Cablegate: Colombia: Comments On Application for Opic Finance

VZCZCXYZ0003
PP RUEHWEB

DE RUEHBO #3987 3052214
ZNR UUUUU ZZH
P 312214Z OCT 08
FM AMEMBASSY BOGOTA
TO SECSTATE WASHDC PRIORITY 5356

UNCLAS BOGOTA 003987

SIPDIS

EEB/IFD/OIA FOR MCULLINANE; OPIC FOR DMONTGOMERY

E.O. 12958: N/A
TAGS: EINV ENRG ECON CO
SUBJECT: COLOMBIA: COMMENTS ON APPLICATION FOR OPIC FINANCE
ISAGEN

REF: STATE 116186

1. Generacion y Comercializacion de Energia S.A. (ISAGEN) is
a well known Colombia-based company dedicated to electric
energy generation and sales. ISAGEN owns and operates five
power plants in Colombia: San Carlos (hydroelectric); Jaguas
(hydroelectric); Calderas (hydroelectric); Miel 1
(hydroelectric); and Thermocentro (thermal). The company has
an installed capacity of 2,132 megawatts divided between
hydroelectric generation (1,832 MW) and thermal generation
(300 MW) representing 16 percent of total national electrical
generation capacity. ISAGEN is commonly regarded as one of
the most efficient public companies in Colombia with an
average net profit of approximately USD 90 million per year.

2. ISAGEN primary stock owners are the Colombian government
(57.66 percent); Proteccion Pension Fund (15.38 percent);
Empresas Publicas de Medellin (12.95 percent); and Empresa de
Energia del Pacifico (4.85 percent). Post is not aware of
any information on ISAGEN or its investors related to
potential ties to terrorism, money laundering, corruption, or
violations of law.

3. The Colombian government has publicly declared in various
channels its intention to sell its share in ISAGEN, valued at
USD 1.5 billion, with the privatization process originally
planned for 2007 but yet to materialize. Given rising GOC
fiscal pressures for the proceeds of the sale, local analysts
suggest the process will move faster in 2009. Under Law 226,
ISAGEN workers receive priority for making offers on the GOC
stake, followed by local pension funds/cooperatives and
private institutions. Once the Finance Ministry has finished
setting terms for a bid process, the GOC expects considerable
interest from prospective bidders. In light of ISAGEN's firm
financial footing at present, rising electrical demand, and
the positive outlook for privatization, post is not aware of
any significant additional risks related to OPIC converting
its current Non-Honoring of a Sovereign Guarantee (NHSG)
insurance contract to an Investment Guarantee.
BROWNFIELD

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