Canals, Tunnels and Penstocks, Dam Safety, Finance, Latin America

Ituango situation leads EPM to cancel planned gas acquisition

Empresas Publicas de Medellin in Colombia has halted its pursuit of a majority stake in Gas Natural to deal with the situation at its Ituango hydro project, with Chief Executive Officer Jorge Londono saying, “For now we will use that money to adjust to these new circumstances.”

EPM announced it was launching a takeover bid for the gas distributed as part of a Latin America-wide expansion. Instead, EPM must seek to deal with “catastrophic” flooding following construction problems at the site of its 2.4-GW Ituango hydroelectric project in northwestern Colombia, BNamericas says.

EPM says the emergency was caused by a landslide that blocked a tunnel used to regulate the flow of water between the dam’s spillway and the Cauca River. Weeks of heavy rain have hampered relief efforts.

EPM partly flooded the plant’s powerhouse to avoid overflowing the dam, and Londono said EPM employees and contractors are working to raise the dam’s wall to at least 410 m from its current level of 404 m.

In addition, Londono guaranteed that EPM will cooperate with authorities in their efforts to determine the cause of the incident, according to BNamericas. EPM’s website says that due to an obstruction in the diversion tunnel of the Cauca River that presented on April 29, a water dam was generated in the upper part of the dam, resulting in variations in the flow in the river downstream. Over the course of time, the tunnels have been blocked and unblocked.

On its website, EPM reported that as of the morning of Monday, May 21, a discharge of water began to be observed through the right diversion tunnel. This water is expected to greatly increase flow in the Cauca River downstream of the dam.

On Saturday, May 19, the National Unit for Disaster Risk Management called for a total and immediate evacuation of all localities in the red alert area. People in the orange alert areas were warned to remain attentive to information from authorities and assistance agencies. Other municipalities located downstream were on yellow alert.

On Thursday, May 17, public prosecutors said they were probing allegations that public servants received illicit payments in the project’s contracting process.

This crisis will postpone the start of electricity generation at the site, which was previously slated for December 2018. When fully operational in 2021, Ituango is expected to supply more than 17% of Colombia’s electricity.

In relation to EPM’s overall financial situation, Londono says it is stable. “I don’t see our financial stability being threatened,” he said. “At the moment, Hidroituango doesn’t generate a single peso of revenue and the debts are over 15 or 20 years, which allows EPM to adapt to the situation. We will continue generating cash flow.”