The Colombian government has mandated the liquidation of Electricaribe, an affiliate of Spain’s Gas Natural Fenosa that provides power to some 2.5 million people on the nation’s Caribbean coast, because it believes the utility’s financial situation is jeopardizing the stability of the electricity supply in the region.
The order was handed down today by José Miguel Mendoza, head of Colombia’s Superintendencia de Servicios Públicos Domiciliarios (Superservicios), “because the company is not in a position to provide the energy service with the quality and continuity that are required,” said the public utility regulator in a statement.
The agency added that it has already begun working to find another operator capable of providing energy service in the Caribbean coast. In the meantime, said Superservicios, Electricaribe will continue to provide power “under the temporary administration of a special agent designated by the Superintendency.”
The Barcelona-based Gas Natural, which has an 85.4% stake in the utility, per Reuters, has urged the Colombian government to reverse its decision regarding Electricaribe, a firm with liabilities of some $800 million USD, according to Reuters.
“The decision to liquidate Electricaribe is contrary to the dialogue that the company has maintained with the Colombian authorities in recent months, always with the objective of reaching an agreement satisfactory for all parties that solves the critical situation,” said Gas Natural in a statement.
The company also chastised the Colombian government for taking an action that “is also contrary to the spirit of deepening trade relations between the European Union and Colombia” and “is clearly a step in the opposite direction to the principles advocated by the Organization for Economic Co-operation and Development, to which Colombia is a candidate for accession.”
According to a report by Reuters, the company is expected to fight the action by issuing a complaint to the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).
Superservicios took over Electricaribe’s assets late last year, on November 15, “to confront the critical financial situation of the company and remedy the poor performance of the service under its responsibility,” according to the agency.
Gas Natural doesn’t dispute the gravity of the financial situation but said that Electricaribe’s cashflow problems are due to customers not paying their bills and others connecting to the grid illegally. “The Colombian government cannot ignore that Electricaribe suffered for years from chronic fraud and defaults, with an impact that has reached 1.3 billion euros and a solution that requires establishing a secure and reasonable legal framework.”
Regardless, Superservicios chief José Miguel Mendoza reiterated to the media today, according to Reuters, that “when the assets of the company are sold, creditors will be paid in the order established by law.”
Colombian President Juan Manuel Santos also weighed in via Twitter. “The liquidation process is a responsible decision,” said Santos. “The priority is that neither users nor companies suffer due to the energy supply.”
Photo credit: Santiago Castro Pión