May 19, 2024
Companies

Hidroituango Project Threatened by New Comptroller Embargoes

EPM’s problem-plagued, US$5 billion “Hidroituango” hydroelectric project is facing yet another threat from a new assets-embargo order brought by Colombia’s Comptroller-General against one or possibly all of the Hidroituango construction contractors.

In an April 21 press conference, EPM general manager Jorge Andrés Carrillo Cardoso cautioned that the full, immediate impact of the Comptroller’s surprise embargoes – aiming to grab COP$4 trillion (US$1.1 billion) from the Hidroituango contractors — has yet to be analyzed completely, via continuing discussions with the involved contractors.

The contractors meanwhile retain rights to appeal the Comptroller embargoes — possibly enabling continuation of their Hidroituango project work, while some future appeals process proceeds.

While EPM continues to hold the required financing for the project, the Comptroller embargoes potentially could savage the finances of the contracting companies, causing them to stop work – resulting in enormously costly delays that could have consequences for EPM’s finances, even though EPM has a “contingency plan” for replacing contractors.

One such rumored “contingency plan” is to hand the Hidroituango project to China Three Gorges company, a Chinese state-owned construction contractor. In furtherance of this aim, the Chinese government last year published a fawning report in the state-owned People’s Daily newspaper on Medellin Mayor Daniel Quintero, sparking rumors that Quintero is cultivating a strategic “friendship” for his future political career.

However, EPM isn’t yet saying what the future plan is for Hidroituango if the current contractors are ruined by the Comptroller. “The information we have at this time is still very preliminary and is being analyzed by each of the parties and related companies,” EPM GM Carrillo stated at the press conference.

Just prior to the press conference, EPM issued a bulletin stating that “it has been reported that Integral SA and possibly the other EPM contractors in the Hidroituango project had their accounts seized by the Comptroller General of the Republic within the framework of the fiscal responsibility process” — a process first unveiled by the Comptroller last December (see Medellin Herald 12/03/2020, “Colombia’s Comptroller-General Blames Hidroituango Contractors, Former Officials, Politicians for US$1.18-Billion in Losses at Hidroituango Project”).

“EPM is not a party to such processes and has not received notification, nor have its accounts been seized. In accordance with the foregoing, EPM at this time is not in the capacity to report if such measures have any effect for the company or for the project,” the EPM bulletin concluded.

EPM’s Carrillo added at the press conference that once the company completes its analysis of the immediate impact of latest Comptroller actions, it will issue a public statement explaining its plans for completing the Hidroituango project.

As of this moment (1 pm Tuesday, April 21), the only publicly available document from the Comptroller specifies the seizure of certain bank accounts and real-estate properties held by Hidroituango construction consultant Integral SA.

However, this same document also states that “responsible companies” involved in the Comptroller’s COP$4 trillion demand include all the Hidroituango consortia members including Camargo Correa, Conconcreto, Coninsa Ramon H, Ferrovial Agroman Chile, Sainc Ingenieros Constructores, Ingetec, Sedic, and third-party project insurors including Mapfe, Seguros Generales Suramericana, Axa Colpatria and SBS Seguros Colombia.

“Affected parties” named in the demand include the Hidroituango S.A. corporate entity, EPM, the Antioquia government’s Instituto para el Desarrollo de Antioquia (IDEA), EPM subsidiary Central Hidroeléctrica de Caldas (CHEC), Colombia’s national energy finance agency FEN as well as the Colombian national government.

Also named in the complaint as “responsible parties” are a host of former Medellin and Antioquian mayors and governors as well as former EPM and Hidroituango project officials, according to the Comptroller document.

Late Wednesday, April 21, the Hidroituango construction consortium issued a press bulletin stating the following: “The CCC Ituango Consortium and the companies that make it up have not received any communication by the Office of the Comptroller General of the Republic nor from our financial providers, on the imposition of embargoes on their accounts.

“During the  fiscal responsibility process we have provided all the information necessary to clarify the allegations raised by the Comptroller and demonstrate that in the execution of civil works under our charge, we have always acted in good faith, diligently and in accordance with the good practices of the engineering, complying with the designs and instructions provided by EPM.”

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