Monthly Archives: November 2024

On October 27, 2024, the Electricity Regulation and Control Agency (ARCONEL) issued Resolution No. ARCONEL-010/2024 (the “Resolution”). The Resolution amended and codified Regulation No. ARCONEL-005/24, which includes the “Regulatory Framework for Distributed Generation Systems for Self-Supply by Regulated Electricity Consumers.”

The Resolution was published in Official Gazette No. 689 on November 22, 2024.

Below is a summary of the amendments to the Regulation:

1. Distributors with multiple business units
   • Previous rule: For distributors with multiple business units, the regulated consumer and the distributed generation system for self-supply (“SGDA”) were required to be within the same business unit (e.g., both had to be within CNEL Guayaquil).
   • Current rule: It is now sufficient for the regulated consumer and the SGDA to be within the same service area of the distributor, even if they belong to different business units (e.g., the regulated consumer may be in CNEL Guayaquil, and the SGDA in CNEL Esmeraldas).

    

2. Contract between the SGDA owner and the regulated consumer
   • Previous rule: If the SGDA was owned by a third party, it was mandatory to submit a lease agreement between the owner and the regulated consumer to the distributor before starting SGDA operations.
   • Current rule: Submitting a lease agreement is no longer mandatory. Any “legal document” agreed upon by the parties is sufficient. The prohibition against selling the energy produced by the SGDA to the regulated consumer remains in effect.

    

   Carlos Torres, Senior Associate at CorralRosales
   ctorres@corralrosales.com
   +593 2 2567676

   Mario Fernández, Associate at CorralRosales
   mfernandez@corralrosales.com
   +593 2 2544144 

   © CORRALROSALES 2024
   NOTA: The above text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused by actions taken or not taken based on the information contained in this document. Any specific situation requires the specific opinion and advice of the firm.

   CORRALROSALES

Through Resolution No. BCE-GG-024-2024, published in the Official Gazette No. 678 on November 7, 2024, the Central Bank of Ecuador (“BCE“) complied with the first transitional provision of Resolution No. JPRM-2024-018-M, issued by the Monetary Policy and Regulation Board (“JPRM“) on September 4, 2024, and enacted the Regulation for the Authorization, Oversight, and Supervision of Participants in the Auxiliary Payment Systems (hereinafter, the “BCE Resolution“).

The BCE Resolution repealed Resolution No. BCE-GG-018-2023, issued by the Central Bank on September 29, 2023, which previously governed this matter.

This regulatory update amends the criteria that entities must meet to be qualified by the Central Bank as participants in the Auxiliary Payment Systems (“Participants“).

The BCE Resolution strengthens the qualification process by imposing more rigorous requirements for entities seeking to obtain such status. Notable among the new requirements are:

1. ISO 27001 Certification on Information Security Management Systems or the implementation of policies, processes, procedures, and methodologies for information security aligned with international standards.
2. ISO 22301 Certification for Business Continuity Management or a business continuity plan that adheres to recognized international standards and practices.
3. ISO 31000 Certification on Risk Management or a methodology for managing operational risks.
4. A liquidity risk management methodology, integrating operational and analytical tools for identifying, measuring, controlling, and monitoring such risks.
5. A Corporate Governance Manual tailored to the administrative structure of the Participant.
6. A Customer Service Manual.
7. A Personal Data Protection Policy aligned with the Data Protection Law and its Regulations.
8. Certificate of compliance issued by the Financial and Economic Analysis Unit – UAFE.

Additionally, the BCE Resolution imposes periodic reporting obligations requiring Participants to submit information in structures established by the Central Bank.

The BCE Resolution mandates that, within a maximum of four (4) months, the BCE will require currently authorized Participants in the Auxiliary Payment Systems to submit the additional documents and requirements specified in the BCE Resolution.

The BCE will also have to update the registry of Participants in the Auxiliary Payment Systems to ensure that services listed for each Participant comply with the provisions of Resolution No. JPRM-2024-018-M.

 

Juan Fernando Riera, Associate at CorralRosales
jriera@corralrosales.com
+593 2 2544144

On November 7, 2024, the National Public Procurement Service (“SERCOP”) issued Resolution No. RE-SERCOP-2024-0145 (the “Resolution”), through which amendments were made to the Secondary Regulations of the National Public Procurement System (“NSSNCP”).

The Resolution was published in Official Registry No. 682 on November 13, 2024, and came into force on the same date.

Below is a summary of the general amendments to the NSSNCP:

1. RUP Suspension. 1.1. The suspension of the Unified Suppliers Register (“RUP”) of a supplier will also apply to its legal representative and major shareholder. 1.2. For associations to consortia, it will extend to their common representative. 1.3. If the legal representative or common representative is an entity, the suspension will also extend to the individual who holds the legal representation of that entity.

1. Financial Ratios. Non-compliance with the financial ratios established by the contracting entity in the bidding documents does not constitute grounds for rejection of the bid.

1. Beneficial Owner. The beneficial owner declaration does not apply to bidders, or their shareholders listed on a stock exchange.

1. Participation Rules. The participation rules regarding technical experience, legal existence, and equity do not apply in reverse auction procedures or in the special regime procedures set forth in numbers 2 and 8 of Article 2 of the National Public Procurement Law (“LOSNCP”).

1. Ecuadorian Added Value. For a bid to be considered national, its Ecuadorian Added Value (“VAE”) must be equal to or exceed the minimum threshold established by the contracting entity. VAE does not apply to engineering, procurement, and construction procedures.

1. Sustainable Public Procurement. 6.1. Sustainable public procurement is established as a strategy to: (i) position contracting entities as responsible consumers; (ii) promote environmental, social, and economic well-being; (iii) ensure the quality of public spending; and (iv) encourage the use of criteria related to environmental, economic, and social responsibility. 6.2. By March 13, 2025, SERCOP is required to issue the “Guidelines for Sustainable Public Procurement.”

1. Bids. Bids must be submitted exclusively through the COMPRASPÚBLICAS portal, except in: (i) emergency procurements; (ii) acquisition of real estate; (iii) leasing of real estate; (iv) inclusive fairs; (v) procurements by specific business activity; and (vi) special regime procedures set forth in numbers 2 and 10 of Article 2 of the LOSNCP.

1. Collusion. In cases of suspected collusion in public procurement, SERCOP will inform the Superintendency of Economic Competition to determine and sanction such acts.

1. UAFE. If the contractor is an entity subject to obligations with the Financial and Economic Analysis Unit (UAFE), it must submit the UAFE Compliance Certificate during the contract execution phase.

1. Validation stage. During the validation stage of bids, contracting entities may request documents that support any information included in the bid that lacks sufficient evidence.

Public procurement procedures initiated before November 13, 2024, will conclude under the rules in force at the time of their call.

By November 13, 2025, SERCOP must update the electronic tools of the COMPRASPÚBLICAS portal to apply the provisions of the LOSNCP, its Regulations, and the NSSNCP.

If you require additional information on reforms related to your industry, please feel free to contact us.

 

Hugo García Larriva, Senior Associate at CorralRosales
hgarcia@corralrosales.com
+593 2 2567676

 

Mario Fernández, Associate at CorralRosales
mfernandez@corralrosales.com
+593 2 2544144 

It is important to note that the Ministry of Labor issued Ministerial Agreement No. MDT-2024-059, which reestablished the terms and deadlines that were suspended by Ministerial Agreement No. MDT-2023-056, effective from December 15, 2023.

This last agreement, now repealed, suspended and interrupted the terms and deadlines for fulfilling registration and procedural obligations dependent on the Ministry of Labor´s computer systems. This includes, among others, the registration of employment contracts, termination agreements, sanction resolutions, inspection files and inputs, as well as the registration of thirteenth and fourteenth salary forms.

Employers have until February 23, 2025, to recover from the Ministry of Labor’s platforms, records of labor contracts, termination agreements, internal regulations, occupational health and safety documentation, training certificates, and resolutions regarding special working hours for the period from 2020 to 2023.

 

Edmundo Ramos, Partner at CorralRosales
eramos@corralrosales.com
+593 2 2544144

 

María Victoria Beltrán, Senior Associate at CorralRosales
mbeltran@corralrosales.com
+593 2 2544144

 

On October 27, 2024, the Electricity Regulation and Control Agency (“ARCONEL”), issued Regulation No. 006/24, establishing the “Regulatory Framework for Participation in Distributed Generation by Companies Interested in Energy Generation Activities” (the “Regulation”).

Below are the most relevant points:

1. Purpose

The Regulation defines the technical and commercial requirements for private sector companies and foreign state-owned enterprises to establish, operate, and manage new distributed generation plants (“CGD”) for selling energy to distribution and commercialization companies (“Distributors”).

Interested companies are responsible for identifying generation projects.

The maximum capacity and accumulated energy for projects under this Regulation will be governed by policies and guidelines issued by the Ministry of Energy and Mines (“MEM”) according to the country’s needs.

1. CGD conditions

• Nominal capacity equal to or greater than 100 kW and up to ten 10 MW.
• Synchronous connection to an electricity transmission or distribution network.
• Use of a primary source of non-conventional renewable energy.

1. Procedure

Companies wishing to install and operate a CGD must:

1. Obtain a Preliminary Connection Feasibility Certificate from the Distributor, confirming the initial feasibility of connecting the CGD to its network.
2. Obtain a Qualification Certificate from MEM, granting the applicant exclusive rights to meet the project’s requirements.
3. Obtain a Definitive Connection Feasibility Certificate from the Distributor, confirming final connection feasibility.
4. Obtain a Concession Contract from MEM, which is the enabling title for project development.
5. Sign Regulated Contracts with Distributors for the sale of energy produced by the CGD.

1. Levelized costs of the energy produced.

The levelized costs of energy (“CNE”) are rates at which energy produced by CGDs will be compensated, based on the technology used:

Technology CNE (¢USD/kWh) Biomass 11,864 Wind 8,488 Hydroelectric 7,589 Solar Photovoltaic 8,144 Biogas 12,360 Geothermal 11,140

CGDs with nominal power between 1 MW and 10 MW will receive preferential dispatch.

This Regulation does not apply to: (i) distributed generation projects in the Galápagos; (ii) self-generation plants; (iii) distributed generation systems for self-supply of regulated and unregulated consumers; (iv) emergency generator sets; and (v) generation plants that were constructed or in operation before October 27, 2024.

 

Carlos Torres, Senior Associate at CorralRosales
ctorres@corralrosales.com
+593 2 2567676

Mario Fernández, Associate at CorralRosales
mfernandez@corralrosales.com
+593 2 2544144 

On November 5, 2024, the Official Gazette No. 676 published the Regulation for the Utilization of Associated Gas, hereinafter referred to as “the Regulation”, which was issued by the Board of the Hydrocarbon Regulation and Control Agency through Resolution No. ARCH-003/2024 on September 25, 2024.

The Regulation aims to establish both the actions and technical parameters required to implement projects for the Utilization of Associated Gas, the gradual elimination of routine flaring, and the elimination of outdoor burning of Associated Gas using flares. It will apply nationwide to all oil exploration and extraction activities that produce Associated Gas, conducted by public or private, national or foreign companies, consortia, and associations, referred to as Subjects of Control.

To optimize the utilization of Associated Gas, Subjects of Control must submit an Associated Gas Utilization Plan, hereinafter “the Plan,” which can be used for self-consumption within the Subjects of Control’s contract area. The Plan aims to quantify the volume of associated gas usage and flaring during the exploration and extraction stages of hydrocarbons. Subjects of Control will request annual authorization for the use and flaring of associated gas from the relevant ministry within 30 days from the start of production tests on the first exploration well. The Plan must include the following information:

1. Description of projects for associated gas optimization.
2. Designs and project infrastructure plans.
3. Schedule for the implementation of associated gas utilization projects.
4. Measurement of gas flow produced and flared from wells in production.
5. Methodology for estimating planned volume.

All Subjects of Control are required to submit an annual report on the integrity and operational safety of the systems for the safe disposal of relief gases in an environmentally friendly manner, referred to as “Teas.” For Subjects of Control to operate Teas, the Plan must include the following:

1. Number of Teas, categorized by platforms.
2. Geographic coordinates of Teas.
3. Designs, plans, and specifications of Teas.
4. Annual monitoring plan approved by the environmental authority.
5. Inspection and maintenance program for Teas.

The deadline to replace flares with Teas is set for 2030. If the maximum capacity for Associated Gas Utilization cannot be reached by 2030, the Subjects of Control must provide technical justification and update the Plan.

Subjects of Control must measure the following volumes of Associated Gas:

• Produced.
• Designated for routine, non-routine, and gas safety flaring.
• Used in the Subjects of Control’s gas utilization projects.

Once the maximum associated gas utilization capacity is reached according to the block operated by the Subjects of Control, they will not be allowed to flare Associated Gas except in authorized volumes.

Within 90 days of the Regulation’s entry into force, the Ministry of Energy and Mines will define contractual models for the industrialization and/or commercialization of surplus Associated Gas.

The first five-year plan for Associated Gas Utilization will come into effect upon the authorization for Associated Gas Use and Flaring in 2025.

 

Rafael Serrano, Partner at CorralRosales
rserrano@corralrosales.com
+593 2 2544144

Carlos Torres, Associate at CorralRosales
ctorres@corralrosales.com
+593 2 2567676

 

By Resolution NAC-DGERCGC24-00000035, issued on October 30, 2024, the Internal Revenue Service amended the rules regarding the transmission of electronic sales receipts and the issuance of pre-printed receipts.

Previously, taxpayers were required to transmit electronic receipts to the tax administration within a maximum of 72 hours after generation. Under the new amendment, taxpayers may now submit receipts within a period of 4 business days from the date of issuance.

Additionally, as long as the emergency in the electrical sector persists, taxpayers are permitted to issue pre-printed receipts up to a limit of 5% of the total receipts issued in the previous fiscal year. This limit was previously set at 1%.

 

Andrea Moya, Partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144