Hidroituango Completion Thrown into Doubt as Controller Confirms US$1.07 Billion Fine Against Constructors, Politicians

Colombia’s Controller-General (Contraloria General de la Nacion, CGR) announced this morning (November 26) finalization of CGR’s earlier-proposed COP$4.3 trillion (US$1.07 billion) fine against 28 individuals, politicians, insurers and companies that allegedly are responsible for the 2018 collapse of a diversion tunnel at the US$5 billion “Hidroituango” hydroelectric project in Antioquia.

The CGR’s final decision ironically came just hours after Hidroituango developer EPM publicly announced a tentative deal with its current construction contractors to continue building the project for at least another eight to 12 months — all in order to ensure start-up of the first two generating units (out of a total eight) as planned and expected for late 2022.

However, the CGR fine presumably would require the contractors to abandon the project — pending final confirmation by Colombia’s Council of State – potentially causing chaos and enormously costly delays in finalizing construction, which is already way-over the initial budget (roughly estimated at US$3 billion) and almost four years behind its initially scheduled start-up.

EPM’s latest forecast indicates that all eight generating units won’t be operating until 2025, with gradual, additional generating-unit start-ups in 2023 and 2024.

The CGR’s now-finalized charges of “gross negligence” hit construction companies Camargo Correa SA, Constructora Conconcreto and Coninsa Ramon H SA, as well as project designers and consultants including Integral SA, Ferrovial Agroman Chile, Sainc Ingenieros, Ingetec and Sedic.

Also hit by the charges are former Antioquia Governors Sergio Fajardo and Luis Alfredo Ramos, former Medellin Mayor Fabio Alonso Salazar, and several former EPM executives and former Hidroituango project board members.

Acquitted of a previous CGR charge of culpability is current (and former) Antioquia Governor Anibal Gaviria. However, the CGR now reinstates previously exempted culpability charges against project insurers Mapfre and Suramericana.

Given the latest addition of those two companies, the CGR charges now hit 28 different persons and companies.

While the CGR announcement doesn’t explicitly say how the total US$1.07 billion fine would be split among the parties, if it were to be portioned equally, then (theoretically, at least) every person and company each would be responsible for about US$38 million.

Meanwhile, EPM on November 25 had announced a “comprehensive preliminary agreement with the representatives of the CCCI [construction-contractor] consortium in charge of the main works in the Hidroituango hydroelectric project,” according to its press bulletin.

“This comprehensive pre-agreement will allow the contract, which expires on December 31 [2021], to be extended by eight more months from January 1, 2022, plus three months” to help guide new construction contractors during a contract hand-over period.

“The extension of the contract between EPM and the construction consortium CCCI would make it possible to guarantee the continuity of the works in the future hydroelectric plant and comply with the schedules foreseen for the start of the commercial operation of the first two power generation units in the second half of 2022. Both EPM and the CCCI consortium will carry out additional internal procedures that are necessary before signing the [final contract-extension] agreement,” according to EPM.