EPM Full-Year 2022 Profits Drop on Write-Down in Tigo-UNE Value; Hidroituango Costs Rise; Medellin Finances to Suffer

Medellin-based multinational electric power, utilities and telecom-internet giant EPM announced March 27 that its full-year 2022 net income declined 10% year-on-year, to COP$3 trillion (US$645 million).

The decline is explained by a COP$1 trillion (US$215 million) write-down in the value of its partial holding in the Tigo-UNE telecom/internet company, according to EPM.

As a result of that write-down, EPM – 100% owned by the city of Medellin—will cut its contribution to the city of Medellin’s 2023 finances by COP$330 billion (US$71 million), according to the company.

Excluding that Tigo-UNE write-down, Grupo EPM otherwise posted in 2022 a 26% profit gain year-on-year, hitting COP$4.1 trillion (US$881 million), according to the company.

Grupo EPM revenues likewise rose 28% year-on-year, to COP$32.2 trillion (US$6.9 billion), while earnings before interest, taxes, depreciation and amortization (EBITDA) rose 32%, to COP$9.8 trillion (US$2.1 billion), according to the company.

EPM owns and operates electric-power-generation and public utility operations in Colombia, Chile, El Salvador, Guatemala, Mexico and Panama.

Other financial highlights during 2022:

Investments in infrastructure projects totaled COP$4.8 trillion (US$1.03 billion). “Investments in the Hidroituango [hydroelectric project in Antioquia] and progress in the construction of the Tepuy Photovoltaic Solar Park stand out, a project that is in tune with the energy transition and that will provide 83 megawatts of non-conventional renewable energy to Colombia,” according to EPM.

“In the natural-gas business, the expansion and biogas projects at the San Fernando plant stood out. Likewise, investment was made in the expansion and modernization of wastewater treatment plants, guaranteeing the supply of water for the coming decades.”

As for its international subsidiaries, EPM invested in expansion project of a desalination plant in Chile, Advanced Measurement Infrastructure (AMI) in Guatemala; extensions and replacement of assets in the distribution system in El Salvador and the expansion of networks, replacement of assets and loss reduction programs in Panama.

Meanwhile, EPM’s TICSA subsidiary in México benefited from construction of treatment plants for the Don Julio tequila manufacturing plant in the state of Jalisco, along with water treatment plants for the city of León (Guanajuato state) and for Mexico City.

In Colombia, TICSA made progress in the construction of the “Tranvía” wastewater treatment plant in the municipality of Rionegro, near Medellin.

Meanwhile, to finance infrastructure projects, in December 2022 EPM signed its first “sustainable credit line” for US$700 million for various ventures.

During 2022, EPM contributed COP$1.8 trillion (US$387 million) to the city of Medellin, up 32% over 2021.

Hidroituango Cost Update

Meanwhile, EPM announced that it has updated the project cost of the 2.4-gigawatt Hidroituango hydroelectric project to COP$19.4 trillion (US$4.17 billion), up from a previous estimate of COP$17.6 trillion (US$3.78 billion).

“This change is due to the increase in direct investment and financial expenses and pre-operational costs, equivalent to COP$1.7 trillion [US$366 million],” according to the company.

The latest cost projection doesn’t include “possible variations in the value of the offers received as part of the of the new contracting process in which the company has been advancing to undertake the works for the completion of the second stage, which includes units 5 to 8,” the company cautioned.

As of February 28, 2023, EPM reported that Hidroituango construction is 90.68% complete, with total executed cost to date at COP$14.6 trillion (US$3.14 billion).

“In accordance with the evolution of the work fronts and the concentration of efforts of the company, generation units 3 and 4 are expected to come into operation before November 30, 2023, for compliance with the firm-energy obligations assigned in the reliability auctions in which it has participated in the project,” according to the company.