Wednesday, September 26, 2018

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The Sociedad Antioqueña de Ornitologia (SAO, the Medellin ornithological society) announced September 19 that the fifth annual “Festival de las Aves de Medellin” will take flight October 3 to October 8.

All local Festival programs -- including lectures by national and international experts, special learning workshops and guided, local bird walks -- are free. But the post-festival birding trips to Manantiales or Napoles, Antioquia -- which require special advance registrations -- carry separate charges.

Complete Festival program details -- including instructions on how to sign-up for the workshops and the local bird walks -- are available here: https://www.festivaldelasavesmedellin.com.

Registrations for the post-festival birding trips (Manantiales or Napoles)-- departing October 6 and returning October 8 -- can be made here: https://www.festivaldelasavesmedellin.com/pajareadaspostfestival .  However, as of this writing, the Napoles birding trip was already fully booked.

The option for joining the (still-available at this writing) Manantiales birding trip is nothing short of spectacular (see: http://www.medellinherald.com/ecot/item/239-paradise-restored-manantiales-nature-reserve-symbolizes-colombia’s-hopeful-future, titled "Paradise Restored: Manantiales Nature Reserve Symbolizes Colombia’s Hopeful Future," Medellin Herald, January 04, 2016).

According to the SAO, the annual Medellin Bird Festivals “seek to position Medellin as the 'Bird Capital of the World,' as recognized nationally and internationally, and also so that local citizens learn to appreciate their natural heritage.

“It’s clear that people only love and appreciate what they know -- which is why it is vital to integrate scientific [bird] knowledge with educational-cultural events in our city spaces. Thus, this Festival seeks to offer the public a place for recreation and learning which generates knowledge, ownership and awareness of the great diversity of birds that are hosted in this territory.”

Lecture, workshop and birding highlights this year include:

8 am-12 noon Wednesday, October 3: Workshop for children on how to use the “Merlin” bird-identification cell-phone application, at EAFIT university in Medellin (Las Vegas campus).

2 pm Wednesday, October 3: Workshop on how to prevent collisions of birds against buildings and other structures, at Corantioquia headwaters in Medellin.

2-3 pm Wednesday, October 3: Workshop for adults on how to use the “Merlin” bird-identification cell-phone application, EAFIT university (Las Vegas).

3-4 pm Wednesday, October 4: Official debut of new illustrated book, “Birds of Ituango,” by EPM and University of Antioquia, and a bird-photography exhibition, both at EAFIT university (Las Vegas).

5:30 am to 11 am Thursday, October 5: Choice of bird walks either to Parque Arvi, Parque Presidenta, or San Sebastian de la Castellana.

2 pm Thursday, October 5: Lecture on Medellin’s new “green corridors” (Planetarium auditorium, next to Parque Explora).

2:50 pm Thursday, October 5: Lecture featuring professors and children from Restrepo, Meta department, on their novel “Alas de Saber” ornithology-teaching curriculum for children, at Planetarium.

3:45 pm Thursday, October 5: Expert lecture on how to prevent bird collisions with power lines in Colombia, at Planetarium.

6 pm Thursday, October 5: “Science on Bicycles” event featuring hummingbird observations. Departs from Planetarium.

5:30 a.m.-11 am Friday, October 6: Optional bird-walks to Parque Arvi, Parque Presidenta, San Sebastian de la Castellana, EAFIT Llanogrande or EAFIT Medellin (Las Vegas campus).

2 pm Friday, October 6: Lecture on the birds of the Alto de San Miguel nature reserve (Caldas, Antioquia), EAFIT university (Las Vegas campus).

4 pm Friday, October 6: Lecture on the “Merlin” birding application by Cornell Laboratory of Ornithology (USA) bird expert Drew Weber, EAFIT university (Las Vegas campus).

6 pm Friday, October 6: Lecture on urban birds by Cornell Laboratory of Ornithology bird expert Karen Purcell, EAFIT university (Las Vegas campus).


The Antioquia departmental government (Gobernacion de Antioquia) and the Area Metropolitana del Valle de Aburra (AMVA, the association of Medellin regional governments) announced September 13 that financing has been secured for a major debottlenecking project of the “Regional Norte” highway between Medellin, Bello and Copacabana.

The current highway suffers huge traffic jams at the intersection of the main Bello highway with the roundabout connecting the “Regional Norte” highway and the Niquia metro station. Extending the congested "Regional Norte" highway north of Medellin alongside the eastern bank of Rio Medellin has been frustrated for some 50 years, proponents noted.

According to the AMVA-Gobernacion joint press release, COP$179 billion (US$59 million) has just been approved for “phases 2, 3 and 4” of the “Avenida Regional Oriental Norte” project.

This scheme partly involves building elevated highways on the eastern side of the Rio Medellin, opposite the existing Regional Norte highway on the western bank.

The project will be undertaken by the existing "Hatovial" highway concessionaire in three new phases, according to the government agencies:

• Phase 2, Northern Oriental Regional Route (Bello): This involves extending the Regional Norte highway on the eastern side of Rio Medellin between Universidad Minuto de Dios (at the Acevedo interchange) and the La Seca interchange (Fontidueño sector) in the municipality of Bello.

The project includes construction of a 3.6-kilometers-long highway with three vehicular lanes and a bicycle corridor, including a 350-meters-long bridge system connecting to the La Seca interchange.
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• Phase 3, La Seca Interchange: The La Seca Interchange on the western side of the Rio Medellín river will connect to the eastern side of the river in the vicinity of EPM’s new "North" wastewater-treatment plant in Bello.

This project will include two vehicular lanes of 1.9 kilometers in length, including 0.8 kilometers of bridges -- along with sub-surface intersections -- enabling future expansion of the Metro rail system northward of Niquia and including the highway route to Fontidueño.

“The La Seca Interchange will allow the circulation of some of the 30,000 vehicles that travel daily through the Bello-Hatillo highway and the main route for those heading to the north of the department of Antioquia and the Colombian Caribbean coast,” according to the agencies.

• Phase 4, Copacabana: This project includes a vehicular and bicycling corridor 600-meters long, from 50th street to 48th street, bordering the Piedras Blancas stream and the west bank of Rio Medellín, passing through the Quebrada Las Catas and finally connecting with the main entrance bridge to Copacabana’s central park, according to the agencies.


Colombia’s Ministry of Commerce, Industry and Tourism (“MinCit”) announced September 5 that the “Colombia Travel Expo 2018” at the Hotel Intercontinental in Medellin this week is seen generating at least COP$15 billion (US$4.8 million) in immediate business deals.

Meanwhile, the recently concluded “Expocamacol” building-construction trade show at Medellin’s Plaza Mayor convention center – attended by more than 18,000 registrants -- generated another US$22 million in immediate business deals (double that of the 2016 show), with likely tens of millions of dollars more in future construction business deals for Medellin, Antioquia and Colombia generally, according to trade-promotion agency ProColombia.

What’s more, Medellin’s hotels, restaurants and taxis netted more than US$12 million from the surge in tourism during “Expocamacol,” according to the agency.

“Expocamacol 2018 has an international reputation as the most specialized trade-fair [for the -building-construction sector] in Latin America,” added Camacol Antioquia general manager Educardo Loaiza Posada.

In total, the Expocamacol show occupied 11 pavilions at Plaza Mayor, with 410 exhibitors from 20 countries taking 24,000 square meters of show-floor space, attending 239 international buyers from 26 countries as well as hundreds of Colombian buyers.

Panamá, Ecuador, Peru and the USA were the four countries making the largest business deals, according to Camacol.

Meanwhile, for the “Colombia Travel Expo,” MinCit cited Fontur statistics indicating that 224 travel-related agencies and 150 sellers of “destination packages” had already set-up some 2,040 business appointments.

Some 10,000 registered attendees will visit with some 430 exhibitors at “Colombia Travel 2018,” which is mainly focused upon cultural- and nature-oriented tourism, according to MinCit.


Medellin-based multinational electric-power giant EPM on September 9 revealed in a presentation to the Medellin City Council key financial assumptions about its proposed sale of assets and other measures to cover losses arising from the Hidroituango hydroelectric project diversion-tunnel collapse.

“Among other issues, we highlight that in the case of the Hidroituango hydroelectric project, we assume that the equipment currently in the mechanical room could have suffered some damage [resulting from diversion of Cauca River water through that room], although to date we lack exact information on possible damage,” according to EPM.

To recoup losses, EPM proposes to raise about COP$7 trillion (US$2.27 billion) from asset sales, internal cost reductions and postponement of some capital projects over the next three years.

Among key assumptions to this financial-recuperation plan:

1. Hidroituango would produce its first 300 megawatts (MW) of power in December 2021, with the remaining 2.1-gigawatts of the total 2.4-gigawatts of capacity entering into service at some yet-to-be-determined dates.

2. EPM possibly would net COP$1.2 trillion (US$389 million) in insurance payoffs for infrastructure damage plus another possible COP$1.3 trillion (US$422 million) for loss-of-power sales that had been expected between 2018 and 2021 – all resulting from the diversion-tunnel collapse and subsequent postponement of power sales.

3. Total Hidroituango project costs are now estimated at COP$14 trillion (US$4.5 billion), of which COP$2.5 trillion (US$811 million) corresponds to financial costs.

4. Costs to compensate populations affected by the temporary emergency (following the diversion-tunnel collapse and subsequent measures to relocate threatened downstream populations) are estimated at COP$600 billion (US$195 million), including costs likely to be incurred in 2018, 2019, 2020 and 2021.

5. Costs for installing transmission power lines are estimated at COP$120 billion (US$39 million).

6. Equipment down-time costs are estimated at COP$338 billion (US$109 million) in 2019.

7. Colombian national power prices are seen declining from 2021 to 2026, after Hidroituango comes back on-line.

8. Thermal power generators in Colombia are assumed to burn imported liquefied natural gas (LNG) rather than fuel-oil or domestic gas during the three-year delay in power output from Hidroituango.

9. EPM investments in drinking-water infrastructure in Colombia would continue as normal from 2015 to 2025, with current tariff structures unchanged until 2026.

10. Another 370,000 water customers would be added to EPM’s Colombia network through 2025.

11. The “Emvarias” trash-collection transfer station near Medellin would begin operations in 2021.

12. EPM would sell its Chilean water and power utilities and its 10% stake in Colombian power transmission giant ISA during 2019.

13. EPM wouldn’t lose access to financial markets to cover its debt needs.

14. EPM’s gross income would dip to COP$16.5 trillion (US$5.3 billion) in 2019, down from the COP$18.2 trillion (US$5.9 billion) initially foreseen (prior to the diversion-tunnel collapse and subsequent delay in power sales from Hidroituango). Through 2030, that initial loss of power sales (which would have started in December 2018) continues to penalize total expected revenues each year, hitting COP$27.8 trillion (US$9 billion) in 2030 – down from an expected COP$31.9 trillion (US$10 billion) in 2030, the difference explained by the tunnel-collapse financial impacts.

15. Earnings before interest, taxes, depreciation and amortization (EBITDA) also take hits in most years from 2019 through 2030, although EBITDA should spike to around COP$8.8 trillion (US$2.8 billion) in 2021, EPM estimates.

16. EPM’s annual payments to the city of Medellin (its 100% shareholder) from power sales will fall in 2019, 2020 and 2021 -- compared to 2018 -- but payments then rebound and rise from 2022 onward, hitting COP$2.1 trillion (US$681 million) in 2030.

Asset-Sales Details

In an earlier, September 3 press conference, EPM general manager Jorge Londoño de la Cuesta revealed that the Medellin City Council could decide whether to approve the sale of EPM's 10% stake in power transmitter ISA and Chilean utility assets by early October.

“The sooner the better,” Londoño added, as a quick sale would overcome current market anxieties about EPM’s financial position as a result of losing an estimated COP$6 trillion (US$1.97 billion) to COP$7 trillion (US$2.3 billion) from the Hidroituango hydroelectric-dam project problems.

“We’re confident and optimistic that [the Council] will approve this in the next few weeks,” he added.

Most of the estimated revenue losses from Hidroituango problems come from an estimated three-year delay in electric power sales (COP$4 billion/US$1.3 billion), Londoño said.

The remaining losses include an estimated COP$1.5 trillion (US$492 million) to COP$2 trillion (US$656 million) in related dam-infrastructure repair costs, plus an estimated COP$500 billion (US$164 million) to COP$1 trillion (US$328 million) for compensating temporarily affected populations around the hydroelectric dam.

EPM’s proposed sale of its 10% stake in electric power transmitter ISA is likely to net about COP$1.5 trillion (US$492 million) while the sale of its Chilean water and power utilities likely will generate more than COP$2 trillion (US$656 million), he estimated.

Hence it’s possible that the entire COP$4 billion (US$1.3 billion) in lost electricity sales can be recouped by just those two asset sales, without affecting any core EPM businesses, he estimated.

In addition, EPM aims to delay about COP$2 trillion (US$656 million) of the total COP$14 trillion (US$4.6 billion) in planned infrastructure investments over the next few years. Those delays won’t significantly hurt EPM’s future power, water and sewer services, nor have any impact on current EPM customers. What’s more, these postponements won’t impede achievement of regulatory service standards, he emphasized.

In addition, to generate more savings, EPM expects to trim about COP$500 billion (US$164 million) to COP$1 trillion (US$328 million) in internal costs including cutbacks in various sponsorships and short-term contract labor over the next three years, he said.

As a result, the roughly COP$4 trillion (US$1.3 billion) gained from asset sales, plus the COP$2 trillion (US$656 million) n infrastructure investment delays, plus the up-to-COP$1 trillion (US$328 million) in internal-cost cutbacks would deliver about COP$7 trillion (US$2.3 billion ) in additional revenues – enough to cover all the expected Hidroituango losses and simultaneously ensure that the City of Medellin continues to receive its hefty annual share of EPM profits, he said.

EPM’s payments to the city (EPM’s 100% owner) currently run at about COP$4 trillion (US$1.3 billion), or about 25% of Medellin’s total annual city budget.

While EPM’s full-year 2018 earnings before interest, taxes, depreciation and amortization (EBITDA) won’t be hurt by Hidroituango costs this year, future EBITDA likely would be trimmed somewhat, although Londoño didn’t offer any estimate of the total impact.

As for when EPM will shutter the tunnel that currently diverts Cauca River water through the machine room (necessitated by the diversion-tunnel collapse last April), this decision depends on relative rainfall over the next months. Higher rainfall around the Cauca River basin means greater Cauca River flow, while lower relative rainfall cuts river flow, he explained.

EPM aims to reduce the time it takes between shuttering the machine-room tunnel -- with a consequent rise of water-level behind the dam – and the subsequent, eventual flow of water over the engineered spillway at the top of the dam. Cutting this time-gap to a minimum number of days will mean less impact on downstream populations that depend upon some constant minimal water flow of the river, he added.


Medellin-based, national corporate-and-individual risk-management, due-diligence and real-estate investigator Konfirma announced August 29 that its first-half (1H) 2018 revenues grew 45% year-on-year -- and the company expects full-year 2018 revenues to rise about 40% year-on-year.

In an August 29 interview with Medellin Herald, Konfirma general manager Sergio Jaramillo Mejia added that upcoming anti-corruption legislation -- backed by newly elected Colombia President Ivan Duque as well as Colombia’s main political parties – could very well provide a further boost to revenues in future years.

Konfirma has been involved in numerous Colombian “fourth generation” (4G) highway construction projects as a real-estate-value investigator-and-negotiator, including three such projects in Antioquia: “Pacifico 2,” “Mar 2” and “Conexion Norte,” Jaramillo revealed to us.

Beyond highway-corridor, public-transit and transmission-network real-estate services, Konfirma also offers reputational, financial and legal-history investigative services for both individuals as well as companies considering real-estate acquisitions, corporate acquisitions, business launches, employee hires or business partnerships. Investigative services also can probe a candidate company (or an individual) on relevant experience, quality, security and workplace safety.

For foreign investors, Konfirma also has bilingual staff available, Jaramillo told us.

Such specialized services are especially important in Colombia where anyone (qualified or not) can be a real-estate agent, where mortgage insurance isn’t yet available, where Colombian property-ownership laws and enforcement still lack clarity, where fiduciary obligations are weak, where certain properties earlier might have been seized illegally by criminal or guerrilla groups, or where government-dictated land restitutions to prior owners might be underway.

Hence investors can run huge risks by investing in properties, businesses or persons that may have criminal, illegal or irresponsible histories, Jaramillo explained.

One current example is the “Meritage” commercial real-estate development scandal near Medellin, where both Colombian and foreign investors have lost millions of dollars following the seizure of the Meritage property by Colombia’s Attorney General.

That seizure was the result of the property’s alleged ties to mafiosos (see Medellin Herald on February 02, 2018, “Colombia Supreme Court Ruling: Fiduciaries Hardly Protect Real-Estate Investors.”)  Now those investors are suing the Attorney General in an international tribunal, aiming to recoup their lost investments.

While it’s unclear what Corficolombiana (the fiduciary for the Meritage project) did or didn’t do to discover criminal-history issues -- and thus help avoid investor problems with the Meritage project -- it’s conceivable that the sort of “deep” investigations in which Konfirma specializes could have discovered problems in time to avoid investor losses, Jaramillo explained to us.

Unfortunately, Konfirma – Colombia’s largest-such investigative services company, owned equally by the Medellin Chamber of Commerce and by local “e-commerce” specialist Cadena -- wasn’t hired to investigate the Meritage project.

While Konfirma can’t offer guarantees that its “deep” investigations always would discover and hence avoid disasters like Meritage, its investigative techniques and studies nevertheless could give investors greater peace-of-mind than just the routine “certificate of tradition and freedom of the property” (“certificado de tradición y libertad del inmueble”) studies performed by realtors or fiduciaries, Jaramillo added.

Konfirma’s services also include due-diligence on companies seeking to bid on government-supervised or regulated projects, such as the “4G” highways and electric-power transmission corridors. Such services include investigations into experience and qualifications, as well as possible money-laundering, bribery, terrorism links or other legal problems that might involve candidate companies, individuals, potential employees, suppliers and counter-parties, he explained.

While Konfirma may be best-known for its government- and corporate-client services -- with some 112 such clients so far in 2018 -- the company also offers investigative services for even the smallest investors, such as those considering buying an apartment or house, he added.

One such corporate client – Colombian fiduciary Fiduprevisora – recently tapped Konfirma to investigate health-insurance plan options for a national teacher’s organization. That investigation analyzed more than 205,000 documents and helped the organization guide its decisions, according to the company.

For various clients, in 2017 alone, Konfirma analyzed 460,000 data sources -- and discovered that nearly 25,000 (4.8%) of individuals or counter-parties investigated presented reputational or legal risk, he revealed. Unfortunately, in Colombia, “there’s a relatively high level of illegal activity,” which puts investors at greater reputational and business risk, he said.

What’s more, corruption is now estimated to be robbing Colombia of an estimated 8% of gross domestic product (“PIB” in Spanish initials) – money that could better be directed for all sorts of social improvements including education, health and infrastructure, he added.

Since its launch eight years ago in Medellin, Konfirma has since expanded its operations to some 40 major and smaller cities in Colombia (including Bogota) and is now planning expansions to nearby South and Central American markets, initially in conjunction with expansion plans by Colombian-based companies, he said.

Among its numerous major corporate clients here are EPM, Isagen, ISA, Metro de Medellin, Sura, Proteccion, Bancolombia, AngloGold Ashanti, Antioquia Gold, Coninsa Ramon H, Exito, Argos, Goodyear, Grupo de Energia de Bogota, PIO, Comfama, Agencia Nacional de Infraestructura and ANDI (Colombia’s national industrial trade association), according to Konfirma.


Colombia’s Ministry of Commerce, Industry and Tourism (MinCIT) announced August 28 that Antioquian milk-products producers Colanta and Proleche are among 11 companies that just won certifications and approvals to export certain dairy-based products to Mexico.
 
MinCIT, ProColombia and Invima collectively worked to open Mexico’s doors to Colombian milk products from 13 newly licensed processing plants in nine Colombian departments, according to the Ministry.
 
“The products that can be sold [to Mexico] vary depending on the establishment,” according to MinCIT.
 
On the newly approved list are mozzarella cheese, white cheese, whole and skimmed milk powder, whey powder, buffalo whey, whole and buffalo flavored yogurt, buffalo arequipe, industrial milk powder, canned condensed milk, canned cream, arequipe, dulce de leche, chocolate milk, strawberry and vanilla flavored milk, whole milk-based drink with oatmeal, and almond-flavored milk.
 
“This is excellent news for the dairymen of Colombia and, in addition, it is a sign of the great benefits that will bring for the national producers from a foreign trade policy focused upon taking advantage of the commercial agreements that we have in force,” added MinCIT Minister José Manuel Restrepo Abondano.
 
Prior to the Mexico deal, Colombian regulatory authorities had identified and then controlled an outbreak of foot-and-mouth disease in some ranching areas of the country. That control work eventually convinced Mexican authorities that Colombia is a reliable trade partner, ensuring sanitary practices.
 
“The work of health diplomacy is key, which in this case was anticipated -- and that should be the norm for us to continue opening the doors of the markets to our products,” Minister Restrepo added.
 
According to Invima, certified Colombian dairy plants now have access to 18 export markets including Bangladesh, Canada, Chile, Costa Rica, Cuba, the United States, Hong Kong, India, Japan, Morocco, Mexico, Panama, Peru, and the Eurasian Economic Union (Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia).

Colombia’s Controller-General on August 25 unveiled a 442-page report finding that recent problems with the US$5 billion, 2.4-gigawatt “Hidroituango” hydroelectric project in Antioquia are the result of insufficient technical studies, planning and regulatory controls.

The Controller’s report is especially critical of Colombia’s environmental licensing agency (Agencia Nacional de Licencias Ambientales, ANLA) for issuing permits supposedly without sufficiently rigorous technical, environmental, animal and population-risk studies.

However, ANLA immediately issued a public response claiming that the Controller’s report contains “inexact” conclusions that “don’t correspond to reality.”

In part, the response points-out that ANLA wasn’t the entity that initially approved licenses for the project, but rather the Environment Ministry.

What’s more, it’s odd that the Controller didn’t raise objections to the various initial licenses and ANLA license-revisions issued in 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017, but only after the diversion-tunnel collapse in late April 2018, ANLA points out.

In addition, ANLA emphasized that it didn’t hide anything from the Controller in ANLA’s subsequent license-revision approvals, the reponse contends.

In any case, Hidroituango project manager EPM recently hired an independent auditor that will investigate the real causes of the diversion-tunnel collapse. That auditor’s report is due by year-end 2018, ANLA added.

What’s more, EPM has undertaken every subsequent ANLA-mandated measure to remediate, fix and shore-up the project since the tunnel-collapse incident, as well as take extraordinary measures to protect and compensate affected downstream populations and wildlife, the agency adds.

Controller Report Highlights

“There are many weaknesses and errors discovered by the Controller in the different stages of the licensing process, such as the approval of the license by the then-Ministry of Environment, without sufficient studies and designs, detailed and updated, which allowed the location of the megaproject in an area with high geological risk,” according to the Controller’s report.

According to the Controller’s report, the Hidroituango project “is located in an area crossed by more than 11 recognized geological faults,” while some 26,000 people living in the area of the hydroelectric dam potentially could suffer disastrous consequences from any dam failure.

An “alternative environmental study” potentially could have led EPM to reconsider whether the chosen Hidroituango site “was the best option from the environmental and social point of view,” according to the report.

“Due to the absence of certain studies and real designs, 12 modifications to the environmental license had to be generated throughout the execution of the project, which also did not have sufficient and detailed studies and designs, and ANLA -- without sufficient bases in some cases -- has granted them,” according to the report.

“In the development of the civil works of the project, there were decisions by the licensee and the environmental authority which were not supported in a technical manner, which generated flaws in the project, such as the final closure of the two main [Cauce River water] diversion tunnels, without having built the floodgates included in the design; and in their replacement the construction of a single [evacuation] tunnel with half the capacity of the two closed tunnels, also located on geological faults,” according to the Controller's report.

What’s more, since EPM’s recently contracted study investigating the cause of the tunnel collapse still hasn’t been completed, it remains possible that some future collapse could occur in the rock massif adjacent to the dam, with potentially catastrophic consequences, according to the Controller.

“The risk can be increased by the arrival of the rainy season in October, when [rainfall] reaches the maximum peak,” according to the report.

“Given the technical uncertainty surrounding the project in terms of its future, the most certain and real thing is that due to its location, the features of the Cauca River, the deficiencies in studies and designs, the [uncertain] civil works developed, the inhabitants that have been affected and the damages caused to natural resources (flora and fauna), the horizon of the project can be considered as uncertain and the systemic risk is permanent,” according to the Controller.

“Due to the [tunnel-collapse] contingency that occurred in April and May of 2018, the current post-emergency conditions and the internal stability of the massif are not the same as those with which the environmental license was [initially] granted.

“As the excavations of the [construction] work and the actions generated by the loss of hydraulic control of the dam possibly weakened the massif, generating structural changes, [these factors] must be evaluated to continue the project.

“Especially the [water volume behind the dam, adjacent to the rock massif] drastically affects the seismicity, induced by the increase of the load due to the weight of the water, the increase of pore pressure in the geological faults and the lubrication of the contact surfaces," according to the report.

The uncertain integrity and stability of the right bank massif, where all the main works of the hydroelectric] plant are located, plus the impact of the temporary diversion of Cauca River water through mechanical room, both raise the possibility that “this massif should never have been saturated and under pressure,” the report concludes.

EPM Statement

On August 27, EPM released the following statement in reaction to the Controller’s report:

“In relation to the findings of the audit report on the compliance of the environmental authorities in the licensing process for the Ituango hydroelectric project, prepared by the Controller-General of the Republic, EPM informs the following:

"1. From the beginning of the [Hidroituango tunnel-collapse] contingency, EPM has expressed its interest in clarifying all doubts that may be held about the work. Therefore, as is our duty and will, we have provided the authorities and the control agencies with the information required to carry out the revisions on the management and execution of the project.

"2. The construction and development process of the Hidroituango hydroelectric project has always been accompanied by the competent [regulatory] authorities.

"3. Several aspects related to the findings announced by the Controller-General’s Office have been in the process of investigation for several weeks by the Corporate Audit and Disciplinary Control [office] of EPM.  EPM respects due process, for which reason it refrains from elaborating upon the facts of the investigations that are in progress. Once the results of the inquiry are known, our conclusions will be divulged in a timely manner."


Wall Street bond rater Fitch announced September 12 that it has decided to maintain its "AAA (col)" investment-grade rating for Medellin-based multinational electric power giant EPM -- but issued a cautionary “negative” outlook.
 
The Fitch decision follows in the wake of fellow Wall Street bond rater Moody's, which last month likewise maintained an investment-grade rating on EPM -- but issued a similar cautionary outlook because of an EPM-estimated COP$7 trillion (US$2.27 billion) financial shortfall resulting from infrastructure damage and power-sales delays from the 2.4-gigawatt "Hidroituango" hydroelectric plant in Antioquia.
 
Commenting on the action, EPM general manager Jorge Londoño de la Cuesta added that “the rating of Fitch Ratings is in addition to that recently obtained by Moody's Investors Service that ratified the international rating of EPM at 'Baa3,' an investment-grade level, and assigned a 'negative' outlook, as a demonstration of our company's efforts to overcome the contingency in the Hidroituango hydroelectric project and continue to advance in our mission to contribute to the well-being of millions of people in the regions where we have a presence."
 
The Moody’s rating reflects EPM’s “revenue diversification geographically and, of among businesses, a significant contribution to EBITDA [earnings before interest, taxes, depreciation and amortization] by our energy distribution businesses, the condition of relative control of the contingency of the Hidroituango hydroelectric project and the asset-sale plan announced by the company,” according to EPM.
 
“Moody’s rating also incorporates EPM’s rapid response to the required adjustments in terms of its commercial policy, ensuring the supply of natural gas to dispatch [electric power from] its La Sierra combined-cycle natural gas thermal power station, with an installed capacity of 450-megawatts, as well as the purchase of energy through medium-term contracts to meet the energy obligations contracted for 2020 and 2021.
 
“With this rating granted by Moody’s, EPM maintains -- along with the current BBB (-) rating of Fitch Ratings -- a double investment grade, a category considered in the financial market that provides an adequate credit quality and certainty of repayment to the most demanding investors in risk profiles,” EPM added.

Medellin-based multinational electric-power grid operator ISA reported August 13 that its second quarter (2Q) 2018 net income dropped 16% year-on-year, to COP$232 billion (US$77.6 million).
 
Earnings before interest, taxes, depreciation and amortization (EBITDA) for 2Q 2018 likewise dropped 3.8% year-on-year, to COP$945 billion (US$316 million), according to the company.
 
As for first-half (1H) 2018 results, net income is up 2.3% year-on-year, to COP$530 billion (US$177 million), while 1H 2018 EBITDA rose 4% year-on-year, to COP$2 trillion (US$669 million).
 
“In the second quarter of 2018, there were no extraordinary events. However, for comparative purposes, it should be taken into account that in second quarter 2017, the [upward] adjustment of the value of the RBSE [power transmission network] in Brazil was included,” according to ISA.
 
“This factor generated net operating income of COP$359 billion [US$120 million], a deferred income tax of COP$122 billion [US$41 million] and net income of COP$85 billion [US$28 million). Because this was a non-recurring event, we will exclude it in the [current] analysis.”
 
The 1H 2018 profit results “include the recovery of taxes in Colombia and Brazil, the entry into operation of new energy transmission and roads projects in Peru, Colombia and Chile and the incorporation of the results of [recently added transmission networks] TAESA and IENNE,” according to ISA.
 
As for 2018 plans, ISA plans to invest COP$3.5 trillion (US$1.17 billion), “one of the highest in recent years,” with 92% of that in its electric energy transmission businesses, followed by 4.5% in its highway concessions and the remainder in information technology, telecom and systems management, according to the company.

August is the month when both Medellin and Detroit celebrate classic cars -- and the joyful return of positive vibes -- via the “Desfile de Autos Clasicos” here and the gigantic “Woodward Dream Cruise” in Detroit.


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NEW GUIDE "Avifauna de Colombia" (link by clicking on book)

SILLETEROS PARADE 2016 by JOHN AND DONNA STORMZAND (click to enlarge)

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About Medellin Herald

Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

Medellin Herald welcomes your editorial contributions, comments and story-idea suggestions. Send us a message using the "contact" section.

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