Hidroituango dam facing 3-year delay as costs soar

Colombia's multibillion-dollar Hidroituango dam project will be delayed by at least three years as efforts continue to repair damage caused by a series of landslides, owner EPM has revealed.

In a regulatory filing, EPM said cost overruns associated with the emergency would reach 1.5tn pesos (US$500mn), taking the project's overall investment figure to 13tn pesos.

The new timetable, which means Hidroituango will not begin operating until December 2021 in a best-case scenario, will erode future Ebitda by 3.9tn pesos due to lost energy sales, the Medellín-based company said.

EPM plans to meet its financial commitments for the project – and avert any negative impact on its credit rating – by selling a raft of non-core assets in Colombia and abroad. The operations hinge on approval from the Medellín city government, EPM's owner.

"The projected divestments along with savings and efficiency plans ... mean that EPM can continue advancing with its social objectives," EPM said in a 24-page filing with Colombia's financial regulator Superfinanciera.

It added that the asset sales would "allow [EPM] to obtain the funds required to attend to the contingency generated by Hidroituango and other needs."

Earlier in August, EPM said it planned to raise up to 4tn pesos from the sell-off, which includes a 10% interest in Colombian transmission company ISA as well as stakes in water and power generation assets in Chile.

CATASTROPHY

Located around 170km northeast of Medellín on the Cauca river, Hidroituango is Colombia's largest infrastructure project in investment terms. The 2.4GW facility is expected to supply over 17% of Colombia's electricity when fully operational.

A series of geological faults at the site in late April and early May forced the evacuation of 113,000 people and prompted the regional Antioquia government to declare a state of emergency amid fears of catastrophic flooding.

EPM has said it might not know the extent of the damage – which includes collapsed tunnels and flooded turbine rooms – for months.

Despite the crisis, the company has maintained its 10tn-peso investment program, much of which will go toward power transmission lines, electricity distribution and reinforcements to aqueduct and sewage systems.

In addition, EPM says it is cooperating with authorities probing alleged irregularities related to environmental permits for Hidroituango.

In May, the company aborted plans to pursue a majority stake in Gas Natural to focus on Hidroituango. CEO Jorge Londoño told BNamericas in March that the company would launch a takeover bid for the Bogotá-based gas distributor by midyear as part of a Latin America-wide expansion.