Medellin-based Conconcreto President Juan Luis Aristizábal – head of one of the three principal contractors for the US$5 billion “Hidroituango” hydroelectric project here in Antioquia -- today contradicted disturbing damage claims being made by Colombia’s Comptroller General as well as Medellin Mayor Daniel Quintero.

In a wide-ranging interview with El Colombiano -- Medellin’s biggest mainstream daily newspaper – Aristizábal points out that neither Conconcreto nor any of the 26 officials, politicians and companies named in the Comptroller’s COP$4.3 trillion (US$1.15 billion) damages claim over supposed “gross negligence” at the Hidroituango project have been given a chance to provide contravening evidence.

What’s even more disturbing is that there are indications that the Comptroller seems headed toward confirming its charges against the contractors in the next few weeks -- without ever hearing evidence from the accused, Aristizábal suggested.

Hence this Kafkaesque scheme – hearing only from the prosecution and almost nothing from the defense – could resemble a banana-republic kangaroo-court procedure, or Soviet communist dictator Josef Stalin’s murderous “show trials” of the 1930s -- rather than what people and companies in real democracies, such as in North America or Europe, deserve and ought to expect.

Even more ironic is that neither the Comptroller nor Medellin Mayor Quintero have any knowledge or experience in civil engineering, let alone hydroelectric dam-building. Yet both somehow are claiming to know the causes of the diversion-tunnel collapse at Hidroituango, which all engineering studies so far haven’t been able to prove conclusively.

If the Comptroller confirms its damage claims, then EPM must -- under Colombian law -- terminate the existing contracts of the affected Hidroituango builders and designers, then find and get-up-to-speed some unknown replacement contractors -- hence delaying the project likely for many months beyond the current June 2022 scheduled start-up of the first power turbines.

Such delays could cost EPM huge fines not only for failure to provide power to the national grid -- as it has legally promised by June 2022 -- but also untold hundreds of millions of dollars in revenues from lost power sales because of inevitable delays from training new contractors.

Then there’s an enormously costly US$450 million loan pre-payment obligation to the Interamerican Development Bank (IDB) if the project fails to come on-line by June 2022.

What’s more, these fines and costs would come in addition to possibly hundreds of millions or even billions of dollars in counter-claims that probably will be brought by contractors, along with civil torts brought against EPM by lawyers representing persons temporarily displaced downstream of Hidroituango as a result of the 2018 tunnel-collapse incident.

And as a final wound, Hidroituango project insurer Mapfre possibly could cancel all further insurance payments beyond the US$350 million already paid to EPM, and – potentially – demand repayment of what it has already paid, citing the Comptroller’s finding of “gross negligence” and Mayor Quintero’s repeated, unsubstantiated claims of “corruption” and mismanagement.

Following a pattern, Mayor Quintero continues making wild, unsubstantiated claims against the Hidroituango contractors, former EPM officials and former Antioquia elected officials.

The latest pot-shot claim from Quintero – made last week without offering a single shred of evidence -- is that the contractors used substandard construction materials and made reckless design and execution decisions, which supposedly led to the costly 2018 collapse of a diversion tunnel at Hidroituango.

In addition, Quintero now claims that Mapfre and lesser insurers have just decided to exclude insurance payments for diversion tunnels, for some required stabilization works, for much of future lost-power sales and for other Hidroituango project costs that collectively would total roughly US$1 billion.

But if Quintero and the Comptroller are successful in their campaign to blame the main contractors and some former officials and former politicians for the tunnel collapse – resulting in a mandatory switch of contractors, enormously costly delays and inevitable counter-lawsuits – then EPM could lose far more than the US$1 billion that supposedly has been excluded from insurance payments.

To date, Mapfre has not stated publicly what it plans to exclude from insurance payments, nor explain how much it had planned to pay EPM for supposedly covered losses at Hidroituango.

But many leading engineering firms, trade associations, trade unions, public-advocacy organizations -- and now even Colombia President Ivan Duque -- have publicly stated that the correct way forward for recovering Hidroituango damage costs ought to be via negotiations with insurers, rather than blaming contractors.

However, according to Conconcreto President Aristizábal, if blame must be placed on anyone, then the correct target ought to be EPM itself, rather than its contractors, as Aristizábal explained in the El Colombiano interview published today. This would mirror public statements made by some legal experts that Mayor Quintero's US$2.85 billion parallel lawsuit against Hidroituango contractors actually could wind-up as a case of EPM suing itself.

In the interview, Aristizábal pointed out that Conconcreto wasn’t involved in designing nor building the diversion tunnels, which actually were designed and then demanded by EPM, the general contractor for Hidroituango.

“We are not responsible for the design, or the selection of materials, or the decisions that are made around all these activities,” Aristizábal stated in the interview. “We execute the construction, with the designer's guidelines, it is approved by the controller and received by our contractor EPM. All the works that we execute were supervised by the controller, approved by the designer, received by EPM and paid for by them.”

So, if anyone is to blame for the diversion tunnel collapse, then the blame ought to be put on EPM, which specified and approved all design, engineering and execution at Hidroituango, he said.

As a result, the Comptroller “should be investigating EPM. Furthermore, the resources managed by EPM are public resources. We are not fiscal agents because they did not give us an advance and because the money we received from EPM was a payment for services,” Aristizábal concluded, citing the Comptroller's responsibility for investigating public entities.

On another ominous note, Aristizabal pointed-out that Conconcreto’s principal stockholder is France-based Vinci. Hence the eyes of foreign investors are now fixed on the outcome of the current legal claims, which if adverse to some of Antioquia’s biggest and historically prestigious companies could discourage crucial foreign investment that generates tens of thousands of jobs, vital infrastructure development, huge tax revenues and economic progress for all Colombia, Aristizábal added.

Only one day after its fellow “Hidroituango” hydroelectric-project contractor Coninsa Ramon H filed for bankruptcy, Medellin-based construction giant Constructora Conconcreto likewise today (October 13) filed for bankruptcy, citing Colombia’s Comptroller-General proposed COP$4.3 billion (US$1.15 billion) fine for supposed “gross negligence” that allegedly caused an enormously costly 2018 diversion-tunnel collapse at Hidroituango, now almost completely recovered.

While Conconcreto states in the filing that its over-all financial outlook is “solid and positive,” nevertheless “the recent ruling in the first instance of the Office of the Comptroller General of the Republic for a figure of COP$4.3 trillion [US$1.15 billion] has an undeniable patrimonial and operational impact.”

The bankruptcy petition “aims to guarantee the sustainability of Constructora Conconcreto, maintain the more than 12,000 jobs that it currently generates, comply with all obligations and mitigate the uncertainty generated by speculation in the market and the eventual consequences of the ratification of the ruling of the Comptroller General of the Republic through the mechanisms provided by law,” according to the company.

“In the next few days, the negotiation phase of the reorganization agreement with the creditors participating in the process will begin,” the company added.

Commenting on the filing, Conconcreto president Juan Luis Aristizábal added: “We are prepared and committed to the country, Antioquia and their communities in the culmination of the Hidroituango project, critical for the energy stability of Colombia."

Antioquia Governor Gaviria Urges Insurance-Settlement Pathway

Meanwhile, Antioquia Governor Anibal Gaviria today publicly urged that any financial settlement over the diversion-tunnel collapse ought to be the exclusive province of Hidroituango project insurer Mapfre (along with other lesser insurers), with whom EPM has a damages policy totaling more than US$2 billion.

Mapfre has already paid US$350 million to EPM for Hidroituango damages, and likely would continue to make further payments -- barring some contradictory legal ruling putting blame for the tunnel collapse on contractors, consultants and politicians, rather than upon an unforseen, unpredictable tunnel fracture.

"The solution for Hidroituango has been, is and will be, as it should be: PAYMENT BY INSURANCE COMPANIES," Governor Gaviria publicly stated today, adding further emphasis by inserting all-capital letters.

This statement puts the Antioquia Governor in direct conflict with Medellin Mayor Daniel Quintero, who has issued wild, President-Trump-like conspiracy theories about "corruption" among former EPM officials and supposed negligence and/or conflicts-of-interest among contractors, consultants, former EPM officials and former politicians. Quintero has already sued the contractors and consultants for US$2.85 billion in a proceeding separate (but parallel to) the Comptroller-General's legal claims.

Medellin-based construction giant Coninsa Ramon H – one of the principal contractors to the US$5 billion “Hidroituango” hydroelectric project – this morning (October 12) filed a bankruptcy petition with Colombia’s Superintendencia de Sociedades (Supersociedades) regulatory agency.

Under Colombian law, the petition is known as an “Emergency Negotiation of a Reorganization Agreement (NEAR) under Law 560 of 2020,” according to Supersociedades.

“Within the framework of the procedure, the company must set a notice regarding the duration of the negotiation, notify the creditors of the beginning of the emergency negotiation and all the judges and entities that carry out executive, restitution, and guarantee enforcement processes or coercive collection, in order to be suspended during the process, and the company must start the negotiation with creditors and enter into the reorganization agreement in a term no longer than three months for confirmation by the Bankruptcy Judge,” according to the agency.

“The Emergency Negotiation of a Reorganization Agreement, established in Decree Law 560, is a mechanism for rescue and business recovery for those debtors who are affected by the causes that led to the declaration of the State of Economic, Social and Ecological Emergency, which allows to avert the crisis and preserve the company and employment through negotiation with creditors and the confirmation of a reorganization agreement,” the agency added.

Coninsa Ramon H is one of 26 companies, politicians and former Hidroituango officials hit by a proposed COP$4.3 trillion (US$1.15 billion) claim brought by Colombia’s Comptroller General (Contraloria General) for alleged “gross negligence” that supposedly triggered a costly 2018 collapse of a diversion tunnel at Hidroituango.

Potentially, Coninsa Ramon H and other companies could lose the current construction contract at Hidroituango and be forced to pay huge damage claims, possibly threatening the future viability of those companies.

In a September 6, 2021 press statement following the Comptroller-General’s claims announcement, the CCC-Ituango Consortium -- of which Coninsa Ramon H is one of the principal member companies -- announced that they will appeal the Comptroller’s claims.

“From what has been analyzed so far, the [Comptroller’s] ruling corresponds to issues that are eminently technical (project scheduling and tunnel construction), and we hope that the totality of the evidence that we provide is taken into account by all the instances to which we will resort,” according to that press statement.

Colombia President Ivan Duque announced October 11 during a visit to Washington, DC, that the proposed “Puerto Antioquia” ocean freight port near Turbo, Antioquia just won another US$200 million in financing from the Interamerican Development Bank’s “IDB Invest” group.

The project – now estimated to start-up in the second half of 2024 -- has a total estimated cost of US$672 million, of which IDB Invest is putting-up a US$150 million in equity plus “mobilization of US$50 million of funds under administration of IDB Invest, which offers a long-term financing of 17 years not otherwise available in the [private equity] market, and necessary to ensure the financial sustainability of the project,” according to IDB.

The project earlier won a US$110 million term loan from New York-based Global Infrastructure Partners (see Medellin Herald July 9, 2020).

The new IDB Invest financing will support “construction, operation and maintenance of Puerto Antioquia, a new multipurpose port facility located in the Gulf of Urabá,” the agency noted.

The project developers already have obtained a 30-year concession contract with Colombia’s National Infrastructure Agency (ANI).

“Thanks to its geostrategic location and the construction of '4G' [soon-to-open fourth-generation] highways, it will be the port terminal closest to the main production and consumption centers of the country, becoming a key infrastructure for strengthening Colombian foreign trade,” IDB noted.

The project also has lined-up “mezzanine financing from Global Infrastructure Partners and loans of US$193 million from Colombian local banks,” IDB added. Puerto Antioquia also has an environmental license and enjoys Special Permanent Free Zone status.

Among Puerto Colombia’s project sponsors: international shipping company CMA CGM, the Colombian port development company Puertos, Inversiones y Obras (PIO SAS), the European construction company Eiffage and Colombian banana-exporting companies Agrícola Santamaría, Banafrut, C.I. Unibán and C.I. Tropical.

The project features a 16.5-meters-deep ocean draft to a marine platform including 1,340 linear meters of dockage, all connected to a 3.8-kilometers-long viaduct to a 38-hectares shoreside parcel, which will include “logistical and technological facilities necessary for the storage of general cargo, bulk, vehicles and refrigerated and dry containers,” according to the funding agency.

“IDB Invest has promoted the alignment of Puerto Antioquia with the highest international standards in socio-environmental matters, which also means that the project responds to the need to implement sustainable, safer and more efficient transport infrastructures, which contribute to improving global indicators, such as the Sustainable Development Goals,” according to the agency.

Puerto Bahía Colombia de Urabá S.A. is the formal entity holding the concession contract with ANI for the ocean-freight terminal project.

The port initially will move an estimated volume of 7 million tons of cargo per year. “Due to its strategic location in the southeast of Urabá, the Colombian Caribbean coast, it will reduce the distance between the port and the main centers of production and consumption of the region by more than 350 kilometers,” according to the agency.