October 2, 2023
Companies

Colombia’s Comptroller-General Blames Hidroituango Contractors, Former Officials, Politicians for US$1.18-Billion in Losses at Hidroituango Project

Colombia’s Comptroller-General (Contraloria General de la Republica, CGR) Carlos Felipe Córdoba on December 3 announced long-expected mismanagement charges against 28 individuals and companies including contractors, former EPM board members, former Medellin Mayors and former Antioquia Governors for actions and omissions that contributed US$1.18 billion in losses at the estimated US$5 billion Hidroituango hydroelectric project.

“The CGR technically calculates a loss of profits of COP$1.1 trillion (US$317 million) and a detriment to public assets of COP$2.9 trillion (US$836 million),” according to the watchdog agency.

“Among the 28 defendants are 10 members of the board of directors of Hidroituango, two former managers of EPM, two managers of Hidroituango, one manager of the EPM-Ituango subsidiary, two former mayors of Medellín and two former governors of Antioquia. The rest [of those charged] are contractors,” according to CGR.

Those charged include former Antioquia Governors Sergio Fajardo and Luis Alfredo Ramos; former Medellín Mayors Aníbal Gaviria and Alonso Fabio Salazar; and former EPM general managers Juan Esteban Calle and Federico Restrepo.

Also charged are former EPM board members and Hidroituango officials including Alejandro Antonio Granda, Álvaro Julián Villegas, Sergio Betancur, Álvaro de Jesús Vásquez, Ana Cristina Moreno, Iván Mauricio Pérez, Jesús Arturo Aristizábal, Luis Guillermo Atehortúa, John Alberto Maya, Jorge Mario Gallón, Luis Javier Duque, María Eugenia Ramos and Rafael Andrés Nanclares, according to CGR.

The companies facing charges include Consorcio CCC Ituango (Construccoes e Comercio Camargo Correa, Constructora Conconcreto y Coninsa Ramón H.S.A), plus the Consorcio Túneles Ituango (Ferrovial Agroman Chile y Sainc Ingenieros Constructores), the Consorcio Ingetec-Sedic (Ingetec y Sedic) and the Consorcio Generación Hidroituango (Integral e Integral Ingeniería de Supervisión).

“When issuing this important decision, the Comptroller’s Office considered that the mistakes made in the Hidroituango project had three serious consequences:

“1. The first consequence is that the main objective of the project was not met, which was to generate energy already contracted and agreed for the year 2018, which produced the aforementioned loss of profits totaling COP$1.1 trillion (US$317 million).

“2. The second is that there was a disproportionate increase in Hidroituango’s costs. Initially it was agreed at COP$6 trillion (US$1.7 billion) and, due to failures and improvisations, it ended up costing about COP$13 trillion (US$3.74 billion), due to the destruction of the value of the project as of June 2019.

“3. And the third consequence is the serious [tunnel-collapse] contingency that in April 2018 threatened to cause a public calamity in the project’s area of influence and for which resources had to be invested in more works.”

In the run-up to the formal charges, CGR assembled a technical team including researchers at Universidad Nacional, finance experts and legal experts, according to the agency.

Since Hidroituango now isn’t expected to start generating electric power until 2022 – instead of the planned December 1, 2018 start-up – the project will have failed to generate 2.87 trillion megawatt-days of power from 2018 to 2038, at a loss of US$13.99 per megawatt-hour.

“The CGR’s technical team carefully evaluated — with all the technological supports — if there were unjustified increases in investments that affected the net value of the project or if the delay in starting operations generated a loss of profit that was would translate into damage of a fiscal nature,” the agency added.

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