Emcali, TermoEmcali agree to replace PPA

Colombia's Cali-based multi-utility Emcali has signed a memorandum of understanding (MOU) for an energy purchase agreement (EPA) with thermo generator TermoEmcali, government news agency SNE reported. The EPA replaces a power purchase agreement (PPA), which was costing Emcali US$4.5mn a month. Under the EPA, Emcali will only pay for the energy it needs, saving the utility an estimated US$336mn through 2019. The original PPA was designed to provide Emcali with a back-up power supply in case of energy shortages, but favorable hydrological conditions have meant that TermoEmcali has not been needed as much as expected, and Emcali has been left footing the bill. According to the SNE, the agreement guarantees Emcali's feasibility and continuity as a state-owned company, protects the collective labor agreement, and also benefits TermoEmcali because it "eliminates the risk of liquidation from the panorama, and guarantees its competitiveness." Utilities regulator Superservicios intervened Emcali in April 2000, and since then talks have involved creditors, unions, and the renegotiation of the PPA with TermoEmcali. Emcali's creditors reached a preliminary agreement with the government in September to restructure its US$500mn debts, and a collective labor agreement with workers' union Sintraemcali in June. Emcali operates in the drinking water, wastewater, residential waste collection, power distribution and telecommunications sectors.