financial situation of Afinia subsidiary of EPM

Among the reasons, according to the local president, There are the bad decisions made by the management of the subsidiary, which, the mayor denounced, was negotiated for 8 million dollars in the administration of Daniel Quintero..

“A citizen, who witnessed the alleged corruption network that affected Afinia, a subsidiary of EPM, told me in recent days ‘Afinia’s management and businesses were illegally sold by Daniel Quintero to a questioned former congressman for a value of 8 million dollars ($32,000 million)’,” said the mayor.

Although he did not give names, he indicated that This situation occurred in August 2021, a date that coincides with the appointment of Javier Lastra Fuscaldo as manager of the subsidiary..

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It also agrees with what the Mayor said about the departure of a manager “who had been doing things well and with technical knowledge.”

Specifically, Lastra replaced Blanca Liliana Ruiz, who spent 10 months at the head of this company and who, after her departure, remained at EPM “to lead strategic issues within the Group.”

Did this affect the company’s finances? According to Fico, there was no transparency in the delivery of information during the splicing committee at the end of 2023.

“According to the information we had, it was estimated that the investments for this year in Afinia would be about $750,000 million, which we were trying to obtain, but with updated information the figure increased to more than $1.7 billion. Not only that, it is expected that the company will require investments of more than $6 billion in the medium term.. “This situation largely occurred due to poor management,” said the mayor.

What Gutiérrez said adds to an alert issued by the EPM Board of Directors at the beginning of the year in which they expressed their concern about Afinia’s financial situation.

“The new Board of Directors expresses concern, among other issues, regarding the results of the loss and collection indicators, as well as the “the accumulated balance of the account receivable from the rate option, which is estimated at close to 1.7 trillion pesos, at the end of 2023.”says the statement.

This medium spoke with a member of the EPM Board of Directors, who confirmed the concern they have about the company’s situation.

“There is a very difficult financial situation that the company is going through that calls into question its financial feasibility.” which is the principle on which the Public Services Law says the company must operate, which has also been affected by the increase in rate increases,” said the board member.

He also added that a point that is being weighed is the rate option mechanism, which was the relief mechanism in energy rates that was established due to the consequences of the pandemic.

“Obviously that was simply postponing that energy payment to a later period that precisely began in December 2023. In the case of Afinia, the company has to recover $1.6 billion: 1.2 of capital and 0.4 of interest. That obviously weighs on the rate, it is estimated that it would be weighing on the rate between 8 and 9%,” added the board member.

On the other hand, in mid-2022 the Medellín Council held a follow-up debate on Afinia, in which the then manager of EPM, Carlos Andrés Carrillo, spoke about the figures that the company had since its arrival.

“We arrived in September-October and that year 80,000 million pesos were executed and in 2021 investments were made in infrastructure and assets for more than 543,000 million (…) that figure is eight times the amount that Electricaribe had invested in these same departments historically,” said Carrillo.

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However, in the figures he showed, a decreasing curve is observed. In 2020 there were $75,000 million of negative results, but the following year there were $329,000 million of positive results.

“In the net result We should not be surprised that there is a negative result because when the decision is made to get into a company like this it is unthinkable that it will start generating dividends from day one. We cannot forget that this is a rescue on the shoulders of EPM of a region that was collapsed in energy terms,” Carrillo added.

Afinia figures reveal thatIn 2022 the result of EBITDA – which is a financial indicator that shows the profit of a company before deducting financial expenses, taxes and other non-operating expenses – was $683,000 million and by 2023 it decreased to $335,000 million.

Situation that was also reflected in EPM’s financial statements, in which by 2022 the company’s national energy subsidiaries contributed 22% of EBITDA, equivalent to $2.1 billion “primarily driven by Afinia at $516 billion, CHEC at $142 billion, and ESSA at $79 billion.”

However, by 2023, EPM’s national energy subsidiaries contributed 21% of EBITDA, equivalent to $1.1 trillion, “mainly driven by ESSA at $80 billion, CHEC at $36 billion, and a decrease in Afinia for $89 billion.”

Added to this are the $350,000 million approved in September 2023 to capitalize Afinia with the objective of giving continuity to this company’s business plan.

“The investment plan when EPM arrived at Afinia has the purpose of improving quality, reducing losses and improving collections. It is necessary to verify that all these investments are not only registered, but that they have been made and all that is precisely what is being looked at at this moment, but the commitment of EPM’s investments in Afinia is a large commitment and that it is being fulfilling, there is no doubt about that,” said the board member.

For his part, Mayor Gutiérrez indicated that they must work together with the National Government to find a way out of the difficult situation that the company is experiencing.