Boston, MA -- (ReleaseWire) -- 04/14/2014 -- As expected, after two years of double-digit growth in 2011 and 2012, a slowdown is on the cards in Ecuador's construction sector. We currently estimate real industry growth was a more modest 7.3% in 2013, and expect a rate of 6.1% in 2014. This decelerating trend is likely to continue over the medium term, as we forecast average annual growth of 4.3% between 2014 and 2018, which is lower than the hikes seen in recent years, but still strong. We believe a drop-off in government spending as a result of weakening oil revenues is likely to put the brakes on infrastructure investment. Ecuador's persistently weak business environment and prohibitive financing conditions will continue to isolate the sector from private investment.
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Key Trends And Developments
- The deadline for the submission of technical and financial proposals for the construction of Quito metro Phase 2 has been extended to April 2014. The four consortiums that have prequalified in the bidding process for the project are Ansaldo-Impregilo-Herdoiza Crespo; Acciona-Odebrecht; Dragados- Construtora OAS-Hyundai Construction and OHL-Ingenieros Civiles Asociados. The winning consortium is expected to be announced at the end of May 2014, with the contract signing scheduled for June 2014.
- The Ecuadorian government has announced that it has extended the deadline for the submission of prequalification bids for the expansion of the port until 28th February 2014. The US$300mn expansion will include repairs of two international terminals and the dock for the industrial fishing fleet. The 25-year concession also includes construction of 350 metres of new quay as well as building a new deep water container terminal to handle 600,000 TEUs per annum.
- In the oil and gas sector, Ecuador has taken the first step to developing the controversial Ishpingo- Tambococha-Tiputini block by approving drilling on the 850mn barrel area which represents a considerable upside to our forecast. Production estimates for the field range up to 200,000b/d, which if achieved, will boost production in the country by almost 40%. It is estimated that US$3bn will be needed in the initial phases to bring the field into production.
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