EPM Postpones Hidroituango Bid Opening For A Fifth Time; Now Cites “Insurance Difficulties”

Medellín’s municipally owned utility conglomerate announced on Thursday that it is postponing the bid opening process for an eye-opening fifth time, demonstrating that its plan to re-bid the completion of the civil works for the installation of turbines 5-8 in the Hidroituango hydroelectric dam has gone far off the rails.

EPM issued a written statement saying (translated):

That, with the purpose of promoting the plurality of participation in the process and in view of the difficulties identified in the insurance market, the closing date for the reception of offers of the public request CRW 167467, whose purpose is the construction of the final civil works of the Ituango Hydroelectric Project (generation units 5 to 8), which was scheduled for this Friday, November 4, 2022, has been extended.

The term was extended by thirty-three (33) calendar days and, therefore, the reception of offers will be until December 7, 2022, at 4:00 p.m. Addendum No. 9 containing this modification was sent through EPM’s ARIBA contracting system to potential bidders who are participating in this process and was published on the Te Cuento portal on EPM’s website www.epm.com.co

This indicates two difficulties: The first is that EPM is having difficulty attracting additional bidders to take over an unfinished and highly politicized project. Medellín Mayor Daniel Quintero first demanded renegotiation of the contract that the construction consortium (CCCI) building Hidroituango was working under, and when that failed, litigation ensued.

Now, the Quintero-controlled EPM has put out for bid the construction of the heavy construction associated with installation of the second four turbines, and has, based on its statement above, had difficulty attracting sufficient bidder interest, and for those bidders participating, difficulty in obtaining insurance coverage. Spanish insurer MAPFRE has already paid out $100 million USD in claims on the project, and now with the litigation, changing contractors, and EPM’s potential financial liability should they be fined by Colombia’s Energy & Gas Regulation Commission (CREG), the project is understandably very difficult to insure.

Add to that, the Colombian President Gustavo Petro has said that the turbine testing poses a mortal risk to the citizens living downstream of the dam, and should be evacuated during testing.

All the additional risk means that whatever contractor that wins the bid will likely do so at a price that takes into account the added uncertainty and liability, meaning the project will be vastly more expensive than it would have been otherwise. Should the bids be opened on December 7, the day before a public holiday in Colombia, we will find out; but based on the pattern to date, we should not be surprised by more delays.

This is turning out to be more complicated than the mayor or his political appointees on EPM’s board anticipated.

Above photo: The space where turbines 5-8 will eventually go, once a contractor is selected and insurance is found. (photo: Loren Moss)

Share your thoughts:

comments