05/18/2024
EPM is having problems coming together. After more than a decade of embarking on million-dollar investments in countries in the region and more recently in the complicated market of the Caribbean coast, several subsidiaries are reporting adverse figures.
In the financial statements for the last quarter of 2023, companies such as Waters of Antofagasta (in Chile), Intercontinental Technology (Ticsa), Aguas de Morelia (these two in Mexico) and Afinia (on the Caribbean coast) appeared on the list of impaired assets; That is to say, its market value has been reducing.
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Although the most critical situation occurs in Afinia, which since 2020 has already drained at least $2 billion from EPM and shows monthly losses that range between $80,000 and $90,000 millioninvestments abroad are still far from becoming the buoyant businesses promised years ago.
According to figures provided by EPM in response to a questionnaire, these deteriorations translated into an impact of $149,000 million at the end of 2023.
Although the company maintains that said impact was not effective (“that is, it does not generate cash outflow”) and that The financial sustainability of both the parent company and the group have never been at riskFor others, the situation warrants discussing the relevance of maintaining these assets, remembering the internal pressures that the company is already experiencing and the needs in terms of public services that both Medellín and Antioquia have.
Leaving out Afinia, whose deterioration was by far the most robust ($111,638 million), The company with the second largest deterioration was Aguas de Antofagastadedicated to the production, distribution and treatment of drinking water that suffered a hit of approximately $25,000 million. This investment, which cost EPM 965 million dollars (then equivalent to $2.4 billion in 2015), was presented as one of the entity’s most ambitious forays into the Latin market and a golden opportunity for the group to get into the business of water desalination and the sale of water in bulk.
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“Aguas Antofagasta presented a deterioration equivalent to $25,000 million, as a result of the natural exhaustion of the concession granted by the Sanitary Services Concessionaire Company, which ends in 2033,” EPM reported in the written response provided to this medium.
In the next line, another company with deterioration is Ticsadedicated to the design, construction, commissioning, operation and maintenance of water treatment systems in Mexico acquired in 2013 and also presented as a very profitable business.
The purchase of 80% of said company involved an outlay of 113 million dollars for Medellín and was presented as the culmination of an effort that had been going on since 2009 to enter the Mexican market, in this case taking control of a third of the wastewater treatment market in that country. According to EPM, This company suffered a deterioration of $12,000 million.
In that country, another affiliate that was hit was Waters of Moreliawhich had an asset impairment of 945,342 Mexican pesos as of September 2023, equivalent to more than $200 million.
“Ticsa presented an impairment of 12 billion pesos and Aguas de Morelia of 0.2 million pesos, caused by the unification of accounting practices for the presentation of the Group’s financial statements,” said EPM, arguing that These figures have not had an impact on the company’s incomesince if all its subsidiaries are put in the same bag (including those mentioned above), they had contributed 41% of the parent company’s profits ($1.6 billion).
However, in the midst of this panorama, the dilemma of If the best alternative for the public company is to continue putting its hand in its pocket to maintain those businesses. For the former councilor Maria Paulina Aguinagaone of the critical voices of this expansion, in addition to Afinia, Ticsa and Aguas de Antofagasta, we must also think about the situation of Tigo-Une, Emvarias, Aguas de Malambo, the Bonyic power plant and Maxseguroswhich also have the group’s finances under pressure.
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“When one looks at the financial statements and compares those of the parent company with those of the group, the profit of the parent company, as of December 31, 2023, was $3.7 billion, and that of the group, as if consolidating all those losses were lower, $3.4 billion,” he says. “It is worth EPM reviewing that, because There are investments that the only thing they are bringing to the company is losses.. Antofagasta, in addition to the fact that it does not report profits and the deterioration in assets, requires large investments to be able to maintain more than 1,000 kilometers of pipeline and be able to build new desalination plants,” he warns, adding that he does not see it logical that with the resources of Medellín ends up paying for public services abroad.
On the other hand, for Councilor Luis Guillermo Vélezthis whole situation also puts on the board an asymmetry in the operation of EPM, where the margin to embark the business group on these projects is very wide – requiring only the green light from its board of directors – but it is convoluted when it comes to exiting. of them, demanding approval in the Council in which, Beyond the technical discussion, many times everything ends up leading to political disputes.
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“I think it is time for EPM to review the relevance of maintaining investments like those in Antofagasta, Mexico and others. Eventually, these assets can be sold and EPM can bring resources to complete water supply issues throughout the department or eventually create venture capital funds in association with the private sector, to promote the creation of export or technology companies in different sectors of the city. city, to promote job creation,” he proposes.
When asked about this process, EPM pointed out that these reviews are carried out constantly, while maintaining that the accounts are in order. “The impairments recorded as of December 2023 do not compromise the financial sustainability of the company. “EPM continually monitors its investments, in order to identify actions that protect public assets,” the company added.
