Colombia presents the two new energy service operators in the Caribbean region

This Minenergia release was published using machine translation.

Barranquilla, September 29, 2020. The President of the Republic, Iván Duque Márquez, officially presented the companies Afinia and Air-e, new operators of the electric power service in the seven departments of the Caribbean region, in formal acts in the that the Minister of Mines and Energy, Diego Mesa Puyo, took part; the superintendent of Home Public Services, Natasha Avendaño García, and the controlling agent of Electricaribe in liquidation, Ángela Patricia Rojas.

During these meetings, commitments were also signed for the execution of management programs with both operators, through which the superintendency will strictly monitor compliance with the obligations agreed between the government with Afinia (Empresas Públicas de Medellín - EPM) and Air-e (Consorcio Energético de la Costa), within the framework of a business solution scheme designed and led by the government of President Duque since November 2018, in order to ensure the adequate provision of the energy service in the short, medium long term.

In the presence of the governors of the seven departments, the mayors of the capital cities and the Caribbean bench, the president said: "We can say to the entire community of the Colombian Caribbean coast that today the new history of the energy service in our country for this region, and it starts with equipment solutions, with financial solutions, with regulatory solutions, and we have two operators for the region. "

Faced with the investments that the operators will have to make, he indicated: "Through this structure, we will see in the next decade, starting now with the largest injection in these first two years, more than $ 10 billion to fully improve the energy service on the Colombian Caribbean coast. Investments of this nature have never been guaranteed. "

The president also gave special recognition to the congressmen, the minister of mines and energy, the superintendent, the special agent of Electricaribe, the leaders of the region and all members of the government team; as well as the monitoring carried out by the Comptroller General of the Nation, for the results of this process, which he said was based on several pillars, among them: the assumption of the pension liability, the concretion of historical investments to improve the service network, the incorporation of necessary measures in the National Development Plan and the hiring of an investment bank to determine the market delivery options.

In this way, the Electricaribe operation, intervened by Superservicios in November 2016, is put to an end. And a schedule of large investments is opened, as well as the reestablishment of the trust of more than 10 million inhabitants of this area of the country that have been affected by the deterioration of the infrastructure and by deficiencies in the provision of the service in charge of the outgoing company.

Afinia will operate in the departments of Bolívar, Cesar, Córdoba and Sucre; and Air-e in Atlántico, Magdalena and La Guajira. The two new operators must ensure the quality, continuity and coverage of the service; and the execution of investment projects for $ 8.5 trillion, in a period of 10 years, for the improvement of stations and substations, change of transformers, electrical networks and modernization of equipment, among other fronts.

Regarding this process, the Minister of Mines and Energy, Diego Mesa, assured: "We are fulfilling the commitment of the Government of President Duque to find a structural and definitive solution for the Caribbean region, which allows us to offer a quality energy service to those nearby. of 10 million inhabitants of this area of the country The arrival of Afinia and Air-e is part of a comprehensive package, with which the inhabitants of the Caribbean will have a gradual and significant improvement, with large investments in the coming years, which will be it will translate into a more reliable service for an area called to promote Colombia's energy transition. "

The superintendent of Home Public Services, Natasha Avendaño García, stated that: "We are pleased to present this result achieved thanks to the work articulated from the high government and supported by congressmen, leaders of the region, unions and civil society, in the midst of difficulties faced with During the intervention process that we carry out in Electricaribe, we managed to keep the company up to date in the payment of its obligations for the purchase of energy, avoiding a blackout in the region; and we marked the process of searching for new operators, on which we will monitor to ensure that users get the service they deserve, and the region can develop its great potential for economic and social growth for the benefit of all its inhabitants. "

In its first phase of operation, Afinia and Air-e will carry out joint cross-cutting tasks through the Shared Services Center. This company was established by the two operators to attend to commercial and billing issues, among others. Its existence is contemplated for two years, a term that may be shorter depending on the agility with which each operator undertakes these activities independently.

Requests, complaints, claims and all ongoing procedures filed by users with Electricaribe will be assumed by the new companies.

Parallel to the entry into service of the new network operators, Electricaribe's intervention process will continue with the legal procedures for their liquidation and termination of their legal existence.

Pillars and results of the business solution scheme

to. Financial support

The National Government, through the Superservices Business Fund, has allocated $ 4.56 billion to Electricaribe for the following concepts: operation credits for $ 4.1 billion and credits for power purchase guarantees for $ 460 billion.

Additionally, the nation granted resources for investment, via Conpes, in the amount of $ 860 billion. With these resources, priority interventions are carried out to improve the infrastructure of networks, substations, new circuits, power distribution transformers, as well as the implementation of a loss reduction plan. As a result, the interruption duration indicator (SAIDI) has been improved from 75.11 hours in 2019 to 56.34 hours in August 2020. Likewise, the service interruption frequency indicator (SAIFI) was reduced from 77.15 times in August 2019 to 67.33 times in the same month of 2020.

b. Assumption of the pension and benefit liability of Electricaribe and the Superservices Business Fund

The nation assumed the pension and benefit liability of Electricaribe that exceeded two billion pesos. With this, the rights of more than 3,000 pensioners of the company who had stopped receiving their allowance due to the cessation of payments from Electricaribe are assured. The new companies will start without outstanding debts for these concepts.

c. Market segmentation

The new solution scheme released on April 1, 2019 allowed segmenting the market into two large blocks known as Caribe Mar (Bolívar, Cesar, Córdoba and Sucre) with 1.5 million clients and 10.9% of the national market . And Caribe Sol (Atlántico, La Guajira and Magdalena) with a total of 1.2 million clients and 10.8% of the national market. This segmentation made it possible to make the region's energy market attractive and, therefore, the achievement of the two new operators that will begin to provide their service as of October 1, 2020.

d. Commitments of the two new operators

Employer substitution to guarantee job stability and protection of workers linked to Electricaribe, in accordance with the Substantive Labor Code that establishes the responsibilities of the old and new employer in these cases.

Execution of investments worth $ 5.8 trillion, in a period of five years, in the infrastructure and areas of operation. This investment will serve to advance in the progressive improvement of the quality of the energy service.

The Superintendency of Home Public Services will monitor compliance with the investment plan: $ 3.2 trillion by Afinia and $ 2.6 trillion by Air-e, through management programs signed with each company. The Superservicios will constantly monitor the progress of the works, as well as the improvement of the indicators of average duration of interruptions (SAIDI) and number of interruptions (SAIFI). During the next five years, eight types of indicators and sub-indicators will be controlled for a total of 27 items related to investments, and the quality, continuity and coverage of the service.

Background and relevant facts for the success of the process

• November 14, 2016. Superservicios orders the takeover of Electricaribe - Resolution SSPD 20161000062785.
• March 14, 2017. Superservicios orders the takeover of Electricaribe for liquidation purposes and orders a temporary administration stage - Resolution SSPD 20171000005985.
• June 6, 2017. A contract is signed between Electricaribe and Financiera de Desarrollo Nacional in order to determine alternative solutions to the provision of electric power service in the region, in the long term.
• June 12, 2018. The National Government announces the start of the search process for a new investment operator to provide energy service in the Caribbean region.
• September 28, 2018. Electricaribe publishes Definitive Regulations for the achievement of an investor-operator that allows guaranteeing the improvement and continuity in the provision of electric power service in the seven departments of the Caribbean region.
• November 29, 2018. President Duque announces suspension of the selection process for the new operator initiated by the previous government when only one interested party appears. It reports the assumption of the company's pension liabilities by the nation.
• February 5, 2019. The Electricaribe Advisory Board is formed to monitor the investment plan of the company.
• April 1, 2019. The superintendent of Home Public Services and the special agent of Electricaribe present the new business solution scheme and the provision of energy service in the region.
• April 30 to June 14, 2019. Minenergía and Superservicios develop 14 socialization tables on the solution scheme for the provision of energy service in the Caribbean region in Barranquilla, Cartagena, Santa Marta, Montería, Sincelejo, Valledupar and Riohacha; and in the municipalities of Uribia in La Guajira, Fundación in Magdalena, Copey in Cesar, Sabanalarga in Atlántico, Mompós in Bolívar, Ovejas in Sucre, and Lorica in Córdoba.
• May 25, 2019. Sanction of the National Development Plan - Law 1955. It allows progress towards a definitive solution in the provision of electric power service in this region. Article 316 facilitates vertical integration in the energy sector aimed at carrying out energy marketing, distribution and generation activities, previously limited in Article 74 of Law 143 of 1994. It allows an increase from 25% to 35% to the limit participation and marketing of energy distributors in the national market. Article 313 authorizes the National Government to assume the pension and benefit liability of Electricaribe
• June 25, 2019. Superservicios and the special agency announce the fulfillment of the requirements of six companies interested in providing energy service in the Caribbean region, upon completion, by Electricaribe, of verification of the documents presented in the prequalification stage of the search process for new operators - investors.
• March 9, 2020. Superservicios and Fiduprevisora sign a contract that guarantees payment of Electricaribe's pension and benefit liability. Thus, the Autonomous Patrimony of the National Fund for Pension and Benefit Liabilities of Electrificadora del Caribe (Foneca) is created, which will be in charge of managing the resources for the payment of pensions and benefits to more than 3,000 Electricaribe pensioners.
• March 20, 2020. Auction and award of the energy market, divided into two segments, to Empresas Públicas de Medellín (EPM) and the Consorcio Energético de la Costa.
• March 30, 2020. Subscription of contracts with EPM and the Consorcio Energético de la Costa, winners of the auction.
• April to September 2020. Development of the transition and connection process between Electricaribe and new operators.
• October 1, 2020. Start of operations of Afinia (EPM) and Air-e (Consorcio Energético de la Costa).