Medellin-based electric power giant EPM announced September 15 that -- as expected -- it just received a second, US$100 million installment from insurer Mapfre to cover equipment-and-infrastructure damages from an April 2018 diversion-tunnel collapse at EPM’s 2.4-gigawatt Hidroituango hydroelectric project.

Combined with a December 2019 insurance payment of US$150 million, Mapfre has now paid EPM a total of US$250 million for equipment and infrastructure damages.

EPM's Mapfre policy covers up-to US$2.556 billion for Hidroituango infrastructure and equipment damages, plus up-to-US$628 million for lost power sales – covering only a small part of four years of lost sales that should have started in 2018 rather than in 2022 as now projected.

EPM continues to estimate that initial start-up of four power turbines will take place in 2022. However, it’s still uncertain when all power turbines at Hidroituango will begin operation, although the company expects to see further units start-up in 2023 and beyond.

The total of US$250 million in Mapfre payments to date “corresponds to what was recommended by the [insurance] adjuster, according to expenses and investments made by EPM in the recovery of the project,” according to EPM.

EPM "continues in the process of quantifying the damages, the replacement of equipment and the repairs of the project as it progresses in its diagnosis, design and contracting,” according to the company.

The Hidroituango project is now about 80% complete, according to EPM. Currently, construction “is in full swing, with about 3,200 workers on different fronts,” thanks mainly to special efforts to isolate and overcome earlier cases of Covid-19 that had temporarily forced isolation of many workers and slowed progress this year, the company added.

“Today the work is focused on the stabilization of caverns and galleries, the intermediate discharge tunnel, the stabilization of the rock massif in the upper part of the [water intake] gate shafts, the operation of the weir gates, the electrical substation, the maintenance of roads and monitoring the behavior of the reservoir, dam and spillway,” according to EPM.

First Generator Installations in November

Meanwhile, EPM revealed September 11 that it expects the first two generator units at Hidroituango to be installed by November 2020.

“The transformer cavern is ready and cleaned. Work is being done on stabilizing caverns and galleries,” according to the company. “In the powerhouse, demolitions are carried out in units 1 and 2 and at the same time the area is being stabilized to avoid risks.”

Once the transformer cavern is ready, “seven new transformers will be installed -- being received in November 2020 -- and then another 12 transformers in 2021,” according to EPM.

Integral SA Slams Blame-Gamers

Meanwhile, Medellin-based engineering and design consultant Integral SA on September 16 issued a public statement condemning assertions by the current EPM management and Medellin Mayor Daniel Quintero that contractors and designers are to blame for the tunnel collapse that ultimately could cost EPM billions of dollars in lost power sales.

Below is the Integral SA public statement, in full:

“On the occasion of the recent events related to the disclosure of the [Hidroituango tunnel-collapse] report of the technicians of the reinsurers, and the successive statements and news disseminated in the media, Integral SA states the following:

“1. The Hidroituango project was conceived and developed by our company over more than 50 years, aiming to guarantee clean energy for Colombians. This project is one of our greatest reasons for pride. For the development of the project we have applied -- in the studies, in the design and in the consultancy during the construction -- the best engineering practices, in consideration of the magnitude and importance of the work.

“2. Based on a root-cause report contracted by EPM and also on a report contracted by the reinsurers to define the protections to be covered by the policy, suggestions have been made that Integral SA is possibly responsible or co-responsible for the [tunnel collapse] contingency. Said reports -- contradictory among themselves and with serious deficiencies in scientific and investigative methods -- have also given rise to statements with large amounts of speculation and lack of objectivity that do not contribute to reliably clarify the facts.

“3. The design methods applied by Integral SA follow the state-of-the-art in hydroelectric project engineering and have been validated by various actors in the project, including the author of the root-cause study hired by EPM. During the design and advisory stage, Integral SA never received objections from EPM or the international Advisors related to the designs.

“4. Integral SA responsibly and autonomously made a root-cause report and a complementary report, both of which contradict the conclusions of the report contracted by EPM. These documents were presented to the previous EPM administration more than a year ago and recently also to the current EPM administration. To date, Integral SA has not received a response.

“5. The obligations of Integral SA during the design and consultancy in the construction of the project are clearly defined in the contractual documents and contrast with the responsibilities that [EPM or others] have tried to assign to it, notoriously affecting our professional reputation and unblemished business history.

“6. Integral SA has the deepest conviction of having acted in a professional, correct and ethical manner in all the actions that fall within the project, always within the framework of its contractual responsibilities.

“7. Integral SA is fully committed to the completion and start-up of the project, which it considers to be the highest priority for the country in terms of risk mitigation, and for this it is willing to continue providing all its knowledge, obtained through 65 years of successful corporate history, both in Colombia and abroad.”

Consorcio CCC Ituango Rejects Claims, Attacks

Meanwhile, the three construction companies in the “CCC Ituango Consortium” -- Conconcreto, Coninsa Ramon H and Camargo Correa Infra – on September 14 issued a public bulletin contradicting claims that its construction methods and materials could be blamed for the Hidroituango tunnel collapse.

According to the Consortium, its construction works were undertaken “in full compliance with the technical specifications, field instructions and guidelines of the client EPM, which in turn is the main constructor in the development of the BOOMT [build-own-operate-maintain-transfer] contract signed with Hidroelectrica Ituango SA ESP and of which the Consorcio CCC Ituango is the executor of the construction.

“The reinsurers report -- recently known to us through the news media -- is one of the technical studies that has been carried out by the different stakeholders in the causes of the [tunnel collapse] losses. This report -- whose conclusions we do not share -- contains the findings of a group of technicians whose objective, we understand, was to establish the coverage of a policy and not the responsibility of the insured.

“The CCC Ituango Consortium has acted in a transparent manner and has the peace of mind that it has fully complied with its obligations: consequently, we have provided the information that interest groups and control entities have requested.

“To date, 25 kilometers of tunnels have been executed; more than 2 million cubic meters of rock have been excavated in underground works; 15 million cubic meters of rock [used] in exterior works and about 1 million cubic meters of concrete have been used, which have been defined by the designer, supervised by the controller and received to the satisfaction of our client EPM.

“The CCC Ituango Consortium and the more than 3,000 workers have been committed to EPM and the project to continue with the designs, technical specifications and adequate materials. In addition, we have satisfactorily responded to the different instructions and requests that we have received from our contractor EPM during the execution of the project.

“Departing from other discussions that do not contribute to the project, and after more than seven years of uninterrupted work, fulfilling our obligations and defending our values, we will remain committed while there are no impediments for the Hidroituango [project] to contribute to the development of Medellin, Antioquia and all of Colombia,” the group concluded.

Civil-Case Hearings Continue

Meanwhile, Colombia’s Procuraduría General -- roughly equivalent to the U.S. Attorney-General’s Civil-Case Division -- announced that its current investigation into the Hidroituango tunnel collapse so far has included taking statements from various parties. A preliminary hearing is set for October 21 on EPM’s COP$9.9 trillion (US$2.6 billion) “conciliation” lawsuit against Hidroituango contractors and insurers.

Parties to the EPM “conciliation” lawsuit include Consorcio Generación Ituango (Integral - Solingral), Consorcio CCC Ituango, Consorcio Ingetec y Sedic, Seguros Generales Suramericana and Chubb Insurance.

Colombia Transport Minister Ángela María Orozco and Health Minister Fernando Ruiz jointly announced last night (September 15) that regular international passenger flights will start to resume on September 21 from Medellin’s Jose Maria Cordova (MDE) international airport.

Two days prior to the restart at JMC, Spirit Airlines on September 19 will debut its first regular international passenger flight to Colombia in six months – from Fort Lauderdale, Florida, to Cartagena. On the same day (September 19), Viva Air will debut the first regular international passenger flight from Colombia, from Cartagena to Miami.

Viva had earlier announced that it would include passengers from JMC on a connecting September 19 flight to Cartagena, then continuing onward to Miami.

“The initial international flights to be reestablished are to the United States, Ecuador, Mexico, Bolivia, Brazil, the Dominican Republic and Guatemala,” according to the Transport Ministry.

“The international air passenger reactivation is carried out after the favorable opinion of the Ministry of Health for the suspension of the restriction of entry of international travelers to Colombia, based on the current state of the [Covid-19] pandemic,” Minister Orozco added.

“The entire sector is committed to complying with the defined biosafety protocols so that this operation is carried out safely,” she added.

As with the operation of domestic passenger flights in Colombia, “a strict biosecurity protocol will be applied for the operation of international flights. Among these measures, it has been defined that for the entry of international passengers, the presentation of the negative result of the PCR test for Covid-19 will be requested,” according to the Ministry.

For travelers entering or leaving Colombia, “passengers must compulsorily fill-out, prior to entering the immigration control posts, the 'Check-Mig' pre-registration, which can be found on the website https://apps.migracioncolombia.gov.co/pre-registro/public/preregistro.jsf,” the Health Ministry stated.

That registration process “can be done 24 hours in advance and up to one hour before the flight.”

To enter Colombia, “each traveler must present a negative result of a PCR test no more than 96 hours before the stipulated time of travel” while “to leave Colombia, the [health protocol] requirements agreed by the destination country must be met,” the Ministry added.

“Passenger access to the airport will be up to three hours before the scheduled departure of the [international] flight.”

Airports must “maximize the use of available baggage carousels as much as possible to avoid [health-endangering] crowds. They must also assign specific carousels for flights from high-risk areas,” according to the Ministry.

“For short flights it is recommended that passengers not to use the aircraft toilets. In addition, if the flight is less than two hours, the cabin crew will not be able to perform [drinks and meals] service on board.”

What’s more, “the use of a mask is mandatory from the entrance to the airport, during the trip and at the port of arrival, regardless of the duration of the entire journey,” Health Minister Ruiz added.

“In the case of medium and long-duration flights (more than two hours) it is recommended to wear multiple masks and to replace them during the journey. For short flights, a single mask” is sufficient.

Passengers also must “stay in their assigned seat throughout the flight,” the Ministry added.

Former Medellin Mayor Federico Gutierrez, Former EPM General Manager Jorge Londoño de la Cuesta and all eight former EPM Board members who resigned in protest last month for being ignored on a Hidroituango “conciliation” lawsuit decision issued a joint bulletin this morning (September 8) denouncing Medellin Mayor Daniel Quintero for falsely claiming that they had “hidden” an insurance-adjuster’s report on the Hidroituango tunnel collapse.

According to the joint letter, “the affirmations by [Mayor] Daniel Quintero and [current EPM general manager] Alvaro Guillermo Rendon are absolutely false” in suggesting that the former EPM Board, the former EPM general manager and former Mayor Gutierrez “hid” the Advanta report on the tunnel collapse -- supposedly to protect Hidroituango contractors (see Medellin Herald September 7, 2020).

In fact, neither the former Board, nor the former Mayor nor the former General Manager had ever seen or ever received that Advanta report, according to their joint bulletin.

The supposedly “hidden” Advanta report “was undertaken by the insurer at its own initiative, at its own cost and for its exclusive use, seeking to obtain its own analysis of the root cause of the [tunnel collapse] problem, for which EPM [last year] facilitated access to all the technical information that they required,” according to the joint bulletin from the former EPM officials.

“The final [Advanta] report, with the results of that analysis, was NOT [their emphasis] provided to EPM, NEVER [their emphasis] was handed-over nor known by [former EPM] managers nor its Board of Directors, simply because they had no right” to obtain such report, according to the joint bulletin.

Signing the bulletin were former EPM board members Claudia Jimenez, Gabriel Richard Maya, Andres Bernal, Manuel Santiago Mejia, Elena Rico, Alberto Arroyave, Carlos Raul Yepes, Javier Genaro Gutierrez, former Medellin Mayor Federico Gutierrez and former EPM General Manager Jorge Londoño de la Cuesta.

“The decisions and the behavior of the Mayor [Quintero] and the General Manager [Rendon] are creating an environment of distress and uncertainty with unknown purposes or with veiled intentions, which is generating unimaginable damage, hopefully not irreparable, not only for EPM but also for our city and its future,” according to the bulletin.

“It’s important to mention that the only technical report contracted by EPM to establish the root cause of the [Hidroituango tunnel collapse] problem was by the Skava [engineering consultancy], whose conclusions provided the basis to present [recovery claims] arguments to the insurer [Mapfre].

“After the conclusion of the Skava report, the reinsurers, as well as Mapfre, told EPM that the damages were covered given the terms of the policy, including issues of design, construction and materials, even with the existence of possible errors. Mapfre, under these conditions and finding no evidence of grave error, made an initial payment [to EPM] of US$150 million.

“We vehemently call upon the citizenry, news media and authorities to act with prudence, with reflection, to be careful with information they receive and not be deceived, reiterating that we acted with rigor, respect for norms and in the best interest of citizens and clients of EPM,” the joint bulletin concludes.

A just-released Hidroituango tunnel-collapse report for Mapfre Insurance’s UK-based reinsurance loss adjuster Advanta Global Services – publicly revealed today (September 7) via Medellin Mayor Daniel Quintero’s Twitter account – sparks renewed “corruption” and “cover-up” accusations brought by Mayor Quintero against former EPM directors and former Medellin Mayor Federico Gutierrez.

Ironically, the Advanta report –dated August 2, 2019, but only released now – arrives at mainly the same conclusions earlier found in Skava Consulting’s February 28, 2019 report to EPM (see Medellin Herald March 1, 2019, “EPM: Design Flaw Caused Hidroituango Tunnel Collapse”).

EPM publicly released the Skava report with similar findings to Advanta. So it's unclear how Mayor Quintero can now claim that Mayor Gutierrez was "covering-up" some supposedly shocking Advanta report that supposedly was "suppressed" to avoid any lawsuit against Hidroituango contractors.

Both reports essentially conclude that collapse of the auxiliary diversion tunnel (ADT, or “GAD” in Spanish) was the combined result of extraordinary water-level changes in the Cauca River during April 2018, combined with insufficient sealing of the floor of the GAD tunnel, ultimately causing an estimated US$2.6 billion in losses -- mainly resulting from nearly four years of lost power sales, plus hundreds of millions of dollars of physical damages.

Yet despite the relatively unsurprising conclusions in the Advanta report, Mayor Quintero is now claiming that former EPM directors and former Medellin Mayor Federico Gutierrez actually “hid” the Advanta report from Quintero and the new EPM management (all taking office in January 2020) because it supposedly justifies the new “conciliation” lawsuit brought by Quintero and new EPM general manager Alvaro Rendon against Hidroituango contractors and insurers.

Quintero claims that the prior EPM board – which resigned en-mass last month following Quintero’s failure consult with them on the risky “conciliation” lawsuit – either had "corrupt" ties to Hidroituango-involved companies or else to companies that have historically done business with EPM. Hence EPM’s former Board and management – along with former Mayor Gutierrez -- supposedly put the financial interest of Hidroituango contractors and insurors over the interest of EPM in recovering losses resulting from the tunnel collapse.

One big problem with this argument: Neither the Advanta report nor the Skava report found that the supposedly defective design or construction of the GAD tunnel inevitably led to the tunnel collapse. Instead, both reports cite unusual Cauca River-flow fluctuations prior to the collapse -- coincident with what's now described (in hindsight) as GAD tunnel design and/or construction flaws.

This uncertainty factor – the lack of an inevitability finding -- might help explain why Mapfre – having read both the Advanta and Skava reports earlier last year – nevertheless ultimately decided to pay EPM US$150 million for Hidroituango damages in December 2019, in what would be the first installment for a policy that covers up-to-US$2.55 billion in physical damages and up-to-US$628 million for lost power sales.

Below are all 10 conclusions of the “new” Advanta report that Mayor Quintero now claims was “hidden” from him and new EPM management -- but which inexplicably hadn’t been publicly released by Quintero until now, eight months after he took office last January:

Advanta Report’s 10 Conclusions

“1. The various parties involved in the project had defined responsibilities as stated in contracts. The 'Asesoria' was responsible for the design process for the tunnels, the classification of the rock mass [adjacent to the dam] and the selection of the support [systems in the tunnels]. The 'Interventoria' was responsible for ensuring the project was built according to the contract.

“2. The project operated a risk management program at a high level but it did not comply with the Tunnel Code of Practice because it did not have lower level construction stage risk management and did not control events using a risk mitigation program.

“3. The design of the diversion tunnels was generally in accordance with the nominated codes, standards and normal industry practice. The observational method was a significant component of the design and construction process. Construction of the LDT [left diversion tunnel] and RDT [right diversion tunnel] followed the OM [Observational Method], for example the design was verified during construction using the convergence data. However, the OM was not correctly applied to the ADT [Auxiliary Diversion Tunnel], for example, the convergence was not measured soon enough to be used to verify the design and adjust the [tunnel integrity] support.

“4. The LDT and RDT were claimed to have functioned successfully during four years of operation, so the Asesoria used the experience and data from this and other tunnels to optimize the ADT support design. The ADT support was, however, lightened in comparison with the LDT and RDT such that it [the ADT] was vulnerable to a highly irregular shape, erosion and water pressure changes. Furthermore, the Aesoria’s analysis showed that the support had to be fully installed and working before the [tunnel excavation face] was advanced.

“5. The rock mass in the ADT was weaker around the shear zones than the design assumptions for Type-III ground and it was allowed to relax more than expected by the design because the [excavation] face was advanced before the grout was cured. Consequently, the excavated rock was not controlled by the support installed and the support was not enhanced to compensate for over-relaxation of the rock, such as use of active support to eliminate these weaknesses, as would have been done if the OM [Observational Method] had been implemented correctly as was done in the LDT and RDT. Furthermore, the steel mesh required for shear zones was not installed at the location of the collapse.

“6. Also, the tunnel was not built in accordance with the design, nor the technical specification because the thickness of the shot-crete was not measured by depth pins, the blast lengths were excessive at times and a concrete floor was not installed to protect weak rock and shear zones from erosion by flowing water.

“7. The tunnel showed clear signs of distress during construction because the Contractor made frequent use of additional support to advance the face (spiles), [despite] persistent overbreak, fallouts of rock and support from the crown and sidewalls, fissures and cracks in shot-crete. These signs of distress of the tunnel were not addressed by the Project as is required by the OM.

“8. The parties advising EPM (Asesoria and Inventoria) and together with the Contractor were aware of where the work did not follow the design, where the construction did not produce the tunnel with the expected shape and support and where the tunnel collapsed during construction. Many of these issues were not remedied because those parties did not agree on the cause or whose responsibility it was to resolve them.

“9. The support installed in the ADT was degraded by turbulent [Cauca River water] flow because it had a highly irregular shape and the floor was eroded because it did not have a concrete cover, which undermined the support from the start of the [water-diversion] operation. The parties had a critical divergence on cause of damage of the rock mass beyond the design assumptions in that the Asesoria considered the damage was ‘poor blasting’ and the Contractor considered it to be ‘pre-existing poor rock.’ This and other matters were not resolved and the ADT was put into service with these vulnerabilities.

“10. A flood event from April 1 to April 16 [2018] increased the pressure of the [Cauca River] water in the rock mass of the shear zone at about kilometer 0+540 by about 50 meters equivalent head over invert level. On or about April 13, 2019, was the peak river level and these vulnerabilities manifested when the groundwater pressurized leading to an imbalance with the water pressure in the tunnel. The river level then dropped faster than the water could drain from the ground [around the tunnel] such that the pressure on the outside of the tunnel was greater than inside the tunnel, overloading the existing support, causing it to fail, leading to fallout of key blocks of rock. This process of fallout of blocks and overloading of remaining support continued until there was a major collapse of the tunnel on April 28, 2018, that caused temporary blockage of the tunnel at around chainage kilometer 0+540, that was breached on April 29, 2019, followed by a final major collapse that completely blocked the tunnel at kilometer 0+520 and progressed to the surface on April 30, 2018” -- which ultimately forced EPM to decide to divert the Cauca River through the machine room to avoid catastrophic dam collapse.