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Cablegate: Colombia to Boost Power with Six New Hydroelectric

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DE RUEHBO #2176 1691657
ZNR UUUUU ZZH
R 171657Z JUN 08
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 3196
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
INFO RUEHBR/AMEMBASSY BRASILIA 8248
RUEHCV/AMEMBASSY CARACAS 0554
RUEHLP/AMEMBASSY LA PAZ JUN LIMA 6272
RUEHZP/AMEMBASSY PANAMA 1866
RUEHQT/AMEMBASSY QUITO 6940

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

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