Northern exposure: Colombia's EPM eyes Caribbean expansion

Empresas Públicas de Medellín (EPM) is seeking further expansion opportunities in Colombia's Caribbean region after securing control of Electricaribe unit Caribe Mar, according to CEO Álvaro Rendón. 

The Andean country's largest multi-utility company submitted a winning bid for Caribe Mar at an auction on Friday (March 20), committing to investments of 3.2tn pesos (US$760mn) over the next five years and 5tn pesos in the next decade. 

Electricaribe's other unit, Caribe Sol, was awarded to Consorcio Energía de la Costa, a joint venture between Latin America Corp and Enerpereira.

"That is our big plan [to expand in the Caribbean region]," newspaper El Colombiano quoted Rondón as saying on Tuesday. 

He said gas distribution, energy generation, power transmission and water services were other possible growth areas on Colombia's northern coast.

"There are many collateral services that ... could open the floodgates for us to serve the region with our capabilities. We are certainly ready with everything in our portfolio, including wastewater," he said.

Caribe Mar's coverage area comprises 1.5mn customers in Córdoba, Sucre, Bolívar and César departments. Its assets are valued at 2.7tn pesos (US$829mn).

Caribe Sol, which provides electricity to 1.2mn users in Atlántico, Magdalena and La Guajira, has assets totaling 2.3tn pesos and investment requirements of 3.7tn pesos over the next decade. 

Rendón said the Caribe Mar investments would be mostly bankrolled by EPM's existing funds and future cash flow. 

He added that the company's troubled Hidroituango project posed no threat to its Electricaribe obligations. 

"Hidroituango has its own model with investments that are safeguarded," he said. "This is a different scenario that has been enabled by investment banks, risk rating agencies and our own resources and capacities."

The Electricaribe operation was backed by investment bank Inverlink and rating agencies Fitch and Standard & Poor's.

Rendón said EPM expects to assume Caribe Mar's day-to-day operations in September.