Ecuador Reaches
Temporary Deal With
Foreign Firms Over Oil
Tax Row
Ecuadorian President
Rafael Correa said on
Saturday his government
has reached a temporary
agreement with most
foreign companies that
filed lawsuits against
it over an oil tax.
"Most of the companies
have said yes" to a
government proposal to
offer them a tax cut for
one year if they agreed
to drop the lawsuits,
Correa said during his
weekly radio address.
Ecuador last year raised
its windfall tax from 50
percent to 99percent,
which allowed the
government to grab
nearly all the extra oil
revenues generated by
foreign firms above a
set contractual price.
Correa's government on
Thursday offered to
slash the windfall tax
to 70 percent from 99
percent for one year if
they agreed to drop
lawsuits filed over the
tax.
"But in one year, they
will have to sign
service deals ... that's
the condition." Correa
said.
Ecuadorian Oil Minister
Galo Chiriboga said the
government will
negotiate a new service
contract model with
companies during the
year.
Ecuador, South America's
No. 5 oil producer,
wants the foreign firms
to switch from deals
that allows them to keep
part of the crude they
extract to service
contracts in which the
state will keep all the
crude in exchange for a
fee.
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