OPINION: Guillermo Lasso’s election as the next president of Ecuador was a plus for the Andean nation in more ways than one.
Ecuador used to suffer chronic political instability, until the country fell into the grip of Rafael Correa, a populist caudillo, in 2007.
Correa was forced to flee the country in 2017, amid allegations of corruption and his successor, former vice president Lenin Moreno, was a pleasant surprise, pursuing sensible policies for the economy and the economically vital oil sector.
In apparent contrast to neighbouring Peru, which is seeing polarisation between hard-right and hard-left candidates, Ecuador’s election was sedate.
Lasso, a conservative businessman, was opposed by Andres Arauz, a left-leaning economist.
Arauz was gracious in defeat and called to congratulate the new president-elect.
Rightly wary about the volatility of politics in this region, Lasso said he will ignore International Monetary Fund prescription to increase indirect taxation.
On the other hand, Lasso promised to introduce new risk contract models for the oil sector, hoping to avert a decline in reserves and production.
He also pledged to review investments in the environmentally sensitive Yasuni national park, where environmentalists and indigenous groups have been appalled by a heavy oilfield development.
Building on Moreno’s efforts to revive oil sector investments, Lasso has shown awareness of the need for a deeper rethink of the terms on offer.
He was also right to pledge proper scrutiny of the Yasuni question.
Even though the Yasuni region hosts the country’s biggest greenfield oilfield development, by showing willingness to defend the integrity of a UNESCO-listed park Lasso has signalled that he will be sensitive to the growing demands to reach benchmarks under the category of environmental, social and governance.
It could also earn him a truce with well-organised indigenous groups who have shown themselves to be staunch defenders of the rainforest.
Risk contracts, on the other hand, could help Ecuador unearth new resources in less sensitive regions, possibly including offshore plays.
Along with privatisations, such policies could open a path for investments deemed vital for the modernisation of the midstream and downstream sectors, where spills and accidents have been all too common.
With Ecuador's long history of oil spills and environmental degradation, it is time to start rebuilding trust with communities.
(This is an Upstream opinion article)