Controller on Rules in the Electrical Sector

Electricity, Energy, Regulation & Policy    Sep 7, 2018 2:57 PM

The Controller General made an analysis on the rules to expand the National Electric System (SEN) and the results are not very encouraging. The entity believes that there are many issues to improve to encourage the development of new energy projects in Colombia.

According to El Espectador, the Controller General said that conditions to expand the SEN go against free competition, opening the possibility to millionaire lawsuits against the Colombian state.

The entity recommended reviewing the regulation and conditions to expand the SEN, since there are several factors that affect free competition and others issues that could generate a patrimonial risk for the state.

The controller said that ISA’s obligation to submit an offer in all expansion projects creates a competitive disadvantage for the company. The entity recalled that this obligation was placed when ISA was in charge of the expansion as a state company, but this situation changed, considering that ISA has private investors at present.

The entity criticized that investors must assume all the risks of a project, including unpredictable ones. In addition, the government must guarantee the technical, economic and environmental feasibility of the projects offered, otherwise projects could report cost overruns and motivate lawsuits against the state.

The controller warned that 16 of 25 projects proposed between 2010 and 2017 report delays.

“Despite the authorities’ efforts in the electricity sector, transmission projects have presented significant difficulties for investors in recent years,” said the controller.

Bottom-Line: Colombia is losing competitiveness compared with countries in the region in several sectors. Authorities must listen to the controller’s comments to attract the investors’ interest to the country.

Colombia has great potential for expansion in energy projects, but the government must offer attractive conditions and legal security to boost the sector growth.

 

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