The Contraloría Distrital de Medellín (Medellín District Comptroller’s Office) has opened a preliminary inquiry into whether a change of contractors on the final works of the Hidroituango hydroelectric project caused a presumed fiscal loss of $108.585 billion COP — 108,585,346,005.76 pesos, or roughly $33 million USD at mid-July exchange rates — to Empresas Públicas de Medellín (EPM), the city-owned utility that operates the plant. The review centers on generating units 5, 6, 7, and 8, the final stage of the megaproject.

The matter reached Medellín’s comptroller from the department’s own auditors. Since February, the Contraloría General de Antioquia (Antioquia Comptroller’s Office) had been conducting a special audit of the contractor change. In June it reported that the Sociedad Hidroituango, the project’s owner, suffered no patrimonial harm from the decision, but that it had identified a presumed breach of the principio de planeación (planning principle) in the contracting process led by EPM. Because EPM does not fall under the departmental comptroller’s jurisdiction, the finding of more than 100 billion pesos was transferred to the Medellín district comptroller, which must now formally open a fiscal-responsibility investigation.

“The new contractor presented values in its proposal that are higher than the values EPM had in its official budget. That difference is what generates the patrimonial detriment.” — Paula Ortega, Comptroller of Medellín

Medellín Comptroller Paula Ortega said the possible harm did not arise from a direct increase in the contract’s value. “The new contractor presented values in its proposal that are higher than the values EPM had in its official budget. That difference is what generates the patrimonial detriment,” she told La FM. Ortega stressed that the process is only at the preliminary-inquiry stage, which could run about six months, and that no fiscally responsible parties have been named so far.

The office will need to reconstruct the contracting process and determine whether the decision to change contractors rested on sufficient technical, legal, and financial grounds, or whether it damaged EPM’s assets. Fiscal-responsibility proceedings move through several stages and can extend for up to two years, meaning a decision on the merits may not come until around 2028.

The decision under review was made between 2022 and 2023, when Daniel Quintero served as mayor of Medellín and chaired EPM’s board of directors. Quintero’s administration defended the change at the time, arguing that the firms then executing the project were under investigation over the 2018 Hidroituango contingency, which followed the collapse of the plant’s auxiliary diversion tunnel. On that basis, EPM awarded the completion of the works on turbines 5 through 8 to the Ituango PC-SC Consortium — made up of the Chinese firms Yellow River Co. and Power China International Group, alongside Colombian firm Schrader Camargo — which Finance Colombia reported was the sole bidder for the works. Quintero has rejected the comptroller’s finding. Finance Colombia has also reported on the earlier stages of the dispute, including the breakdown of mediation between EPM and its original consortium, the utility’s re-bidding of the Hidroituango works, and the broader turmoil at the utility under Quintero.

The inquiry adds to other oversight fronts surrounding Hidroituango and EPM, including an inspection of the company by the Superintendencia de Servicios Públicos Domiciliarios (Residential Public Utilities Superintendency) and judicial proceedings that already involve dozens of people over alleged irregularities during the previous administration. The Medellín district comptroller will ultimately decide whether the presumed detriment is confirmed and who, if anyone, must answer for it.

Above photo: Construction workers labor to complete the Hidroituango hydroelectric project (photo © Loren Moss)

The budget allocates resources across all of EPM’s business segments, which include Power Generation, Transmission and Distribution, Gas, Water Provision, and Wastewater. The overall spending plan prioritizes projects focused on modernizing infrastructure, expanding service coverage, and optimizing operational efficiency.

Budget Distribution and Key Investments

The 29.8 trillion COP total budget is divided across four main areas, with investments receiving the largest allocation:

• Investment Expenses (48%): 14.1 trillion COP
  • Infrastructure investments: 4 trillion COP.
  • Long-term contracts for commercial operation and maintenance (registered as investment under current budgetary rules): 6 trillion COP.
  • Assets and inventory related to service provision and investments, provisions, and others: 3.2 trillion COP.
  • Capitalizations and other items: 907 billion COP.
• Functioning Expenses (28%): 8.5 trillion COP
  • This includes transfers to the District of Medellín totaling 2.4 trillion COP, taxes and contributions to the national and territorial governments totaling 1.2 trillion COP, and personnel expenses amounting to 1.6 trillion COP.
• Commercial Operation Expenses (10%): 3.1 trillion COP
  • This covers the purchase of energy, natural gas, and other inputs required to guarantee public service delivery.
• Debt Service (11%): 3.3 trillion COP
• Final Cash Availability (3%): 800 billion COP

Of the 4 trillion COP earmarked for infrastructure investments, 1.3 trillion COP is designated for the second phase of the Hidroituango Hydroelectric Project, a significant infrastructure development for the nation’s energy stability.

Financing and Operational Focus

The 2026 budget is projected to be financed primarily through 18.3 trillion COP (62%) in current revenues from services provided (energy, gas, water, and wastewater). This will be supplemented by 3.5 trillion COP (12%) from loans, with the remaining 26% sourced from dividends received from subsidiaries, accounts receivable recovery, and the initial cash balance.

The budget focuses on specific initiatives across EPM’s segments:

• Power Generation: Includes the expansion of generation infrastructure and the implementation of a master plan for fire protection at generation plants. Resources are also allocated for the modernization of the Guadalupe-Troneras power stations.
• Energy Transmission and Distribution: Focuses on infrastructure expansion and maintenance, replacement of cables and transformers across all voltage levels, and the control of non-technical energy losses.
• Water and Wastewater: Key projects include the Orfelinato – Villa Hermosa Pumping System, the expansion of the Yulimar circuit, and the modernization of the Ayurá water treatment plant. The budget also funds the construction, intervention, and repair of water and sewer networks.
• Gas: Initiatives include optimizing operations through the utilization of biogas from the La Pradera facility.

John Maya Salazar, General Manager of EPM, stated that the budget is aimed at enhancing operational efficiency, strengthening resource management, and ensuring service quality within a context of regulatory, climatic, and market challenges.

Headline photo courtesy EPM

The recently issued governmental decrees aim to reduce household electricity costs but limit mechanisms available to generators for balancing risk and cost across varying hydrology and market conditions. Specifically, the new policies introduce two key requirements: first, power generators are now required to sell at least 95% of centrally dispatched hydro output through fixed contracts; and second, the policies introduce new differentiated and capped Scarcity Prices. Under the new framework, Scarcity Prices for hydro, coal, and renewable generation are capped at 359 COP/KWh, down from approximately 900 COP/KWh, while thermal plants receive separate pricing.

President Gustavo Petro’s populist measures may please retail electricity consumers but imperils the health of Colombia’s electrical generation sector.

The Scarcity Price is a critical market signal, as spot prices exceeding this level trigger firm energy obligations (FEOs). By capping the Scarcity Price, the new regulation reduces the compensation paid to generators, which is intended to cover capacity availability during tight supply periods. This measure, according to Fitch, is expected to reduce returns on new firm capacity, thereby discouraging future investment. Simultaneously, the rule forcing generators to pre-sell 95% of centrally dispatched hydro output may reduce their flexibility to adjust contract coverage in response to changing hydrological conditions. This increased inflexibility raises the potential for costly spot purchases or penalties for generators during drought conditions.

The rated Colombian utilities with diversified assets, including Empresas Publicas de Medellin E.S.P (EPM)  (BB+/Negative), Isagen, (BBB-/Negative), Enel Colombia (BBB/Negative), and Celsia Colombia (BVC: CELSIA) (AAA(col)/Stable), have historically managed hydrology volatility through conservative commercial policies. Over the past four years, these companies have maintained an average of about 80% of sales via contracts, leaving approximately 20% exposure to spot prices even during price spikes. This discipline helped the companies navigate severe dryness conditions experienced in 2023–2024 without compromising credit strength. Fitch expects that if similar dry conditions recur under the new regulatory framework, higher energy procurement costs will weigh on profitability and cash flows, with limited scope for meaningful end-user tariff relief.

Signals for investment are especially critical ahead of the 2029–2030 FEO auction, which is scheduled to commence in early 2026. If these restrictive measures remain in place, auction outcomes could fall short of capacity expansion goals, as the reduced visibility on achievable returns increases developers’ hurdle rates and delays capital commitments. This trend could exacerbate the risk of future power shortages, given Fitch’s estimate that energy demand could exceed current FEOs by 4% to 5% between 2026 and 2028. Durable reliability depends on balanced market incentives that allow all technologies to recover costs and earn risk-appropriate returns. Designing scarcity pricing and contracting rules that preserve clear signals for investment, while enabling generators to manage hydrology risk, remains essential to sustain adequate firm energy and diversify the generation matrix.

Above photo: Electrical transformers en route to the Hidroituango Hydroelectric Dam in Northwestern Colombia. Each has a capacity of 112 MVA (million volt amperes) and will transform the generator output from 18 kilovolts to the grid distribution voltage of 500 kilovolts. Each is 4 meters high and weighs 110 tons when filled with oil. (Photo credit: EPM)

The announcement follows a hearing held by the Fiscalía General de la Nación before the Juzgado Tercero Penal Municipal (3rd municipal criminal court) in which charges were formally brought against Héctor Iván Rendón Vélez for violation of the regime of inabilities and incompatibilities, and Luisa Fernanda Rendón Gallo for falsification of a private document. These charges are part of a broader set of 650 findings revealed by Medellín’s mayor, Federico “Fico” Gutiérrez.

Ruta N clarified that it is not under investigation as a presumed responsible party, but rather as an entity affected by the alleged actions of the accused. The organization has requested formal recognition as a victim within the criminal proceedings, citing direct impacts on principles of transparency, morality, and the public resources it manages.
The damages cited by Ruta N include:

• Economic: Payment for a service contract that, according to the entity, should not have been executed, resulting in a direct impact on its resources.
• Reputational: The events, unrelated to the current administration, risk undermining public and business confidence in the entity’s transparent management.
• Political and Institutional: Actions by former representatives or interveners may distort public perception of Ruta N’s mission and credibility as a driver of Medellín’s science, technology, and innovation ecosystem.
• Moral and Public Trust: Such conduct is described as undermining institutional integrity and affecting relationships with partners, contractors, and the academic and business communities.

Ruta N reiterated its policy of zero tolerance for corruption and its commitment to transparency, legality, and responsible management of public resources entrusted by the Distrito de Medellín and Empresas Públicas de Medellín (EPM). The organization also reported that the accused did not accept the charges, and the judicial process will continue.

Ruta N stated its intention to cooperate fully with judicial authorities to clarify the facts, defend public resources, and preserve its reputation.

The investigation is being conducted by the Fiscalía General de la Nación (Attorney General’s office) and overseen by the Juzgado Tercero Penal Municipal (3rd Municipal Criminal Court).

The offering began on October 10, 2025, and involves the sale of 5,015,035 shares, representing 50.00001% of UNE’s subscribed and paid-in capital. This marks the initial phase of a multi-stage divestment plan authorized under Law 226 of 1995 (text of Law 226) and Law 798 of 2002, which govern the privatization of state-owned equity and establish conditions for democratization of ownership.

In accordance with Article 3 of Law 226, the first stage is restricted to entities and individuals eligible for special conditions. These include:

• Active and retired employees of EPM
• Associations of current or former employees
• Labor unions
• Employee funds
• Severance and pension funds
• Cooperative organizations

The offering notice has been published in two national newspapers and is also available on EPM’s dedicated portal: epm.com.co/institucional/enajenacion-de-acciones-de-epm-en-une. The site includes relevant documentation such as the sale program, regulatory framework, UNE’s prospectus, and the official offering announcement.

If the shares are not fully acquired during the first stage, EPM will proceed to a second phase, open to the general public. This phase allows any natural or legal person to submit purchase offers under conditions defined in the corresponding regulations.

Should shares remain unsold after both stages, EPM is contractually obligated to offer the remaining stake to Millicom International Cellular S.A. (Millicom), which holds a preemptive right under UNE’s bylaws and the UNE Shareholders’ Agreement. Millicom (NASDAQ: TIGO; Stockholm: TIGO_SDB) may choose to exercise this right or opt to participate in a broader public offering that could include shares held by both EPM and Millicom.

Millicom and EPM previously amended their shareholder agreement to include a put option for EPM and extended the “Public Property Protection Clause” until December 31, 2026.

The divestment follows approval by the Medellín City Council in August 2024 and subsequent ratification by EPM’s board in July 2025. The minimum price per share has been set at $418,741 COP, valuing the total stake at approximately $2.1 trillion COP.

UNE EPM Telecomunicaciones, operating under the Tigo brand (Tigo Colombia), is a telecommunications provider jointly owned by EPM and Millicom. The company offers fixed and mobile services across Colombia and has undergone integration with Millicom’s operations since 2014.

EPM has stated that it will remain a 100% publicly owned entity, and the divestment is part of a broader strategy to refocus on its core utilities businesses, including energy, water, and waste management.

Federico Gutiérrez Zuluaga, mayor of Medellín, and John Maya Salazar, general manager of EPM. Photo credit: EPM.

The revised model delineates two primary functions within EPM. One segment of the organization now oversees strategic management across the 47 companies that comprise the Grupo EPM—which operates in Colombia, Chile, El Salvador, Guatemala, Mexico, and Panama—while the other focuses on direct public service delivery in Medellín and the department of Antioquia. The legal status and public ownership of EPM remain unchanged.

Administrative Adjustments and Workforce Impact

As part of the restructuring, EPM reduced its number of executive positions from 247 to 206. This change shortened reporting lines and flattened hierarchies in several departments. The company reports that 45 internal professionals were promoted to executive roles, and 21 department heads were elevated to higher-level positions.

The reorganization also includes the transformation of EPM’s existing Shared Services Center (CSC) into a proposed sub-management unit called “Global Business Services” (GBS). The GBS model, which is under internal review but not yet approved by the board of directors, aims to consolidate and standardize fragmented processes currently distributed across multiple departments.

GBS structures are widely adopted in multinational corporations for centralized service delivery. In Colombia, similar models are used by Grupo Argos (BVC: GRUPOARGOS, PFGRUPOARG), Grupo Nutresa (BVC: NUTRESA), Organización Corona, Grupo Aval (BVC: GRUPOAVAL, PFAVAL), and Grupo de Energía de Bogotá (BVC: GEB).

Strategic Objectives and Governance

The restructuring is part of EPM’s broader effort to enhance its governance framework and align its operational model with global trends in digital transformation, energy transition, and circular economy practices. The company has emphasized that the changes are not intended to split the organization but to clarify roles and responsibilities between corporate oversight and service execution.

EPM’s leadership team under General Manager John Alberto Maya Salazar includes newly appointed vice presidents across strategic, energy, water and sanitation, finance, regulation, and customer experience divisions.

Photo credit EPM.

Cárdenas Álvarez holds a degree in Business Administration from Universidad EAFIT and a specialization in Marketing Management from CEIPA. Her career includes various strategic leadership roles, notably serving as the Undersecretary of Citizen Services within the District of Medellín local government.

This executive selection aligns with the organizational structure implemented by EPM on May 12, as the company works to strengthen its governance model, improve operational efficiency, and address current and projected challenges in the utility sector.

Above photo: Catalina María Cárdenas Álvarez. Photo credit: EPM.

Despite the tower’s collapse, EPM reported that there were no resulting power service interruptions in the city.

In the immediate aftermath, Medellín Mayor Federico “Fico” Gutiérrez stated that police were initially called to the area to investigate the presence of a flag alluding to the FARC’s 36th Front. After detonations were heard, the damage to the EPM tower was confirmed.

The mayor announced that the attack was believed to be a direct response to a successful operation by the National Police of Colombia in the municipality of Campamento, Antioquia, which resulted in the deaths of four members of the dissident group.

“This terrorist act is in response to the blow and takedown that the National Police dealt to this structure today in Campamento,” Gutiérrez stated. “We are going to continue putting a price on all terrorists. They will fall because they will fall. We are offering up to $200 million COP for information on the material and intellectual authors of the attack against the power tower.”

🚨🚨🚨A todos los terroristas les vamos a seguir poniendo precio. Caen porque caen. Ofrecemos hasta $200 millones de pesos para quien nos dé información de los responsables materiales e intelectuales de la afectación contra la torre de energía el día de hoy.
Colombia 🇨🇴 debe… pic.twitter.com/vR8MjDpDni

— Fico Gutiérrez (@FicoGutierrez) September 11, 2025

The governor of Antioquia, Andrés Julián Rendón, echoed the mayor’s assessment and announced an extraordinary security council meeting. “This is the front of ‘Calarcá,’ the same criminal with whom Petro insists on negotiating ‘total peace,” Governor Rendón remarked, referencing the national government’s ongoing peace negotiation policies.

EPM technical teams were dispatched to the scene immediately, but were unable to begin repairs. The area first had to be secured by anti-explosives units from the National Army of Colombia and the National Police to ensure no other explosive devices remained.

Security Response and Investigation Developments

Two days after the attack, on Friday, September 12, authorities announced a significant reinforcement of security in Medellín with the arrival of 480 new members of the Public Forces. The contingent, presented at the Bomboná Battalion, includes 350 soldiers from units such as the PM4, Special Forces, and the Rapid Deployment Force, along with 130 specialized police officers from the Search Block, GOES (Special Operations Groups), Gaula (Anti-Extortion and Kidnapping Group), and intelligence and investigation units (Sipol, Sijín, Dijín).

Addressing the newly arrived forces, Mayor Gutiérrez defined their objective clearly. “The best way to protect ourselves and our citizens is by neutralizing the terrorist threat. That is the mission that has been entrusted to you as soldiers and police of the homeland,” he said, adding that the task is to completely dismantle the 36th Front of the FARC dissidents. “Medellín cannot be a den for criminals; we are going to continue fighting.”

The operational plan includes:

• 24-hour checkpoints on main roads and access points.
• Joint Army-Police patrols at major intersections.
• Combined patrols by GOES and Special Forces in peripheral areas.
• Raids to search for explosives and criminal group members.

Enhanced surveillance of strategic infrastructure using cameras and drones, supplemented by nocturnal air patrols with police and Colombian Air Force helicopters.

Authorities also updated the reward system, offering up to $50 million COP for information that prevents terrorist acts and up to $100 million COP for intelligence leading to the capture of the dissident leader in the department, known as alias ‘Primo Gay’.

Mayor Gutiérrez also reported a breakthrough in the investigation, announcing the capture of alias ‘el Sastre’ or ‘el Pío’ during a raid in the Manrique neighborhood. The individual is believed to be a logistics manager for the 36th Front. During the operation, authorities seized 19 flags identical to the one left at the tower site and communication equipment.

“These radios were not for communication,” Gutiérrez pointed out, “but to activate explosive charges.”

An attack using explosives destroyed a high-voltage electrical tower belonging to EPM. Photo credit: Es tendencia en Colombia/X.

The Colombian government is evaluating the elimination or reformation of the Reliability Charge, a mechanism that compensates power generators for the availability of their assets. This charge is a significant revenue source for GenCos, particularly those with a focus on thermal power. The proposed changes are aimed at reducing electricity costs for consumers.

Energy Demand vs. Energy Obligations. Credit: Fitch Ratings.

Colombia’s energy matrix is highly dependent on hydroelectricity, which supplies between 60% and 70% of the nation’s power. The Reliability Charge was designed to encourage the expansion and diversification of the generation infrastructure by compensating GenCos for maintaining the capacity to fulfill Firm Energy Obligations (FEOs), which are assigned through auctions. The mechanism is intended to ensure a consistent energy supply, especially during periods of low rainfall, functioning similarly to capacity and power charges in other countries.

For Termocandelaria Power, which operates exclusively thermal generation assets, the Reliability Charge can constitute more than 20% of its total revenue and a larger portion of its operating cash flow. The company provides critical electricity capacity on Colombia’s Atlantic coast, which helps address demand peaks and energy volatility, mitigating shortfalls from hydroelectric plants and transmission constraints.

Other GenCos with more diversified portfolios and less reliance on thermal generation, such as Enel Colombia and Empresas Publicas de Medellin, receive an average of 10% to 15% of their total revenue from the charge. Isagen (BVC: ISG), which also has a diversified portfolio, is also in this group.

Installed Power Generating Capacity in Colombia. Credit Fitch Ratings.

The potential changes to the Reliability Charge come as the Colombian power sector faces increased stress. In recent years, electricity supply growth has not kept pace with demand, a trend attributed to environmental issues and conflicts with local communities. A drought in 2024 caused a spike in spot electricity prices, though FEOs were sufficient to cover the reduction in hydroelectric generation. However, a future drought could necessitate energy rationing.

Fitch estimates that from 2026 to 2028, energy demand could exceed current FEOs by 4% to 5%, following the last reconfiguration auction in May. Modifications to the Reliability Charge could exacerbate this shortfall by inhibiting GenCos’ capacity to fund capital expenditures.

Above photo: Turbine chamber at the Hidroituango hydroelectric dam. (Photo credit: EPM)

Although hydroelectric power leads Colombia’s electricity generation, the country relies on gas-fired electricity for baseload supply, especially during droughts and high-demand periods. Colombia has historically been largely self-sufficient in natural gas, but imports rose to almost 20% of consumption in 2024 because of lower-than-usual hydroelectricity generation, domestic gas production issues, and geographical imbalances.

Industry associations project that the structural deficit in natural gas will widen, with domestic gas production capacity only meeting 88% of projected consumption in 2025 and 70% in 2026. Colombia’s main gas transporters, Transportadora de Gas Internacional S.A. ESP (TGI; BBB/Negative) and Promigas S.A. E.S.P. (BBB-/stable), are investing heavily in natural gas transportation infrastructure to support increasing gas imports and new onshore gas projects and to improve connectivity within the country.

Courtesy: Fitch Ratings.

Retail gas prices have risen sharply in some regions. In February 2025, Vanti (AAA(col)/stable) announced a 36% price hike in Bogotá, while Empresas Públicas de Medellín (EPM; BB+/negative) hiked prices by 21% in Medellín. Other gas distributors, such as Gases del Caribe (Gascaribe; AAA(col)/stable), Surtidora de Gas del Caribe (Surtigas; AAA(col)/Stable) and Gases de Occidente (GDO; AAA(col)/stable), which supply gas to Cartagena, Barranquilla and Cali, respectively, have maintained domestic supply and moderated price adjustments by leveraging access to smaller fields in northern and southwestern Colombia.

Colombia’s proven gas reserves are declining, with projections indicating only six years of supply remaining by 2025 at the current production rate of 965 giga British thermal units (GBtu) per day. Upstream gas production is dominated by two major producers, Ecopetrol S.A. (BB+/Negative) with around 58% market share, and Canacol Energy Ltd. (NR) with 17%. However, their production rates have fallen in recent years. Total production at the key Cusiana, Cupiagua, and La Guajira fields has dropped to 425 GBTU per day from 550 GBTU per day over the past year.

The decline in domestic gas production, which partly reflects geological constraints, has been accelerated by government policies that deter investments in the oil and gas industry. In 2023, Colombia became the first Latin American country to sign the Fossil Fuel Non-Proliferation Treaty at COP28, and the government announced it would stop issuing new oil drilling and exploration contracts.

Gas distributors in Colombia benefit from a regulated tariffs regime that allows supply costs to be transferred to end users. However, rising energy costs could increase working capital needs and heighten political pressures for energy companies along the value chain.

Even with regulatory measures in place to protect margins, Colombia’s electricity distribution companies’ finances are being strained by rising energy prices experienced in the past year and political intervention. The sector has faced financial challenges due to restrictions on tariff increases imposed by the local regulator since the pandemic and the government’s fiscal challenges, which have resulted in delayed subsidy payments. EPM will likely have to financially support its subsidiary Afinia (AAA(col)/stable), which has been particularly affected by payment delays.

Photo credit: Ken Doerr.