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)

Finance Colombia has previously reported that the Ituango PC-SC Consortium, made up of two Chinese government-affiliated construction companies, Yellow River CO LTD and Power China International Group Limited Colombia Branch, and one Colombian company, Schrader Carmargo appears to be the one that will move forward with the construction of the troubled project.

As controversies abound over the funding and construction of the project, Medellín daily El Colombiano has revealed that some past projects of Sinohydro Corporation Limited, which is a subsidiary of Power China International, have been haphazard and expensive with very little success to show for it publicly for the project host countries.

Among the projects that Sinohydro has done in Latin America region is the Coca Codo Sinclair, a billion-dollar project located on the Coca River in Ecuador, billed as the largest of its kind inside the country and designed to create over 35% of the nation’s energy needs.

Despite its high price tag of $3.3 billion, the structure reportedly suffered multiple fractures; a report from the Control Commission of Ecuador’s National Assembly found more than 17,499 cracks, as well as other construction-related problems. The project reported only generates 700 megawatts of power, less than half of the 1,500 megawatts that was supposed to be its capacity.

Questions have abounded about the new consortium, allegedly ushered in by the Quintero administration after he had demanded the previous contractor, the CCC Ituango Consortium, to renegotiate their contract after accusing them of corruption–something which they refused to do.

Among the questions about the new consortium is their knowledge of the Hydroituango project, taking over from a previous contractor that left on less than cordial terms with the Quintero-controlled EPM.

The bidding process has also received harsh criticism, with the editorial staff of El Colombiano openly-questioning the haphazard and much-delayed bidding process that ended up with a single bidder. Olga Lucia Arango, the president of EPM’s largest labor union, SINPRO, had claimed as early as 2020 that the controversy was engineered by Quintero in order to re-issue the contract.

Jorge Andrés Carrillo, the CEO of Empresas Públicas de Medellín (EPM) is already claiming that the operations of the first two turbines in the dam have decreased the prices of electricity in Colombian electricity exchanges by more than 60%.

Como siempre lo hemos dicho, #Hidroituango es la seguridad energética del País. La entrada en operación de las unidades 1 y 2 con 600 MW ya tuvo un impacto en el precio en la bolsa de energía: hace 8 días el valor del kW-h era $526 y ayer fue de $200 por kW-h.@EPMestamosahi

— Jorge Andrés Carrillo (@jaaacarrillo) January 26, 2023

Above photo courtesy EPM