Antioquia Acting Governor Luis Fernando Suárez announced today (July 8) that the departmental government wants to swap its majority shareholding in the US$5 billion “Hidroituango” hydroelectric project for a minority share in Medellin’s electric-power giant EPM.

The proposed deal “seeks to avoid a judicial conflict that could also generate a prolonged and damaging confrontation between the main institutions in the region” -- that is, the Antioquia departmental government, EPM and the Medellin city government, as the city is the sole current shareholder of EPM.

The parties currently are involved in complicated lawsuits brought by EPM against the Hidroituango contractors, as well as counter-suits brought by the Hidroituango investor consortium. The suits potentially could financially cripple both EPM as well as the city of Medellin and the Antioquia departmental government.

Governor Suárez formally proposed the share swap via a letter to Medellín Mayor Daniel Quintero, EPM general manager Jorge Carrillo Cardozo and EPM’s Board of Directors.

“The government of Antioquia, the majority shareholder through [Antioquia development agency] IDEA in the Hidroituango [investors] society, is willing to sell its participation in [Hidroituango] to Empresas Públicas de Medellín (EPM), in exchange for a direct [shareholding] participation” in EPM, according to the letter.

EPM still would remain 100% publicly held, “as it should be and how everyone wants it to continue to be in Antioquia,” while corporate governance would remain “under the leadership of the Medellín Mayor’s Office,” according to the letter.

Governor Suárez added that the proposed deal would ensure that the Antioquia departmental government and the city of Medellin both enjoy a “fair and adequate proportion” of EPM’s profits, which currently provide nearly 25% of the city of Medellin’s annual budget.

“The minority participation of the [Antioquia] government, in addition to enabling synergies in the territory, would be a convenient reflection of the reality of a very important presence of EPM throughout Antioquia and would stimulate the strengthening of corporate governance,” the letter adds -- an oblique reference to severely compromised corporate governance as a result of Mayor Quintero’s bizarre handling of EPM’s top management and the resignation of EPM’s entire former Board of Directors last year.

The proposed shareholding swap arose because EPM, “as the constructor of the Hidroituango project within the framework of the BOOMT [build-own-operate-maintain-transfer] contract, has obligations with the Hidroituango [investor group] Society which have not been fulfilled and are the reason for several lawsuits," according to the letter.

Governor Suárez added that while he awaits a response from EPM, financial, legal and technical teams would be formed to “design the pertinent aspects and details and the future implementation” of the proposed swap.

Hidroituango construction continues apace, with the first power-output units scheduled to come on-line in late 2022 or possibly early 2023, followed by subsequent, additional power units scheduled to come on-line in 2023 and 2024. Once complete, Hidroituango would produce 2.4 gigawatts of power, by far Colombia's largest single electric producer.