By Giselle Alzate | 2023-07-19

QUITO -- When Ecuador's Ministry of Education in 2015 signed a no-bid contract with China Railway to build 200 prefabricated schools for $196 million, the work was expected to be completed within 21 months.

But eight years later China Railway has delivered only 50 schools, and only 20 of them are operational.

The failure to deliver the schools agreed upon in the contract has had a significant impact on the Ecuadorian education system and resulted in costly legal procedures.

"We are going to build what we have called the '21st Century Schools', prefabricated, made of high-quality anti-seismic, thermal and noise-reducing materials," then-President Rafael Correa announced in September 2016. "They will cost less than $1 million each and can be built in just three months, with the materials already on site."

An investigation by the digital media outlets Código Vidrio and Revista Vistazo found that the Correa administration had signed an agreement with the objective of constructing 200 21st Century Schools before his administration ended in 2017.

In addition to building 200 prefabricated schools, China Railway also committed to build a material plant for the construction of these schools and houses.

The media investigation published on June 30 found that at the time of Correa's promise, more than a year had passed since the signing of the contract, and yet no school had yet been built.

The 21st Century Schools project was tied to a loan with the Bank of China Limited, as was the case with many other projects signed with Chinese firms under Correa's rule.

Six years after the signing of the contract, the Ecuadorian Comptroller's Office issued a report that determined several irregularities in the contracting process. The report even concluded that the Chinese company did not meet the "experience requirements" for the project.

It was only in early 2017, in the midst of the electoral campaign, that the government began to inaugurate the first 21st Century Schools built by China Railway.

Prior to that, the Ecuadorian government had not criticised or questioned China Railway for its failure to build the infrastructure.

Analysts say this was due to the government's great dependence on Chinese loans. The Correa administration was reluctant to jeopardise its relationship with China, which was its main source of financing.

'Inconsistencies and omissions'

However, with the arrival of the government of Lenin Moreno (2017-2021), the Ministry of Education began the unilateral termination of the contract with China Railway.

By then, the company was considered to have breached the agreement and was found to have used low quality materials in the schools it had built.

As a result, the government accepted only 20 of the 50 schools built, while the rest remained in the custody of the Chinese company.

Citing the unilateral termination of the contract by the Ecuadorian government, China Railway sued it. The company is demanding $100 million in damages, which it claims is the amount it invested in the project.

According to contract process documents, China Railway built 50 of the promised 200 schools between December 2016 and December 2017. In addition, it flattened 10 plots of land, but no infrastructure was built on them, the report said.

"Inconsistencies and omissions were found. Some of the schools were received because of need and with provisional records, even though there were infrastructure risks," said Roberto Acosta, legal co-ordinator of the Ministry of Education, who pointed out that he did not hold that position when the litigation between the parties began.

The Comptroller's Office found several irregularities in the construction of the 21st Century Schools, including China Railway's failure to "deliver the educational units in accordance with the established schedule".

The deadline for delivery was June 9, 2018, which the company did not meet, resulting in a fine of $29 million.

The Chinese firm, for its part, claims that the lands were not delivered on time to install the prefabricated schools and that the soil was not adequate for their installation.

Correa was sentenced in absentia in 2018 to eight years in prison for bribery. The sentence was upheld by the Ecuadorian Supreme Court in 2020, but Correa remains a fugitive and political refugee in Belgium.

During his term, Correa signed several infrastructure construction contracts with Chinese companies and Chinese banks lent billions of dollars to Ecuador.

These loans have since led to a serious debt problem for Ecuador, which has had to renegotiate payment agreements with China for shoddy infrastructure such as the Coca Codo Sinclair dam.