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Achieving an EBITDA (profit before taxes, interest, depreciation and amortization) of 12.6 billion pesos is the objective of Empresas Públicas de Medellín (EPM) for 2025, of which 2 billion would come from the hydroelectric project Ituango when it will be operational, according to the rating agency Fitch Ratings
This last figure equates to 15.8% of EPM's EBIT by 2025. But that could be jeopardized by Contingency to Hidroituango, who initiated the past April 28 (see Glossary)
Carlos Mario Correa, Professor of Finance in Public Accounting at the University of Antioquia, explained that these figures show the importance of this energy project for the company Antioquia. "Without this cash flow, it will be very difficult for the company to meet its obligations to third parties," he said.
If the project succeeds, EPM will increase total electricity production by about 13,500 gigawatt hours (GWh) year; In total, it would produce 5,900 MW, of which 2,400 would be provided by the project. "The average annual consumption of a household of four in Colombia is in the order of 1,824 kilowatt-hours (kWh) per year, which implies that Hidroituango could serve approximately 7,400,000 Colombian households." to give another example, this energy can also power 122 metro systems in Medellín ", explains the research professor at the Faculty of Electrical Engineering of the University Pontifical Bolivariana (UPB), Andrés Emiro . According to Fitch, this would bring the current Ebitda from about 5 billion pesos a year to about 7 billion pesos, once the two phases of the project are fully operational and the 2,400 MW promised to the National System interconnected (SIN) will be paid. Other regulated businesses would continue to account for approximately 60% of EPM's total cash flow generation.
The hydroelectric activities, which would begin at the end of 2018, could begin in 2022.
If the delay materializes and the generation of Ebitda of Hidroituango is postponed beyond the year 2022, so EPM should meet the challenge of maintaining its growth target set for 2025. "Fitch's previous expectation was that EPM would use most of the project's cash flow to fund its program. of capital expenditures in 2019-2021 ", stresses the US company.
Did EPM provide for contingencies?
Clara Inés Pardo Professor of Administration at the Universidad del Rosario and PhD in Energy Economics, explained that the Companies in general develop a project in two stages: 1 construction and 2. operations to predict any situation. "When EPM has a crisis like that of Hidroituango, it is currently possible that its growth forecasts are deteriorating, because it is possible that this does not comply with commitments made in time," he added. .
Luis Fernando Múnera civil engineer and former director of EPM Planning reiterated what was declared by the Mining and Energy Planning Unit (Upme) of the Ministry of Mines and Mines. Energy and XM (administrator of the electricity market): it expects problems with electricity supply until 2022. If Hidroituango was delayed beyond this date, he would most likely have an energy deficit. "
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