Spanish energy group Gas Natural Fenosa is claiming €1,103m from the Colombian government after discussions over power distribution company Electricaribe (ECA) failed.
Gas Natural Fenosa acquired a 85% stake in ECA in 2000. The company distributes electricity to 2.5 million people in northern Colombia, on the coast of the Caribbean Sea, one of the poorest region of Colombia (default rate of 80%). The 34% tariff increased implemented in 2015 fuelled further electricity theft. According to Gas Natural Fenosa, costs related to unpaid electricity bills from state agency, vulnerable consumers and electricity theft exceed €1bn (figures calculated by PwC). Provisions set by ECA (about 2/3 of this amount) have prevented the distributor from making profits and forced it to limit its investments in the grid.
Negotiations with the government will continue until January 2017; if unsuccessful, Gas Natural Fenosa plans to go to international arbitration before the Arbitration Court of the World Bank.