Cablegate: Minister of Labor Chiriboga Named Head Of

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TAGS: PGOV PREL EC
SUBJECT: MINISTER OF LABOR CHIRIBOGA NAMED HEAD OF
PETROECUADOR

Palacio Reshuffles Petroecuador
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1. (U) President Palacio replaced the board of directors of
Petroecuador, and named Labor Minister Galo Chiriboga
president of the state energy company on July 31. The
decision comes after the failed July 27 auction of 17 million
barrels of crude oil from Occidental's former concession,
Block 15, which Palacio terminated at the eleventh hour.
According to Minister of Economy Armando Rodas, Palacio was
upset that the auction was ill-run and that many state-owned
companies were unable to place bids on time.

2. (U) As the fifth president of Petroecuador during
Palacio's time in office, Galo Chiriboga stated that his
first priority would be overseeing the postponed auction of
crude scheduled for August 4, in order to encourage greater
participation from state-owned enterprises (only one
state-owned company was prepared to bid). Chiriboga also
said that he would work to strengthen the country's petroleum
production capacity, work with the Ministry of Economy to
create a trust fund that will facilitate the consolidation
and professional technical management of Block 15, and try to
improve communication and coordination with the Ministry of
Energy.

3. (U) Subsecretary of Labor and Employment Dr. Jose Serrano
will serve as interim Minister of Labor.

Comment
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4. (SBU) Chiriboga's appointment signals that Palacio
recognizes the need for better coordination between
Petroecuador, the Ministry of Energy and the Presidency.
Although he lacks experience in the industry, he is favorably
known to us on labor issues. Chiriboga has served as
Palacio's trusted fixer and fill-in before, stepping in as
minister of government for several weeks, and is unlikely to
diverge from his boss's wishes. The official story from the
Presidency is that the invitation process was poorly run and
that some state-owned companies (eg PEMEX) were invited to
bid two days after closing. A downside of Chiriboga's
departure from Labor is that it probably makes the needed
labor code reform he had been championing even less likely
before year's end. End Comment.
BROWN

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