China Three Gorges short-listed for Colombia HEP project

Two Asian groups have pre-qualified to bid for Colombia's biggest-ever energy project, further demonstrating the region's, and especially China's, ambitions when it comes to investments in other emerging markets. 

China Three Gorges Corporation and a consortium of six Korean companies led by Korea Electric Power join four Brazilian firms and Colombia's own Empresas Públicas de Medellín on a shortlist for the $2.3 billion construction of the 2,400 megawatt Ituango hydroelectric power station, which is located 170 kilometres north of Medellín, Colombia's second-largest city. The winner will be revealed in May.

The first phase of the project is scheduled to be delivered by 2018. When completed it will account for nearly 18% of the country's installed power capacity, said Adriana La Rotta, Hong Kong media advisor at the Colombia Investment Promotion Office (CIPO) yesterday.

The winner of the bid will receive a 20- to 25-year concession to build, own, operate, maintain and transfer the Ituango plant, currently controlled by the local and regional governments of the Colombian province of Antioquia. The scheme, planned for the mouth of the Ituango River, will flood a total area of 38 square kilometres and will generate 13,900 gigawatt hours of power per year.

China is strengthening its ties to Latin America and is increasingly including Colombia in its investment portfolio. In late November, the third China Latin America Business Summit was held in Bogota, the country's capital, and late last year, China Development Bank announced plans to open an office in Colombia

Also in November, Chinese dam builder Sinohydro bought technical information for the construction of a $175 million reservoir in Colombia's eastern province of Santander. That structure will have a storage capacity of 17.6 million cubic meters and aims to guarantee water supply for 1 million inhabitants of Colombia's eastern cities.

Chinese capital flows to Colombia have targeted the transport sector as well as trade and mining. Prominent deals include Sinochem's purchase in August 2009 of Emerald Energy, a UK-based company with Colombian oil exploration rights. Between January 2003 and November 2009, according to data collected by CIPO, China invested in 76 projects in the region, with China National Petroleum, ZTE  and SAIC Chery Automobile among the top 10 investors.

Meanwhile, Colombia's demand for new energy sources has risen following the economy's sustained growth over the past decade, which makes the country an attractive alternative for investors in hydropower, said La Rotta. Three new tenders for major hydroelectric projects have previously been awarded to consortiums from Italy and Spain.

Colombia has made great efforts to improve security and to offer guarantees to foreign investors. The World Bank's 2010 "Doing Business" report, named Colombia as the most business-friendly country in Latin America, ahead of Brazil, Chile and Mexico.