by Lucien Chauvin

In 2020, Ecuador hopes to celebrate the bicentennial of the declaration of its independence with Manta as the principal port on South America’s Pacific coast. A docking center will be interconnected with the rest of the country and much of the northern half of region through a series of roads and waterways.


“Manta is going to be the doorway between South America and Asia. It is a deepwater port with ample room for the major expansion we have planned,” says Luis Carguaitongo, a spokesman for the Manta Port Authority.

Besides the port, Carguaitongo says there is a modern airport for cargo and a land transportation system in the works that will make it easy and cheap to move goods from Belém, on Brazil’s Atlantic coast, up the Amazon to Manaus and then over to Ecuador and Manta on the Pacific coast.

Much of the scheme remains on the drawing board and other countries, principally Peru, are racing to do something similar. But Manta’s makeover is underway with a $583 million price tag for port expansion and another $660 million for an the integrated system that would link the port to a river system and Brazil.

Strategic Appeal
The port itself was awarded as a 30-year concession in 2006 to Hong Kong’s Hutchison Port Holdings (HPH). The company has finished initial work of shoring up Manta’s existing piers and in September began construction of a new fishing terminal. The facility will serve local and international boats, with a focus on tuna. Manta processes around 30,000 tons of tuna annually.

The major development begins at the start of next decade with the construction of container terminals and storage facilities that aim to make Manta one of the largest ports on the Pacific. When completed in the 2020s, the hub will move between 1.6 and 1.8 million 20-foot equivalent units (TEUs) annually. Manta handles around 50,000 TEUs a year.

Expansion will easily make Manta the country’s largest port, surpassing Guayaquil, which has capacity for 450,000 TEUs, and place it third in Latin America for container capacity, behind Santos, Brazil with 2.9 million TEUs and Kingston, Jamaica with 2.2 million TEUs.

HPH’s full investment will be $523 million, including construction, equipment and maintenance. The Ecuadorian government is investing another $60 million as part of its commitment in the concession agreement. The spending is funded through a 1% tax added on customs duties.

“Manta’s strategic location and relative proximity to the Asian market gives it an important advantage for cargo traffic. This and the depth of the port [more than nine meters] are what attracted HPH,” says Andrea Ricaurte, an economic analyst with Ecuador’s Analytica Securities. HPH was unavailable for comment.

Airport and Refinery Blocks
The port is just one piece of a larger puzzle. One of the first steps is integrating the airport at Manta into the project. This is not a problem physically, but it does require some political maneuvering. President Correa announced last year that his administration would not renew a 10-year contract with the US military to use the Manta airbase as part of the war on drugs

Formal notification that the contact would end came in July and the US military announced that the pullout would begin at the start of 2009 and be completed by November. The US military is leaving behind a remodeled airport in which it invested around $70 million. 

Carguaitongo says that while the decision involving the base was political, the Manta Port Authority looks forward to making the airport part of the project. “The airport is an important complement for the port. It is built for cargo and will allow us to provide an integral service,” he adds.

The more ambitious projects are the construction of a $6 billion oil refinery outside Manta that will vastly increase the facility’s importance as an energy hub, and a road-river connection to Brazil and the Atlantic.

The oil project is a joint Ecuador-Venezuela project. The original idea was to build a regional refinery to serve neighboring countries. Heads of state-run oil companies from the Andean countries were invited to Ecuador earlier this year for a briefing, but there were no commitments because of the size of the investment.

César Gutiérrez, president of Peru’s state-owned Petroperu, says the proposal simply would not work. His company is involved in putting the final touches on a $1 billion upgrade of its refinery at Talara, northern Peru. “Getting $1 billion in financing for Talara has been a heroic task. I really do not see where Ecuador will raise $6 billion. This seems impossible today,” says Gutiérrez.

Given the lack of regional interest, Ecuador’s president Correa and Venezuela’s Hugo Chávez signed a contract in July to build the refinery. Correa also announced that China and Iran might stump up cash for the refinery, which would produce 300,000 barrels per day of oil. Construction could begin in 2010.

A Path Through Brazil
The refinery would certainly be a plus for Manta, but it is not a necessity. Key to making the port a major player is the Manta-Manaus-Belém project.


If the road-river system is completed – a pre-feasibility study got underway in the second quarter – it would allow products to flow from Brazil to Asia in 20 days, less than half the average time it now takes using the Panama Canal.

The project is estimated to cost $660 million and the Brazilian government has listed it as a national priority. There is a tentative commitment of funding from the BNDES, but attracting private cash to Ecuador will not be easy, particularly as the government continues to question the legitimacy of existing bonds.

“Investors continue to be skeptical about putting money into Ecuador. There is no long-term assurance that the country will ultimately stand by its debts,” says Ken Levine, an attorney at Carter Ledyard and Milburn in New York. Levine has followed Ecuador closely since the Correa government hinted at a debt default in 2006. The government still talks about cancelling part of the debt it considers “illegal.”

There are a few other impediments, primarily work already underway in Peru on three highway and road-river projects being built to connect it to Brazil. The best-known is the southern inter-oceanic highway, an all-weather road connecting São Paulo with three ports on Peru’s coast. The $1.3 billion project is moving forward quickly and should be finished mid-2010, about six months ahead of schedule.

Peruvian Rivalry
The competition for the Manta-Manaus project is Peru’s northern inter-oceanic leg. It is also a road-river system, connecting by road the northern port of Paita with the river port of Yurimaguas, deep in the Amazon. Merchandise then travels by river to Manaus and down to Belém on the Atlantic coast. The highway section will be inaugurated in late 2008 or early 2009. The Peruvian government is promoting the concession of the Paita and Yurimaguas ports and hopes to have them in private hands by early next year. 

“The Paita-Manaus system is the first leg of infrastructure integration that will join Peru and Brazil in the north, center and south. This will boost trade with Brazil and the rest of the world,” says Miguel Vega Alvear, head of the Peru-Brazil Chamber of Commerce.

Besides being years ahead of Ecuador with existing infrastructure and general macro stability, Peru is also enticing Brazilian businesses with free trade. Peru is completing the implementation of free trade agreements with the US, Canada and Singapore, expected to come online January 1 2009. It has moved ahead quickly on an agreement with China, while South Korea and Japan are carrying out feasibility studies for trade pacts with Peru.

Vega Alvear says Peru could be a platform for Brazilian companies to export to the US and China tariff free, something that Ecuador could not offer.

But Carguaitongo says that he is not concerned about the rivalry. “The shortest, easiest route is Manaus-Manta. We are confident that Manta, which is much larger than Peru’s northern ports, will be a hub for the region,” he says. LF