Colombia moves to ease power sector liquidity crisis

Colombia's mines and energy ministry has signed a decree approving a 1tn-peso (US$232mn) credit line for ailing electricity distributors and retailers.  

Public development bank Findeter will disburse the funds to companies at a subsidized interest rate to ease growing liquidity concerns.

Energy minister Andrés Camacho said the move formed part of a series of measures designed to support energy sector stakeholders. 

Other steps announced by Camacho on Tuesday include: mechanisms that reduce electricity rates and prepayments for buyers of energy on the wholesale market; an extension of payment deferrals for affected retailers and distributors; and a resolution that seeks to guarantee the supply of liquefied petroleum gas (LPG) under emergency conditions. 

"This is a government that that is ... committed to the energy security of the country," Camacho said on X, the platform formerly known as Twitter. 

Further details of the actions, in Spanish, can be seen here.

Colombian electricity distributors and retailers say they have been crippled by an optional rate subsidy program, introduced by the previous government to help consumers cope with the impact of COVID-19.

The program, which allowed consumers to defer payments for up to 36 months, has left providers with a combined deficit of more 5tn pesos.

The situation has been aggravated by the onset of the El Niño weather phenomenon which has parched hydroelectric dams and prompted a sharp rise in wholesale electricity prices.

A report published last week by grid operator and wholesale power market coordinator XM (see attached file) warned that 36 distributors and retailers were in danger of financial collapse.