In all economies there are natural advantages and often times for lots of reasons, they have not been taken advantage of. The reasons tend to be the owners of resources look after themselves, but over time the government of the country evolves to take advantage of the resources for everyone. A classic case is Ecuador, South America.

The country is located south of Columbia and north of Peru and it is rich in resources the Andes Mountains run through it, and closer to the Pacific there is the Amazon jungle.

In an article by Julie Turkewitz and Jose Maria Leon Cabrera of the New York Times News Service, 2 decades ago there was a vision – the water running down the mountains could be and should be tapped for hydroelectric power. The government of Rafael Corra in 2007 set out to do such a thing. The government had little money, but Chinese lenders did and a dozen new hydroelectric projects, including dams were built. With Chinese banking, came Chinese companies to do the work. The country’s overall energy generation capacity rose 60% according to the Ministry of Energy and Mines. This was a good thing and energy costs fell.

Mr. Corra flew Ecuador for Belgium because of corruption charges related to the hydro projects.

The problem in the country is whether its due to climate change or bad management of the hydro system, Ecuador has been experiencing drought conditions and the output of the hydro has decreased leading to blackouts. This has meant Ecuador is buying power from Columbia and every election the cost of power is the number one election issue. Power cuts began in 2023, then became daily occurrences in September of 2024 shutting down businesses and ending entire industries into crisis. Power costs for a small business went from $3,000 a year to $15,000 because of the need to use diesel generators.

Linking to dividend paying stocks, all companies start off with a number of advantages, costs are less than competitors, which is why they were able to generate profits to pay dividends. Over time things change, sometimes because of management decisions, some of them due to what happens in the world, but things change. The issue is how to deal with them to maintain margins.

There are more questions than answers, till the next time – to raising questions.