EPM (Empresas Publicas de Medellin) in Colombia has received an advance payment of $100 million for material damage at the 2.4-GW Ituango Hydroelectric Project from the insurance company Mapfre.
The resources obtained by this payment are destined to attend to the recovery of the Ituango Hydroelectric Project and development of the works, which will allow the hydroelectric plant to be in operation and generate 17% of the energy the country needs.
EPM said the resources received for the contingency since April 2018 amount to $350 million. This figure paid by Mapfre corresponds to that recommended by the adjuster, based on the expenses and investments made by EPM in the recovery of Ituango.
“The $350 million received to date for the compensation of the contingency in the Ituango Hydroelectric Project, through the ‘all risk construction and assembly’ policy, are the product of this new payment of $100 million, added to the $150 million delivered by Mapfre in December 2019 and the $100 million reimbursed in September 2020,” said Jorge Andrés Carrillo Cardoso, general manager of EPM. “Thanks to the teamwork of various areas of EPM, this milestone was achieved.”
Last July, the company updated the value of the investments necessary for completion of the project by 2.1 trillion pesos. This will ensure the entry into commercial operation of the first two turbine-generator units in the second half of 2022 and the six units remaining between 2023 and 2025. With this, the total investments in the future plant amount to 18.3 trillion pesos.
The insurance policy “all risk construction and assembly” that covers the contingency that occurred at the Ituango Hydroelectric Project has an insured limit of $2.556 billion dollars for coverage of material damage to infrastructure and equipment. It also has coverage for the delay in the entry into operation of the hydroelectric plant (money not received due to damages derived from the contingency) for $628 million, amounts that establish the maximum liability of the insurer. The compensation will correspond to the value of the damage suffered by the project and covered by the insurance, considering that it is a partial loss.
Located about 170 km northeast of Medellin, Ituango is Colombia’s largest infrastructure project in investment terms. Serious construction problems forced EPM to postpone Ituango’s operational startup to early 2022, more than three years later than originally planned. Initially budgeted at about 11.4 trillion pesos, the cost is now estimated at 16.2 trillion (US$4.3 billion) in a best-case scenario, representing a cost overrun of at least US$1.2 billion.