- Due to the amount and characteristics of the transaction, this is the most relevant credit transaction that EPM has signed with the private sector of the Inter-American Development Bank.
- The General Manager of EPM, Jorge Londoño De la Cuesta, highlighted the importance of this loan because of its deep significance in the sense of backing EPM and the Ituango project, while highlighting the diversification of the company’s funding sources.
In the course of executing its 2017-2020 Financing Plan, on December 29, 2017, EPM signed a loan agreement for USD 1 billion with IDB Invest, private sector of the International Development Bank, to partially finance the Ituango Hydroelectric Project. The following scheme was reached with this loan transaction, and within the framework of the project’s financial structuring: 36% equity and 64% debt.
EPM General Manager, Jorge Londoño De la Cuesta, stated that this transaction represents a major show of support from multilateral banking and the international financial sector of the Colombia’s development and EPM, and in particular the technical, socio-environmental and financial rigor that identifies the development of the Ituango project by EPM’s.
This is a loan with an A/B structure in which the IDB Group participates in tranche A, a relevant group of commercial banks and international institutional investors fund tranche B. Additionally, the loan includes resources from the China Fund—co-financing fund managed by IDB Invest. This loan transaction was authorized by the Ministry of the Treasury and Public Credit through resolution no. 4497 of December 29th, 2017.
The structure of the loan includes a USD 300 million tranche A from the IDB Group, USD 50 million from the Chinese Government co-financing fund managed by IDB Invest, and a tranche B of USD 650 million contributed by international commercial banks and institutional investors from North America, Europe and Asia (CDPQ, KFW IPEX, BNP Paribas, ICBC, Sumitomo Mitsui, BBVA and Banco Santander).
This year, EPM's CEO stressed that major power transmission projects were started up, such as Nueva Esperanza and Bello-Guayabal-Ancon, the former so that more than 12 million people living in middle-east region of Colombia can have the electricity they need for their development and well-being, and the latter to cover the demand of the metropolitan area of Valle de Aburrá, as well as other areas of Colombia.
Londoño De la Cuesta stressed that this credit also improves the diversification of EPM sources of financing, which in turn contributes to EPM’s long-term sustainability.
The financing has a total term of 12 years for tranche A and the resources contributed by the China Fund; tranche B has terms of 8 and 12 years. The resources will be disbursed gradually over the 4-year disbursement period, maintaining an appropriate level of indebtedness for the company.
The Ituango hydroelectric project is the largest infrastructure project currently under construction in Colombia. With a total investment of COP 11.4 trillion, it is currently advancing by 80% and it is estimated that at the end of 2018, it will begin to generate the first 300 of 2,400 megawatts of its total generation capacity. Social and environmental management in the 12 municipalities in its area of influence is highlighted, with investments totaling close to COP 1.9 trillion, in all areas of development: connectivity, health, education, housing, public utilities, community infrastructure, productive projects, and institutional reinforcement.