Planta Hidroeléctrica Ituango
Empresas Públicas de Medellín S.A E.S.P. (“EPM” or the “Company”) is developing the Ituango Hydroelectric Project (“Ituango” or the “Project”), a key driver to expand its electricity segment in Colombia. Located about 8 km north from the mouth of Ituango River in Antioquia and approximately 170 Km from Medellín, the Project will be country’s largest hydropower plant and will have an installed capacity of 2,400 MW that will allow the generation of 13,900GWh per year. The Project’s first phase, when four of its eight turbines will be operating, is expected to be completed in 2019. The second and last phase, where the additional last four turbines will be in operation foreseen to be finished in 2022. The Project’s total investment is estimated to be around COP$11.400.000 million.
IIC’s participation in the financing will play an important catalytic role in mobilizing new sources of long-term commercial financing for EPM. The IIC will lead a financing package to EPM, which will also mobilize additional financing from international financial institutions and investors under the IIC-B Loan as well as IIC managed funds. The transaction will be structured as an unsecured corporate loan to EPM. IIC/IDB facility will support EPM’s strategy through a 12-year unsecured loan (including a 4 year grace period) to EPM for up to US$550 million.
The Project has been preliminary classified as Category A operation according to the IIC’s Environmental and Social Sustainability Policy.
In particular, this includes the proximity of the following protected areas: i) Reserva de Recursos Naturales de la Zona Ribereña del Río Cauca; ii) La Reserva Natural Bajo Cauca – Nechí; and iii) Distrito de Manejo Integrado del Sistema de Páramos y Bosques Altoandinos del Noroccidente Medio Antioqueño. The area where the Project will be located also includes health and safety issues and risks associated with working at very high altitude and isolated area.
The Project’s EIA was completed in 2007. In January 2009 (Resolution 0155) the Project received its environmental license by the National Environmental Licensing Authority (Autoridad Nacional de Licencias Ambientales -ANLA). A relevant modification of the environmental license was granted in December 2012 (Resolution 1041) for the construction of the Puerto Valdivia Dam road. 13 additional modifications were submitted to the ANLA to adjust the environmental license to the Project’s changes.
The EIA has an Environmental and Social Management Plan (ESMP) that contains the following programs: i) Physical Environment Management Program, that includes several programs to manage air quality, excavation materials, surface water, residual (domestic and industrial) water, solid residues, vehicular transit, erosion, deviation of the Cauca River, reservoir management, among the most important; ii) Biotic Environment Management Program, that comprises programs to manage habitats and sensitive species as well conservation programs; and iii) Social Management Programs, that includes communication and public participation, living conditions restauration, project-region integration, and archaeology subprograms. All these programs will be revised in more detail during the Environmental and Social Due Diligence (ESDD).
In addition to the EIA, and upon request and with the support of the IDB Group (IDBG), EPM has undertaken the following additional studies: i) water quality modeling and assessment both for the reservoir and for downstream; ii) base line update for the aquatic component; iii) the social management plan update; and iv) baseline update for the flora and fauna components.
IIC intends to hire an independent environmental and social consultant to assist the ESDD process and evaluate the environmental probable risks, confirm the project categorization, assess management plans to mitigate these risks, and define a project environmental and social action plan (ESAP). During the ESDD the IIC and the consultant will visit the site and further assess the Project’s Environmental, Health and Safety Management System, including plans and procedures, review the main Projects facilities, verify the extent of public consultation, assess baseline information pertaining to key environmental and social concerns, and evaluate the social and labor issues related to the Project. The Client will be required to ensure the Project meets the requirements of the IIC Sustainability Policy and address any gaps in the form of an action plan.
An Environmental and Social Review Summary (ESRS) has been prepared and posted on the IIC’s website as part of the Environmental and Social Due Diligence (ESDD) process. Executive Summaries of the EIAs for the Project can also be found on IIC’s website.