COLOMBIA TO BOOST POWER WITH SIX NEW HYDROELECTRIC

UNCLAS BOGOTA 002176 SENSITIVE SIPDIS WHA/EPSC FOR FCORNEILLE; EEB/ESC FOR MMCMANUS; DOE FOR GWARD E.O. 12958: N/A TAGS: ENRG ECON CO SUBJECT: COLOMBIA TO BOOST POWER WITH SIX NEW HYDROELECTRIC PLANTS ¶1. (SBU) SUMMARY: The Colombian government has issued contracts for the private construction of six new hydroelectric dams that will add almost 3000 megawatts (MW) of electricity to the domestic network by 2018. The additional wattage represents a 22 percent increase in installed capacity and will require an estimated USD 5 billion in investment. The GOC expects to eliminate all domestic electricity shortages with the new capacity as well as export excess electricity to Central and South America. END SUMMARY. ¶2. (U) On June 13, the GOC concluded its process to authorize six private companies to construct hydroelectric generation facilities in Antioquia (Empresas Publicas de Medellin-400 MW; Pescadero Ituango-1,200 MW); Tolima (Epsa-60 MW); Huila (Endesa-396 MW); Caldas (Promotora Miel II-135 MW); and Santander departments (Isagen-800 MW). The first three plants (in Tolima, Caldas and Antioquia) should reach operational status by the end of 2014 with the remainder operational by 2018. Colombia currently produces 64 percent of its electricity through existing hydroelectric facilities and expects to increase its capacity by one third with the new plants. ¶3. (U) The announcement of the new plants results from a GOC strategy launched in 2006 to increase incentives for private investment in the electrical generation sector. Private generators were attracted to the deal by the GOC's agreement to allow generators to charge up to USD 13.99 per megawatt hour of electricity produced. Based on this contract charge, generators can finance the significant investment necessary to bring the six plants online. For example, Spanish generator Endesa, already Colombia's largest electricity producer, has announced it will invest USD 650 million in the construction of its new plant in Huila Department expected to begin operations in 2015. ¶4. (SBU) With this new hydroelectric capacity, the first new construction contracts in eight years, Ministry of Mines and Energy Director of Electrical Generation Edilberto Munoz told us Colombia would eliminate electricity shortages that have periodically affected the country since the 1990s. Munoz also said Colombia hopes to become an exporter to Central America (through interconnection with Panama) and South America (through Ecuador to Peru and Bolivia). Maria Zulema Velez, President of the Colombian Association of Energy Generators (ACOLGEN),told us she considered the six new plants essential for lowering energy costs for Colombian industry and predicted that the new facilities would produce electricity at a price low enough to compete with Brazil in exporting to neighboring South American countries. BROWNFIELD