Skip to main content
Natural Resources, Energy and Infrastructure

A Practical Insight: The Constitutional Court Sets Limits on Delegation to the Private Sector in the Electricity Sector

16 de January de 2026
Escrito por:

Through Judgment No. 112-21-IN/25, the Constitutional Court of Ecuador declared unconstitutional paragraph 1 of Article 25 of the Organic Law of Public Electric Energy Service (LOSPEE), which allowed the delegation of activities in the electricity sector to the private sector when it was “necessary to satisfy the public, collective, or general interest.” Below is a practical summary of the main effects of the decision. 

  1. Takeaways
  • Private investment in electricity generation remains constitutional and feasible.
  • Delegation based solely on the notion of “public, collective, or general interest” has been eliminated as a valid cause.
  • New projects must be supported by technical and planning-based justifications, rather than broad or discretionary arguments.
  • Existing concessions and ongoing projects are not affected, although the standard for justifying new delegations has changed.
  • What Did the Court Decide?
  • The Constitutional Court declared unconstitutional paragraph 1 of Article 25 of the LOSPEE, which allowed the delegation of electricity sector activities to the private sector when deemed “necessary to satisfy the public, collective, or general interest.”
  • The Court held that this ground: (i) is overly broad and undermines the principle of exceptionality required under Article 316 of the Constitution; and (ii) would allow for an almost unrestricted delegation of a strategic sector, which is unconstitutional.
  • As a result, this ground has been removed from the legal framework.
  • What Did NOT Change?
  • The ruling does not prohibit private participation in the electricity sector. The following mechanisms remain constitutionally valid, among others:
    • Delegation when public or mixed-capital companies are unable to meet service demand.
    • Development of non-conventional renewable energy projects not included in the Electricity Master Plan, in accordance with sector regulations.
    • Concession schemes and public bidding processes.
    • Public-private partnerships (PPPs) and self-generation for own consumption.
  • Practical Implications for Companies and Investors
  • For new or structuring projects:
  • Invoking “public interest” alone will no longer suffice as legal justification for delegation.
  • Delegation must be supported by verifiable technical criteria, such as installed capacity, supply deficits, demand growth, and energy transition objectives.
  • For projects already in operation:
  • The ruling does not result in the automatic nullity of existing contracts nor does it halt electricity projects currently underway.

For further information, please contact us at: rei@tzvs.ec.

© TobarZVS 

This publication contains information of general interest and does not constitute legal opinion on specific issues. Any analysis will require legal advice from the Firm.