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Colombia’s Aerocivil aviation authority announced August 24 that Medellin’s downtown Olaya Herrera Airport (EOH) just won rights to restart flights to-and-from 10 cities in Colombia.

Simultaneously, flights to and from Cali and Medellin’s Jose Maria Cordova (JMC) international airport at Rionegro also are now allowed, after five months of Covid-19 quarantine shutdowns.

Flights from Medellin’s EOH airport are now authorized to and from Armenia, Cúcuta, Montería, Pereira, San Andrés island, El Bagre, Tolú, Urrao and Caucasia, according to Aerocivil.

“The operation of these routes, which will benefit hundreds of citizens who need to move between the different cities, must be carried out under strict compliance with the biosafety protocols for all authorized airports,” according to Aerocivil

“It should be remembered that, under the current regulations issued by the national government, it is the mayors, who under their considerations and in accordance with the evolution of contagion in their cities, can autonomously request the inclusion of their airports in the plan of gradual reactivation of the air operation for essential connectivity,” the agency added.


Medellin Mayor Daniel Quintero and representatives of the 10 municipalities in Area Metropolitana de Valle de Aburra (AMVA) announced August 24 that they’ve approved a broader economic-reopening schedule that starts now with inter-city bus transport and next week with restaurants and some national flights.

According to AMVA, “the following sectors are being reopened: Ground transportation terminals, airports, gymnasiums, open-air theaters, restaurants, amusement parks, nature areas, sporting areas, motels, discos and mass event centers.”

However, residents must continue to wear masks and practice social distancing at these locations, while all economic sectors must follow strict Health Ministry protocols designed to prevent Covid-19 infections.

Starting August 31, restaurants will reopen. Then, during the first week of September, gymnasiums will open (if the Health Ministry confirms this measure).

The Plaza Mayor convention center will reopen the second week of September, along with all churches, synagogues and temples, as well as Parque Arvi, Cerro Nutibara and El Volador parks.

For the third week of September cinemas, theaters and casinos will reopen, while coliseums will open the first week of October and the Aeroparque Juan Pablo II sports center opens the third week of October.

Bars and discoteques will open the third week of November and the La Macarena concert/event center will reopen in December.


Medellin-based electric power and utilities conglomerate EPM is publicly clashing with former Antioquia Governor Luis Perez (2016-2019) over a 15-years-long, debt-financed expansion strategy that has catapulted EPM from just another a local utility to a multinational giant.

“From the path traced in 2006, EPM has become a business group that today has 14 affiliates and 30 subsidiaries, which has allowed it to become one of the main Latin American multinationals” -- and simultaneously funds around 25% of Medellin’s annual city budget from its annual profits, EPM notes.

It’s an extraordinary business model -- created in a city noted for a tradition of entrepreneurship, not only in the private sector but also -- spectacularly so -- in the public sector.

But such expansion has come with growing and even dangerous debt loads, according an August 20, 2020 opinion column written by former Governor Perez for the national business newspaper, La Republica.

“Until 2013 the company [EPM] had an equity much higher than its liabilities,” according to Perez.  "After 2013, liabilities began to grow without limits, exceeding their equity, and by 2020 the company that their executives and their boards claim to defend so much has a burden of liabilities so great that it lost its strength.

“As of 2020, EPM has a net worth of COP$23.7 trillion [US$6.18 billion] with a very high liability of COP$33.6 trillion [US$8.76 billion],” Perez claims -- although this claim is contradicted in EPM’s latest filing with Superfinanciera (see chart, above, showing COP$24 trillion (US$6.25 billion) net equity, rather than a negative asset/liability balance).

“In 14 years, the net worth only multiplied by two times, while the scandalous liabilities multiplied by 13 times. If EPM remains the same in the next 15 years, it could go bankrupt or disappear,” Perez claims.

Since embarking on international expansions, EPM’s investments “are generally a disaster and many describe them as a bad example of international corruption and business inefficiency,” Perez claims, citing allegedly negative net-present-values (NPVs) in EPM investments in HET (Panama), Ticsa (Mexico) and Cururos (Chile).

“In Panama, not only the hydroelectric plant had scandalous cost overruns of US$150 million,” but the Cururos NPV target “was not met and the it actually made a loss of US$111.2 million,” according to Perez.

“If Hidroituango’s construction errors [which Perez claims caused the diversion-tunnel collapse in 2018] add-up to COP$9.9 trillion [US$2.6 billion], then Hidroituango will also cost double [the original estimate], COP$20 trillion [US$5.2 billion]. The Comptroller General of the Republic (2019) asserted that Hidroituango will not make a profit in the next 120 years if it costs more than COP$15 trillion [US$3.9 billion],” Perez claims.

However, that Comptroller report actually found potential cost overruns totaling US$1.7 billion, not the US$3.9 billion that Perez attributes to the Comptroller report (see Medellin Herald November 14, 2019, “Colombia's Controller-General Probing 2 Former Medellin Mayors, 2 Former Antioquia Governors over Hidroituango Errors, Financial Losses.”)

“If the new [EPM] Board does not take drastic measures, EPM will not belong to the people, EPM will belong to the creditors,” Perez concludes.

Ironically, it was Perez himself who last year suggested that EPM should buy-out the Antioquia government’s 53% share in the Hidroituango project, which either would drastically increase EPM’s debt burden or else force massive asset sales, thus hindering its capacity to tap debt markets for future, potentially profitable expansion plans.

EPM Response

Contradicting the Perez claims, EPM on August 20 filed a detailed response with Colombia’s Superfinanciera oversight agency. Below is EPM’s response, reproduced here:

“EPM, a solid and continuously growing company, was created in 1955, and for more than 50 years its target market was limited to Medellín and neighboring municipalities. This stage allowed the consolidation of a solid public service company, which became the engine of development in the region," according to the filing with Superfinanciera.

“In 2006, the company began a process of transformation from the then-local business model to a Grupo Empresarial (Grupo EPM) structure, which was supported by internal analysis, external consultancies that established an organic and inorganic growth plan, which among other objectives sought diversify its portfolio, both in markets and in the incorporation of new lines of business, respecting its central axis as a provider of public services and thus responding to a changing environment.

“The transformation process was based on the need to diversify risk levels, establish a financial structure that would take advantage of the organization’s debt capacity and that would allow it to generate higher revenues for its owner, the Municipality of Medellín -- a situation that to date has materialized with [profit] transfers that are made annually to its owner and that are vital for the social investment and well-being of thousands of people.

“The growth path outlined obliges the company to change the traditional financing structure of its own resources and establish financing schemes where debt is an important leverage of growth, generating a change in the composition of liabilities to equity, and growth in the total assets of the company. It is important to note that as of 2009, and in response to the demands of the international financial markets, EPM began the consolidation of the Group’s financial statements.

“The defined financing scheme requires a greater presence of EPM in the national and international financial markets, which have trusted in its ability to meet its obligations, a situation that has been evidenced in a history of good relations, which has been maintained even in critical moments such as the contingency of the Hidroituango hydroelectric project.

“The demonstration of this is reflected in the ratings given by the rating firms.

“2007: Since 2007, the rating of the Public Debt Bonds issued by EPM had a ‘AAA’ rating by Duff and Phelps de Colombia S.A., today Fitch Ratings.

“2009: Successful bond issues since 2007, initially in the local market. As of 2009, EPM ventures into the international capital market and on that occasion it obtained a ‘Baa3’ and ‘BB+’ rating by Moody’s and Fitch, respectively, which were very positive risk ratings for a newcomer issuer in the international capital market.

“2011-2020: In 2011, the company achieved a risk rating in the investment grade category ‘Baa3’ by Moody’s and ‘BBB-‘ by Fitch Ratings. Successively, in the following issues carried out in 2014, 2017, 2019 and 2020, it obtained ratings of ‘Baa3/BBB, ‘Baa2/BBB +,’ ‘Baa3/BBB’ and ‘Baa3/BBB’ granted by Moody's and Fitch Ratings respectively -- always maintaining the Investment Grade category and sometimes exceeding the country risk rating.

“Local and international banks, as well as multilateral banks have been very important actors in financing the investment, expansion and replacement plans of the company, which have been undertaken to guarantee the quality, timeliness and efficiency in the provision of the services of energy, water, sanitation, cleaning and natural gas for the entire community, mainly in Medellín, Antioquia and Colombia.

“The optimal levels of financial indebtedness are basically linked to the ability of companies to generate the cash flow required to meet financial obligations, a principle that EPM has honored and which is reflected in the fulfillment of all its obligations. The main source of resources for EPM is generated from the operation of the core businesses and the dividends delivered by its subsidiaries.

“Between 2006 and 2019, EPM has received from its affiliates and subsidiaries resources totaling COP$6.1 trillion (US$1.59 billion), of which the controlled companies have paid dividends and others totaling COP$3.5 trillion (US$912 million) and the non-controlled companies totaling COP$2.6 trillion (US$678 million).

“The resources that EPM generates annually have clear applications and are mostly used to guarantee the continuity of public services and fulfill the obligations with different stakeholders. Many of them are the result of changes derived from regulatory frameworks and business dynamics that are different from those of 20 years ago.

“The resources that have been allocated to the Hidroituango project as of June 2020 amount to COP$11.8 trillion (US$3.07 billion). The financing of the total investment has been provided resources totaling COP$5.8 trillion (US$1.5 billion) of debt and the rest from its own resources. Once the project has all its installed capacity (2.4 gigawatts), it is expected to generate an [annual] EBITDA of COP$1.3 trillion (US$339 million) on average.

“EPM is an important taxpayer in Colombia. In the last four years it paid approximately COP$1.7 trillion (US$443 million) in taxes, fees and contributions. It is important to note that, prior to 2006, EPM was a non-taxpayer, thanks to the tax exemption of power transmission and generation activity, an aspect that no longer is in force.

“Transfers to Medellin: EPM has become a lever for the development of Medellín and the quality of life of its inhabitants, through the transfers it makes to the Municipality. Thus, in the 2006-2020 period, surpluses have been delivered to the Municipality of Medellín totaling COP$13.3 trillion (US$3.47 billion) and additional resources totaling COP$2 trillion (US$521 million) were delivered from the UNE-Millicom merger and the sale of Isagen shares.

“EPM’s assets have grown in recent years by 251%, with a significant percentage in property, plant and equipment. [As a result], the company’s equity grew by 111%, increases that have been achieved thanks to a better financial structure and resources generated by business.

“The internal generation of funds and dividends allows estimating that the company could be paying its financial debt in a period of approximately four years. It is important to note that EPM is currently in a period of heavy investments in all its businesses, whose remuneration in accordance with regulations can take between 30 and 40 years, which allows projecting higher cash flows in the future,” the company concludes.


Agencia Nacional de Infraestrucutura (ANI, Colombia’s national infrastructure agency) announced August 21 that the COP$1.7 trillion (US$443 million) “Pacifico 2” highway linking Medellin and southwest Antioquia to the Pacific port of Buenaventura is now 89% complete.

The 96.5-kilometers-long “Pacífico 2” project is linked to “Pacific 3” southward and “Pacifico 1” northward, enabling high-speed traffic through southwestern Antioquia -- and crucial for reducing the cost of freight traffic between Medellin and ocean ports.

Pacifico 2 includes the 2.5-kilometers-long, four-lane, twin-tube “Mulatos” tunnel, as well as 40 bridges, 37 kilometers of new, four-lane divided highway, three kilometers of new two-lane highway, rehabilitation of 54 kilometers of existing highways and operation and maintenance of 71 kilometers of highway, according to ANI.

“The Mulatos tunnel is 81% complete and the [new] Cauca Bridge is currently 90% complete,” according to ANI.

“Functional Unit 2 between Puente Iglesias and the beginning of the Mulatos Tunnel has registered 91% progress,” while “Functional Unit 4” – which runs from the Mulatos Tunnel to the Bolombolo sector of Antioquia “is now 77% complete,” according to ANI.

“Functional Unit 1 in the La Pintada and Puente Iglesias sectors and Functional Unit 5 between La Pintada and Primavera are finished and in operation and maintenance,” the agency added.

“With the chain of projects Pacífico 1, 2 and 3, foreign trade to and from the coffee region and Medellín will be facilitated. Currently, the travel time in a truck from Medellín to [the Pacific port of] Buenaventura, takes 15 hours. With the construction of these projects it will be reduced to 10 hours,” according to ANI.

Landslide Near ‘La Siria’ Won’t Cause Delays

Meanwhile, ANI and “Pacifico 1”construction contractor Covipacifico announced August 17 that a recent landslide on one of the slopes under construction near “La Siria” -- between bridges 18 and 19 of the Pacífico 1 project – will be cleared and restored in coming months, but won’t delay the over-all project.

The landslide wrecked a new section of highway being built between Bolombolo and Medellín -- without damaging the existing highway -- “so there is no impact on mobility to and from Southwest Antioquia” and Medellin, according to ANI.

The "La Siria" landslide is the second such event over the past 15 months on the 50-kilometers-long, four-lane divided Pacifico 1 project, with an earlier event at Sinifaná having already been cleared.

Because of these two landslides, ANI and Covipacifico just launched a new audit of other potentially vulnerable portions along the route “to guarantee that once the works are concluded they do not present any type of affectation,” according to ANI.

The COP$2.78 trillion (US$725 million) Pacífico 1 project is 46.6% complete and the developers aim to complete it by 2023.


Medellin-based multinational insurance giant Seguros Sura announced August 16 that while it’s partly vulnerable to EPM’s new US$2.6 billion “conciliation” lawsuit against Hidroituango contractors and insurers, its net exposure is “very low.”

“Seguros Sura is not the insurer of Hidroituango’s construction damage policy [actually, that policy is covered by Mapfre insurance]; it acts as reinsurer in a minority portion,” according to Sura.

“This reinsurance policy was not subscribed by Seguros Sura, but by RSA Colombia, which was subsequently received as part of the RSA operation that Suramericana acquired between 2015 and 2016 in six Latin American countries.

“The company was summoned to a preliminary settlement for two compliance policies taken out by two [Hidroituango construction] contractors and not directly by EPM, largely reinsured.

“Seguros Sura Colombia, from its general insurance company, is analyzing based on technical and legal criteria the request for prejudicial conciliation before the Office of the Attorney General [of Colombia], formulated by the Vice Presidency of Legal Affairs of Public Companies of Medellín (EPM), with a claim of COP$9.9 trillion (US$2.6 billion) against all those summoned.

“The [Sura] general insurance company is linked to this process by two compliance policies taken by two of the consortia, the controller and the supervisor of the work, also summoned by EPM to the conciliation.

“One of the policies has an insured value limit of about COP$22 billion (US$5.8 million) and the other has coverage of up to COP$38 billion (US$10 million).

“Both amounts are the maximum responsibility that would correspond to Seguros Sura and in a greater proportion they are reinsured, thus leaving a low exposure of what the company would have to assume directly in the event of this event,” according to the company.

“As we reported in 2018, Sura is not the insurer of the project, it is only reinsurer with a minority stake of 13%.

“This implies that the relationship in this case is not directly with EPM, but with the leading insurer, from whom we have received information as one of the reinsurers regarding the handling of the loss associated with the construction damage policy. In fact, the final exposure of Seguros Sura in this policy is very low, as it is also reinsured in a large proportion.

“In addition, as has become public knowledge, the insurance company of the damage policy [Mapfre] already made a first disbursement of US$150 million to EPM, in December 2019. Seguros Sura Colombia, from its general insurance company, has paid the corresponding proportion to its minority stake as a reinsurer.

“Finally, it should be noted that this minority stake was not subscribed by Seguros Sura either, but by Royal & Sun Alliance (RSA) Colombia, a company that subsequently became part of an operation acquired by Suramericana in six countries in the region between 2015 and 2016, widely known at the time,” the company added.


Medellin-based electric power giant EPM admitted in an August 17 filing with Colombia’s Superfinanciera oversight agency that its lenders are alarmed over the mass resignation of its Board of Directors following EPM management’s decision to sue Hidroituango contractors and insurers this month without first consulting with the Board.

In the latest filing with Superfinanciera, EPM recounts the decision by Wall Street bond rater Fitch Ratings to cut its credit rating to “BBB-“ with “negative observation” because of EPM management’s contemptuous bypassing of its own Board.

“The reduction of one notch in the international rating of EPM by the rating agency Fitch Ratings, presented on August 13, has not generated, to date, acceleration of financial obligations, the breach or activation of financial covenants, nor has it implied the requirement of additional guarantees by the current financial creditors,” according to the EPM filing.

“On the other hand, since Tuesday, August 11, a series of teleconferences [organized by EPM] have been attended with financial creditors responding to concerns about the corporate governance situation.

“In relation to the events that led to the reduction of the risk rating, EPM has received notification from some local and international financial entities regarding the temporary suspension of commercial relations, which reduces the quotas in operations such as loans, exchange risk hedges and bank guarantees, without, to date, this having had a material effect on EPM’s liquidity and operations,” the filing concludes.

New EPM Board Members

On a related front, Medellin Mayor Daniel Quintero – who like all prior Medellin Mayors is by EPM corporate statutes the automatic chairman of city-owned EPM’s Board – announced August 18 several more new members of the EPM Board, replacing  prior Board members.

The new members include:

1.  Luis Fernando Rico Pinzón, former General Manager of Medellin-based electric power giant Isagen (16 years) and a member of civic promotion group Proantioquia.
2.  Luis Fernando Mejía, current executive director of Colombia’s prestigious Fedesarrollo economic think-tank; former director of Colombia’s National Planning Department (2017-2018) and a former board member of Colombia’s Commission for Regulation of Energy and Gas (CREG, which has crucial oversight over all power generators).
3.  Omar Flórez Vélez, former Mayor of Medellín (1990-1992) and a former EPM Board President during his term as Mayor.
4.  Sandra Suárez Pérez , former Colombia Minister of the Environment, Development and Housing (2013-2016) and currently the managing director of Colombia’s top news magazine, Semana.
5.  Jorge Iván Palacio, former President of Colombia’s Constitutional Court (2013-2015) and a former Magistrate of the Supreme Court.


Former Colombia Vice President Germán Vargas Lleras, former Antioquia Governor Luis Perez and current Medellin Mayor Daniel Quintero are making noises over supposedly questionable conflicts-of-interest that triggered the mass resignation of EPM’s entire Board of Directors this month following EPM's sudden "conciliation" lawsuit against Hidroituango contractors and insurers.

In an August 15, 2020 interview in daily newspaper El Tiempo (Bogota), Mayor Quintero is quoted as saying that “some members [of EPM’s Board] -- Medellín knows it as a whole -- had or have very close relationships with the defendant consortia” in the conciliation lawsuit.

Similarly, former Colombia VP Vargas claimed in an August 16, 2020 opinion column in daily newspaper El Tiempo (Bogota) that the only way for EPM to recover massive losses caused by a 2018 diversion-tunnel collapse in the US$5 billion “Hidroituango” hydroelectric project is for EPM to do what it just did: sue the project contractors and their insurers, in conciliation (see Medellin Herald August 11, 2020, "EPM, Construction Contractors in Conciliation on US$2.6 Billion Losses from Hidroituango Tunnel Collapse in 2018").

Vargas suggests that this conciliation lawsuit is necessary because the now-departed members of EPM’s Board of Directors didn’t have EPM’s interest at heart, but rather were more interested in protecting Hidroituango contractors and insurers.

Rationale: Some of the newly-exited EPM board members had historic indirect ties to the influential Grupo Empresarial Antioqueño (GEA), a group of companies with interlocking stock holdings and which have had business relationships with EPM for many years.

What’s more, some former EPM general managers have or had worked for GEA companies and/or companies now involved in the conciliation lawsuit, Vargas noted, claiming that this somehow helps explain the mass resignation of the latest Board. Problem with this argument: the former EPM general managers weren’t on the current (just-resigned) EPM Board, undercutting the logic of the critique.

In any case, it’s not clear that even a supposed interest-conflicted Board would have voted to block EPM and Mayor Quintero from bringing the new conciliation lawsuit claims. Reason: They weren’t given a chance to debate the conciliation proposal, so it’s pure speculation to conclude what they would have done.

Former Antioquia Governor Luis Perez – who frequently clashed with former Medellin Mayor Federico Gutierrez over assigning blame for the Hidroituango diversion-tunnel collapse – likewise made similar insinuations in an August 12 interview with local TV station Cosmovision.

One problem with these Quintero, Vargas and Perez attacks: Except for now-former Board member Luis Fernando Álvarez Jaramillo -- who says on his resume that he is or was a legal advisor to Integral SA, one of the companies being sued in the conciliation proceeding -- the other seven of the eight EPM Board members who just resigned lack any current legal ties to any of the Hidroituango contractors, overseers or insurers – even if some of them had indirect or direct ties in the past. What’s more, only two of the now-former Board members historically had any ties to GEA companies.

Former Board member Andrés Bernal Correa – who in the past had risen to become a VP at Sura, one of the construction-contractor insurance companies being sued in the new conciliation action -- stated in an August 13 interview with local Medellin newspaper Vivir en El Poblado that the Quintero/Rendon decision to bypass the Board and sue contractors and insurers for conciliation contradicted already partly successful negotiations with project insurer Mapfre.

“We were already recovering the money [for Hidroituango damages], in fact the insurer [Mapfre] has already paid close to COP$550 billion (US$145 million),” Bernal said in that interview.

“What the [EPM] manager did [bringing the conciliation lawsuit] is one of the options [for damages recovery] and if we had studied it in the meeting, then we could have defined whether it was the most appropriate or not. We have always sought to recover that money. We were already recovering it. It is not that what the manager did was the only option. There are different paths and the right thing would have been analyzing pros and cons to make the best decision.”

Another of the just-resigned board members is Manuel Santiago Mejía, a founder of major retail group Corbeta and board member of civic-promotion group Proantioquia, which includes many GEA companies. However, Mejía doesn’t have any direct legal interest in the contractors or insurers being sued in the Hidroituango conciliation.

The other now-former EPM board members aren’t directly connected to any of the companies being sued.

Former Board member Aristizábal Guevara -- a retired EPM manager -- was a former board member of the Hidroituango corporate oversight entity, who (at worst) conceivably could be questioned for approving certain engineering decisions that possibly might have been linked to the tunnel-collapse incident. But there’s no published evidence showing he has any legal ties to GEA or the contractors.

Gabriel Ricardo Maya, first appointed to the Board in 2006 by former Medellin Mayor Sergio Fajardo, likewise doesn’t have any proven ties to the companies involved. Similarly, Javier Genaro Gutiérrez Pemberthy -- a former president of Colombia’s mostly state-owned Ecopetrol oil company -- doesn’t have known ties to the companies being sued.

The same lack of any legal ties to the companies being sued goes for now-former Board members Alberto Arroyave Lema and Elena Rico Villegas.

So what is all the noise about some supposed GEA plot and conflicts-of-interest?

ANDI Response

Just ugly noise, according to Bruce MacMaster, President of ANDI, Colombia’s biggest industrial and commercial trade association.

In an August 16 public bulletin issued by ANDI, MacMaster states the following (reproduced below in full):

“There are games that are dangerous and our politics is full of them. Populist attitudes that only seek to win votes by selling illusions [that] are impossible or unsustainable over time.

“The honor of people, as well as the reputation of institutions, is one of the greatest intangible assets that we have.

“During this week, given the serious situation that arose in EPM, the strategy of the municipal administration and some politicians has been to attack the reputation of past administrations and entities that have served Antioquia with honesty and example.

“The destruction of reputation is often effective in order to disqualify those who think differently, but it turns out to be the most unfair strategy intellectually and harmful for those who are being attacked.

“Of course, it is a violation of all the principles of corporate governance to make decisions behind the back of the Board of Directors and, even worse, to suggest that the reason why it was not informed is because it was likely that the decision would be ‘screwed up’ there.

“If that is the case, then how can it be understood that the Mayor [Quintero] was willing to continue with that Board and that he disagrees with its resignation?

“Of course, it is a bad practice of corporate governance [to bypass the Board on transcendental matters] -- and it is not the fault of the Mayor that [under current EPM corporate statutes] the Manager of EPM is handpicked by the Mayor as if he were a cabinet secretary.

“Of course, it is a bad practice of corporate governance for the Mayor to be the Chairman of the Board of EPM. This [current EPM corporate statute] is not the Mayor’s fault either, but it is obviously rejected by all entities such as the OECD. This is indeed an opportunity to put the house in order by changing these two provisions.

“EPM is a company and it is mandatory that everything around it works as such. It cannot be a hybrid between company and secretariat. If Medellín wants our public company to be successful in the market and annually provide more than COP$1 trillion [US$264 million] to the city so that Medellín can continue to be the envy of all, then it has to be well managed.

“There are many challenges EPM has at this time, perhaps more than ever, because EPM requires the most-expert of the experts to lead it.

“Why has the Antioquia business sector participated so actively in the processes of building public policy in the region? For one reason only: because the business sector is one of the few communities that has fully understood that public responsibility is everyone’s responsibility.

“Because the business community has also understood that politicians, in the best of cases, are good at defining public policy, in the legislative exercise, and in social leadership -- but that without a doubt politicians have immense shortcomings that can be strengthened by the administration of companies, in the creation of innovative processes and in the gestation and sustainability of entities that deserve the attention of the entire community, such as universities, museums, parks, or libraries.

“How much we have admired and even envied the commitment of the Antioquia community and society with their region! How many exemplary results have been achieved, which has been recognized by all in Colombia and beyond! Who are bothered by these results? Who wants to appropriate the ‘jewel in the crown?’ [that is, EPM].

“It is paradoxical to try to attack what has been a great virtue: that people who work for their society [are viewed by some] as pernicious. It is impossible not to think that this situation is being used by some politicians as the opportunity to get rid of the discomfort of being audited, accompanied, supervised, controlled and guided. Do politicians really think that they are the only ones with the possibility of giving an opinion and contributing to the construction of the public good?

“There will be those who say that these [oversight] functions are of the comptrollers, auditors and prosecutors. And they are partly right. But they forget that the latter [public enforcement regulators] have been designed to identify and punish mistakes, but not to get it right. Getting it right is not the job of not making mistakes, but rather of doing things well, and hopefully better and better. This is where the participation of the best minds and wills of any society make the best opportunities.

“Insinuations that the Antioquia business community takes advantage of positions in entities [such as the EPM Board of Directors] are unacceptable. If someone has complaints to make, then they have the obligation to make them. Not in opinion columns, or radio statements with generalities and statements that manage to cast a blanket of doubt about the reputation of institutions that have worked hard for the country. But [such charges should be brought] before the authorities, with evidence and making sure not to make reckless complaints.

“To affirm that the Grupo Empresarial Antioqueño and the business community have tried to appropriate EPM is not only false and manipulated, but it is also an accusation of immense gravity that merits the firm rejection of those of us who know the organization, its ethics and the principles that govern it. This strategy [of demagoguery] seems more like an attempt to get society to hand over everything of value to some political groups, rather than responsible reasoning.

“I reiterate our invitation to the Mayor to reflect on everything that can be lost at this time in Antioquia due to a situation that deserves to be redirected, taking into account the good of all, the future of society, the immense values built over the years, the possibility of community and joint work of proven suitability and with great possibilities of yielding virtuous results, putting aside any temptation of the ego, or the voices of counselors with intentions that raise many questions as well.

“This is not an issue only for Antioquia, it is a national issue. We must all defend EPM, but also defend the community of Antioquia businessmen who have done so much good for society and how necessary it is at this time in which Colombia requires activating all the instruments to generate employment, production and wealth for Colombian families.”


Area Metropolitana de Valle de Aburrá (AMVA, the metro Medellin council of governments) announced last night (August 15) that all 10 municipalities in AMVA are switching to a two-digit “pico y cedula” rotation starting Tuesday, August 18, all the way through Sunday, August 30.

The “pico y cedula” regulation applies to Medellín, Bello, Envigado, Itagüi, Sabaneta, La Estrella, Caldas, Copacabana, Barbosa and Girardota, according to AMVA.

The new, more-liberal rotation -- eliminating weekend lockdowns -- comes as the metro area is starting to experience a plateau in Covid-19 cases and stabilization in demand for intensive care unit (ICU) beds, now at 75% of capacity in Medellin.

AMVA credits Covid-19 plateauing to the “4x3” regulatory scheme that over the past four three-day weekends mandated a near-total lockdown of most citizens (most workers and all shoppers) -- paired with four days/week of shopping-and-errands privileges via the “pico y cedula” rotations.

Under the new scheme, people with cedulas ending in 0 or 1 can resume normal shopping-and-errands ventures starting August 18, with subsequent number rotations in following days (see chart, above).

Commenting on the new scheme, Medellín Mayor Daniel Quintero added that while AMVA is lifting the lockdowns over the coming two weekends, “citizens are expected to assume an attitude of responsibility, compliance with biosafety protocols and care for the elderly,” the latter group being the most vulnerable to Covid-19 mortality.

Caldas Mayor Mauricio Cano added that “our call is to maintain preventive isolation at home [that is, aside from pico-y-cedulas privileges], use the face mask, wash hands constantly and maintain social distancing.”

Mass gatherings and parties with family or friends “are prohibited, because these activities are the cause of further spread of the virus,” the AMVA bulletin adds.

Health Ministry Covid-19 Case Update

According to Colombia’s Health Ministry, Antioquia recorded another 1,751 new cases of Covid-19 on August 15 -- 960 of which were in Medellin – along with 55 more deaths, 29 of which were in Medellin. Since Health Ministry tracking began six months ago, Antioquia has recorded 60,873 cases of Covid-19, with 48,570 recoveries so far and 1,121 deaths.

As of August 15, 863 Covid-19 patients are in hospitals in Antioquia, 420 of which are in ICUs, pushing the ICU occupation rate here to 81%.

Nationwide, Colombia now has recorded a cumulative total of 456,689 cases of Covid-19 since tracking began six months ago, with 274,420 recoveries and 14,810 deaths.

Bogota has the most cumulative cases (158,674) followed by Antioquia/Medellin (60,873); Atlantico (60,542); Cali/Valle del Cauca (36,847); Bolivar (21,593); Cundinamarca (14,572); Cordoba (12,231); Nariño (11,273); Magdalena (9,915); Santander (9,608); Sucre (8,443); Norte de Santander (6,500); Meta (5,014); Tolima (4,327) ; Choco (3,439) and Cauca (3,222).


Three contractors principally involved in EPM's US$5 billion, 2.4-gigawatt Hidroituango hydroelectric plant on August 14 unveiled a letter slamming EPM's new COP$9.9 trillion (US$2.7 billion) "conciliation" claim tied to a diversion-tunnel collapse two years ago.

The contractors making-up the "Consorcio CCI Ituango" consortium -- Camarga Correa Infra, Constructora Conconcreto and Coninsa Ramon H. – state in their letter to EPM general manager Alvaro Rendon that they are stunned by the new EPM compensation claim.

The conciliation demand, “ as well as the allegations of responsibility that you make against the Consortium, are unusual, to say the least, and contradict the conduct of EPM observed so far with respect to the contract, since no requirement or questioning has existed on the part of [CCC Ituango] regarding the way in which our obligations were fulfilled in relation to the construction of the GAD [diversion tunnel] and the contract in general.

“Contrary to the above, there have been clear expressions of appreciation for the work carried out by the CCC Ituango Consortium, work that, incidentally, prevented the destruction of the dam, avoiding what would have been the worst catastrophe in the history of the country,” according to the letter.

“If there were doubts on the part of EPM regarding our suitability or the belief that we incurred in a breach as serious as the one that we are being charged today, we would [not] have been entrusted with the execution of the project recovery activities.

“[T]he Consortium, respectful of the rule of law, has always been clear that any of the parties has the right to go to the respective judicial instances to resolve disputes that may exist between them.

“However, in this case, the truth is that between the parties there has not been any example of a controversy related to the breaches that are now being imputed to us, and as an example of this it should be noted that none of the enforcement or sanction mechanisms incorporated in the contract [have been invoked] -- all the more reason to firmly question the fact that EPM abruptly adopts a position that goes against its previous actions and begins to foist upon us, not only in the limited scope of the judicial controversy but also in a public and ostentatious manner, an alleged breach that had never been dealt with directly during contract performance.

“We also want to warn about the serious and onerous consequences that are generated for the Consortium and the companies that comprise it, as a result of the initiation of this procedure given the direct impact on their image and their operation.

“On the other hand, we cannot accept that the alleged responsibility is entrusted to us, not based on the quality of the works entrusted to us, but for an alleged fault consisting of not warning EPM about alleged design errors.

“Therefore, in line with the foregoing, it should be noted that [engineering consultant] Skava’s report [on the diversion-tunnel collapse] that supports your request for preliminary conciliation flatly discards the hypotheses that could fall on our contractual obligations as builders related to issues such as the quality of the installed support, the concrete works, etcetera.

“In consideration of the foregoing, we call on EPM to reconsider the initial decision and withdraw the claims made against the CCC Ituango Consortium and against its members,” the letter concludes.

Fitch Ratings Warning

On a related front, Wall Street bond rater Fitch Ratings announced August 13 that it’s cutting EPM’s debt rating to ‘BBB-‘ just one step short of losing qualification, which potentially could hobble future debt floats and raise interest costs.

“The downgrading is due to a greater intervention by the owner of EPM, the city of Medellín [BBB- Negative Outlook], in the management of the company,” according to Fitch

“This represents a deterioration of the company’s corporate governance controls. Fitch believes that the actions recently taken by the company are contrary to the provisions of the Governance Agreement, signed on April 23, 2007, between the Mayor’s Office of Medellín and EPM’s management.

“Earlier this week, the eight independent members of EPM's board of directors announced their resignations after the newly elected mayor of Medellín instructed the company to take certain actions without board approval.

“The resignations of eight of the nine board members follow an announcement in July 2020 that EPM’s social goal may be expanded beyond the provision of public services to include tourism services, new technologies, infrastructure, bridges and tunnels, among others.

“In addition, the company filed a COP$9.9 trillion (approximately US$2.7 billion) lawsuit this week against contractors, supervisors and contractor insurance companies for its beleaguered 2.4 gigawatt (GW) Hidroituango project without consulting with the board of directors.

“In June 2020, the company announced an additional delay [in Hidroituango start-up] due to the Coronavirus pandemic. Fitch's expectation is that 300 megawatts (MW) of the project will be in operation by early 2022.

"Additional technical and infrastructure complications are possible, and could further delay the project's commercial operation date.

“Additional unforeseen contingencies have been partially mitigated after the insurance company announced that the damages derived from the event would be covered by the insurance policy, although there is no clarity on when and what damages will be covered. The resolution of the Negative Observation could take more than six months due to these uncertainties,” Fitch added.


Medellin-based textiles and plastics recycling giant Enka Colombia on August 14 posted a COP$1.4 billion (US$369,000) net loss for second quarter (2Q) 2020, down from a COP$3.2 billion (US$843,000) net profit in 2Q 2019.

Gross revenues fell 40%, to COP$58 billion (US$15 million), versus COP$97 billion (US$25 million) in 2Q 2019, according to the company.

“After a very good start to the year [1Q 2020] -- where the company achieved volume growth of sales of 8% and EBITDA growth of 79% -- in 2Q Enka was faced with large challenges derived from the [Covid-19] pandemic,” according to the company.

The pandemic resulted in “partial cessation of operations, a sharp reduction in demand and the implementation of biosanitary controls for the safe reactivation of [production] activity.”

In response, “the company managed to act quickly by strengthening its liquidity and adjusting its cost and expense structure to the ‘new normal,’” according to the company

In the meantime, “we continue to advance in the projects of the new ‘EKO-PET’ [plastics recycling] plant and the divestment of non-operational real estate assets. Due to the effects of the pandemic, although progress has been made, the respective [sales] contracts have not yet been formalized.

“Although uncertainty about the recovery of the world economy still persists, we trust that the better dynamics of a large part of the businesses will allow an increase gradual demand, which will translate into an improvement in the company’s results.”

As for first half (1H) 2020, earnings before interest, taxes, depreciation and amortization (EBITDA) declined 20% year-on-year, to COP$11.5 billion (US$3 million), down from COP$14.3 billion (US$3.77 million) in 2Q 2019.

Operating income for 1H 2020 totaled COP$161 billion (US$42 million), down 20% year-on-year. Exports accounted for 44% of total sales (down from 46% in 1H 2019) “due to a greater contraction in the foreign market than in the national market,” according to Enka.

“While the devaluation of the Colombian peso is a positive factor for Enka’s income structure, its effects during this semester have been limited by lower sales in 2Q 2020 and by exchange hedges previously contracted. We hope that by the second semester, with the recovery of sales and better levels of exchange coverage, the devaluation will have a more favorable effect on operating results.”

Assets at end-June 2020 rose by COP$26 billion (US$6.8 million), to a total COP$606.6 billion (US$160 million), “ mainly due to a higher cash position to face eventual effects of the situation generated by Covid-19,” according to Enka.

“To date, these resources have not been used because it has been possible to free working capital through portfolio collection and normalization of inventories.

“Liabilities increased by COP$33 billion [US$8.7 million], mainly due to net disbursements of about COP$33 billion [US$8.7 million] and a difference in exchange rate, which compensated for less financing of suppliers for lower purchases. The net indebtedness ends at COP$36.5 billion [US$9.6 million] and a [debt-to-EBITDA] index of 1.1-x, improving over the result at the end of 2019, at 1.3-x EBITDA,” according to the company.

In Enka’s plastics recycling businesses, 1H 2020 revenues hit COP$56.8 billion (US$14.9 million), taking a 35% share of total corporate sales. Recycled plastic exports totaled US$1.6 million, equivalent to 10% of the business income.

“So far this year the uptake of post-consumer [plastic] bottles showed a 7% decrease compared to the first half of 2019, a lower reduction than in the beverage sector, which between January and May contracted by 16.4% compared to the same period of the year prior,” according to Enka.

“To strengthen recycling coverage on Colombia’s Atlantic Coast and mitigate the effects of Covid-19 on collection in this region of the country, in the second quarter [2020] our subsidiary ‘Eko-Red’ opened its own collection center in Barranquilla. With this opening, the company adds four collection centers -- located in the main cities of Colombia -- consolidating the largest post-consumer bottle collection network in the country.”

As for the company’s “EKO-PET” (8,717 tonnes sales) and “EKO-Polyolefins” (1,044 tonnes sales), “these lines have been the best performing during the crisis, managing to even increase sales volume by 5% and 318% respectively,” according to Enka.

“The increase in sales in ‘EKO- Polyolefins’ is the result of the consolidation of approvals in different markets, enabling transformation of all caps and labels of the bottles currently recycled by the company,” according to the company.

Meanwhile, the company’s “EKO-Fibras” (4,138 tonnes sales) 1H 2020volume decreased 16% compared to 1h 2019 due to the impact of Covid-19 “with a greater impact on the export market, mainly Brazil. However, we have begun to see a gradual recovery in demand,” according to Enka

As for textile and industrial sales, “revenues from these businesses ended at COP$103.6 billion (US$27 million), representing 65% of the company’s total sales. Exports reached US$17.6 million, representing 62% of the [textile-industrial] unit’s revenues, especially to Brazil and the United States,” according to Enka.

Textile filament sales “have been most affected during the pandemic -- both in Colombia and abroad -- because [sector] recovery is intimately related to the reopening of trade, which is still limited due to strict sanitary restrictions and lower consumption. As a result, at the close of first half 2020, sales volume decreased 37%” year-on year, according to Enka.

As for industrial threads (4,980 tonnes sales), volume decreased 17% so far this year mainly due to decline in demand for tire materials, according to Enka.


Page 8 of 66

About Medellin Herald

Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

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