

A Perenco spokesperson said on Tuesday it has had no contact from Ecuador and the tax debt is separate from the judgment.

Perenco sued Ecuador in 2008 and was ultimately awarded $412 million in May last year. The ICSID ordered Perenco to pay compensation to Ecuador in relation to environmental damage it caused in areas where it operated, leaving the company with a net award of $374.3 million plus interest.

At the end of last month, a Luxembourg bailiff ordered 122 banking entities operating in Luxembourg to freeze assets held by Ecuador over payment of the award.

"Ecuador's central bank has no assets or investments in Luxembourg so there hasn't been an effect," said Arosemena, adding that Ecuador has not had issues paying yields on its bonds traded on Luxembourg's stock exchange.

The payment to Perenco will put significant pressure on the country's economy, Arosemena acknowledged, but the government is holding to its goal of closing this year with a fiscal deficit of 2% of GDP. (Reporting by Alexandra Valencia Writing by Julia Symmes Cobb Editing by Leslie Adler)