27985 - EPM AB Loan

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Summary of Proposed Investment

Project Number

27985

Company Name

EMPRESAS PUBLICAS DE MEDELLIN E S P

Date SPI Disclosed

Dec 8, 2010

Country

Colombia

Industry

Infrastructure

Projected Board Date

Jan 31, 2011

Status

Completed

Sector

Integrated Utilities

Department

Regional Industry INF LAC & EUR

Environmental Category

B - Limited

Previous Events

Approved : Aug 25, 2011
Signed : Dec 29, 2011
Invested : Aug 28, 2012

Project Description

The Project is a $349 million capital expenditure program in the areas of water distribution and waste water collection, and electricity distribution and transmission (the “Project”) during 2009 and 2012. The project will replace about 114 km of aging water and sewer pipes and add 116 km of sewer pipes throughout Medellin Metropolitan area, benefiting up to 3 million residents from better water and sewerage services, and reducing water losses. Furthermore, the project will benefit about 209,300 rural residents through new electricity connections. An additional one million residents will enjoy improved electricity supply, through investments in the distribution network, substations, and transformers in Medellin and surrounding regions where EPM operates. In total, the project will benefit about 3 million residents, of which about 50 percent are low income residents classified in strata 1 and 2.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	25.0
Equity

Development Impact

The Project expected to benefit about 3,000,000 residents with better supply of water and sewerage services, 209.300 residents through new rural electricity connections, about 460.000 residents with new electricity connections and street lights, as well as about 600,000 residents with better electricity supply through rehabilitation and connections. Of that large group, about 1,2 million people fall in the low income category classified as social strata 1 and 2 in the Colombian system. In addition to the social impact, network rehabilitation investments offer a positive environmental impact. Reducing non revenue water (NRW), which is about 36%, is critical given that a one percentage point reduction in water losses saves about 3 million m3 per year of treated water, sufficient to supply about 70,000 people. The Project will help reduce the level of non revenue water from about 102 million cubic meters in 2010 to about 85-90 million cubic meters in 2012, and help maintain the level of commercial losses in electricity distribution network at 13.4% or less through rehabilitation and replacement of network infrastructure.

This transaction will permit EPM to meet service needs, particularly of the poorest. Although EPM, as a leading utility in Latin America, has good access to capital and commercial banking markets, it also has a large investment program to maintain the service levels and to expand services to the lower income population. To sustain the program, EPM constantly seeks to expand and diversify its funding sources. IFC syndicated loan structure will bring in new investors from different parts of the world, thereby helping EPM to achieve that goal.

Contacts

For Inquiries About the Project, Contact

Juan Carlos Sampedro Tobon
Empresas Publicas de Medellin
Email: juan.sampedro@epm.com.co

Tel: 574 380 2511
Fax: 574 380 6771

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Local Access of Project Documentation

The Environmental and Social Review (ESRS) is available to the public at the offices of local government authorities at the following address:

Empresas Publicas de Medellin,
Carrera 58 No. 42-125,
Medellin, Colombia

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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