IADB to loan US$1 billion to largest hydropower project in Colombia

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IDB Invest, the private investment arm of the Inter-American Development Bank, has signed a US$1 billion senior, unsecured A/B loan package to Empresas Públicas de Medellín (EPM) to fund the construction of the 2.4 GW Ituango hydroelectric plant, to be the largest hydropower project in Colombia. 

The plant will be located on the Cauca River in the north-west of the Antioquia department, about 170 kilometers from the city of Medellin. Upon completion, it will generate approximately 18% of Colombia’s total installed power capacity, and will generate approximately 13,900 GWh of renewable electricity per year. 

The financing package comprises a US$300 million A loan from the IDB Group, as well a US$50 million co-loan from the IDB Invest-administered China Co-Financing Fund for Latin America and the Caribbean, and a US$650 million B loan from a consortium of international commercial banks and institutional investors comprising CDPQ, KFW IPEX, BNP Paribas, ICBC, Sumitomo Mitsui Banking Corporation, BBVA and Banco Santander. The financing offers a tenor of 12 years for the A loan, and a 12-year and an 8-year tranche for the B loan.

This financing is in addition to a US$1 billion package provided by a different consortium of international banks in January 2016. Whereas proceeds from that loan were stipulated as funding EPM's 2016 investment expenses, which included the development of the Ituango hydroelectric plant, this IBD-sponsored package will finance solely the construction of the plant.

The project's first phase, which includes the enabling of four turbines (to reach a capacity of 1,200 MW), is scheduled to be finalized in 2019. The second phase includes bringing the four remaining turbines into operation (to reach 2,400 MW), and will be finalized in 2022.

EPM holds the concession to construct the plant and then operate it for 50 years. The project's total investment is estimated at approximately COP11.4 trillion (US$3.9 billion).

In addition to the planned hydraulic and electromechanical works, the project includes building a two-lane asphalt concrete road between the dam site and Puerto Valdivia. The energy produced by Ituango will be evacuated through a 500 kV transmission line, which will be built by ISA-Intercolombia.

Construction is currently over 70% complete. The first 300 MW generator unit is on target to come online at the end of 2018. The finished dam will be 225 meters high and 20 million cubic meters in volume. 

The project has become a major job creator. Currently it directly employs 11,247 people. Of these, 2,727 are from the 12 regions surrounding the dam, where there is effectively complete employment. 4,586 are employees from other parts of Antioquia and 3,910 from the rest of Colombia.