Quintero talks Hidroituango

Regulation & Policy    Dec 16, 2021 6:46 PM

The mayor of Medellín, Daniel Quintero, said that the agreement with Mapfre is only the first step, since the project still needs to be finished and resources not contemplated in the Comptroller’s ruling still need to be recovered.

Quintero told La Republica that the contractors will have to respond for the shortfall arguing that they lowered the quality of the work materials.

The Controller General who is investigating financial responsibility disputes the mayor’s statement about quality saying “We do not have certainty over the mayor’s statements” because the study did not identify this as one of the root causes.

He said that the agreement with Mapfre is the best news the project has received in recent months.

“We won the first step, to recover the money, and the second step is to finish the project as soon as possible, we estimate in July of next year,” Quintero said.

The mayor explained that EPM will receive US$983M from Mapfre to cover construction and design errors by the contractors; another US$108M from directors’ policies to respond for decisions made by some former managers and politicians; and there is a small amount to be covered to reach CoP$4.3T, which must be paid by the rest of those fiscally responsible.

“Contractors must pay a deductible, which is between CoP$400B and CoP$800B. EPM will collect this money through institutional channels,” Quintero highlighted.

Quintero added that there is another US$1.2B for effects of coverage of items that were not insured and must be paid by those responsible, in this case, he consider that they are the contractors, as pointed out by the Comptroller’s Office.

He acknowledged that it is more difficult for EPM to get all-risk insurance for the current work, so the company created a dispersed insurance model, in which different insurers have insured the project for various risks.

“But yes, it is difficult to find all-risk insurance because the project is damaged, and it is not only more complex but also more expensive,” Quintero said.

Bottom-Line: Quintero reached a historic settlement with Mapfre but claims with the contractors will be an even tougher ‘fight’. EPM is demanding a considerable amount of money, which the contractors may not be willing to pay.

Both parties are suing each other, but they have to keep working together, for the moment.

Ah, and EPM will have to be especially careful with the actual jobs, as there will be no all-risk insurance….

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