July 12, 2024
Business Companies

EPM Must Pay US$196 Million for 2018 Hidroituango Tunnel Collapse Damages: Arbitrators

A special arbitration panel at the Medellin Chamber of Commerce has just ordered Medellin-based utilities giant EPM to pay COP$781 billion (US$196 million) to the major owners of the US$5 billion, 2.4-gigawatt “Hidroituango” hydroelectric project here in Antioquia.

The ruling is a big win for the Antioquia departmental government and its development agency (IDEA) who together own a 52% stake in the Hidroituango project, with EPM holding another 46% and private investors the remaining 2%.

Antioquia Governor Anibal Gaviria pointed out in a press release following the arbitration ruling that the departmental government has suffered big financial losses from that 2018 diversion-tunnel collapse at Hidroituango, which caused a several-years delay (to 2027) for the full start-up of all eight power-output turbines at the plant.

While private insurance has covered most of the losses resulting from the tunnel collapse, the Antioquia government still had been counting upon hefty revenues from electric power sales from Hidroituango – without which Antioquia’s finances now are in the hole.

“The team of lawyers and staff of the Hidroituango company are studying [the arbitration panel’s] voluminous award that has more than 300 pages and 83 individual decisions,” Gov. Gaviria stated following the ruling.

In addition, Colombia’s national Council of State still has yet to rule on a likely appeal of the arbitration panel’s decisions.

While the initial contract for building, commissioning, operating, maintaining, insuring and eventually transferring Hidroituango was thrown into legal chaos and controversy as a result of the tunnel collapse, “it is clear that [that contract] has a set of clauses that must be reviewed to result in a fair contract between the parties, and in this way avoid future inconveniences,” according to Gov. Gaviria.

To resolve remaining issues, “it is necessary that an agreement be built between the Hidroituango company and EPM to put an end to the legal, contractual and economic differences and that this project be another symbol of unity, progress and development for Medellín, Antioquia and Colombia,” Gaviria added.

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