Issuer:
Domicile:
Branches:
Primary Activity:
Target Market of the
Securities:
Offerees:
Registration and offering
Modalities:
Interconexión Eléctrica S.A. E.S.P.
Calle 12 Sur 18 - 168. Medellín, Colombia.
ISA Sucursal Peru. Domiciled at Avenida Canaval and Moreyra 522, Piso 11,
San Isidro, Lima 27 Peru.
ISA Sucursal Argentina. Domiciled at Viamonte 1133, Piso 4º, Ciudad Autónoma de Buenos
Aires, Argentina.
Linear infrastructure systems on electricity and connectivity on communications, present in
Colombia, Brazil, Peru, Bolivia, Ecuador and Central America.
All Common Shares will be traded at the primary market of Colombia.
The General Public, including pension and severance funds.
All Common Shares are registered in the National Registry of Securities and Issuers,
hereinafter referred to as RNVE, and in the Colombian Stock Exchange (Bolsa de Valores de
Colombia), hereinafter referred to as BVC.
Type of Securities Offered: Common Shares.
Rules of Circulation:
All Common Shares are registered shares and their circulation will be dematerialized.
Nominal value per Share: Thirty-two pesos point eight zero zero zero zero zero zero zero five three five two zero zero
cents ($32.80000000535200).
Subscription Price:
The Subscription Price will be twelve thousand Colombian pesos (Col$12.000) per Common
Share. The Common Shares will be subscribed at such price determined by the Board of
Directors, which will be informed by written communication from ISA’s Legal Representative to
the Financial Superintendency of Colombia no later than one business day before the
publication of the Notice of Public Offering. The Subscription Price was determined
discretionally by our Board of Directors based on the outcomes from offering book-building
process in the terms of Decree 3780 of October 1, 2007. The Subscription Price in no case
will be lower than the nominal value of the share.
Number of Shares Offered: The number of Common Shares offered is thirty two million sixteen thousand five hundred and
twenty (32.016.520) Common Shares. The number of Common Shares offered was
determined by our Board of Directors based on the outcomes from offering book-building
process in the terms of Decree 3780 of October 1, 2007. The number of shares offered will
not exceed of thirty two million sixteen thousand five hundred and twenty Common Shares
(32.016.520).
Issuance Amount:
Shall be the result of multiplying the number of Common Shares offered by the Subscription
Price.
Minimum Investment:
Offerees willing to invest in our Common Shares must acquire a minimum of five hundred
(500) Common Shares. The minimum investment amount will be the result of multiplying five
hundred (500) by the Subscription Price published under the Supplemental Notice of Public
Offering. Notwithstanding the foregoing, and as an exception, an investor may be allocated
with a number of shares lower than five hundred (500) Common Shares as a result of applying
the allocation procedures set for both, Amount A and Amount B Common Shares.
Rights inherent to the
Shares:
All owners of Common Shares will be entitled to: (i) participate in all deliberations of our
General Meeting of Shareholders and vote thereat, (ii) receive dividends subject to the
provisions contained in the law and, in our Bylaws, (iii) trade the shares in the terms of our
Bylaws, (iv) freely inspect our books and corporate records within fifteen business days prior to
the meetings of the General Meeting of Shareholders where year-end balance-sheets are to
be examined, (v) receive a prorate portion of the corporate assets, in the event of liquidation
and after due payment of all external liabilities, (vi) every other as provided in the law and our
Bylaws.
Commissions and
related expenses:
Investors must bear the cost relating fees on financial transactions as these may accrue under
the process concerning acceptance to the Offering and subscription of the Common Shares
(4x1000).
It is likely that Investors must pay certain fees to the relevant direct depositor that serves as
vehicle to create the individual account with Depósito Centralizado de Valores de Colombia
S.A. These fees will be agreed between the Investor and the relevant direct depositor.
1
Stock Exchange where the
shares are registered:
Bolsa de Valores de Colombia S.A.
Placement Deadline and
Offering Term:
Fifteen (15) business days, which deadline may be reduced in case that all Common Shares
are being placed according to the Process on Construction of the Offering Book described in
PART I – AS TO SECURITIES, Chapter II, subparagraph A of this Prospectus, whichever
occurs first, counted as from the date when the Notice of Public Offering is published.
Placing Agents:
They are Corredores Asociados S.A. and Valores Bancolombia S.A.
Date of Financial Updating: The financial information contained herein is updated as of September 30, 2009. For further
information on ISA, please consult our webpage www.isa.com.co
Administrator of Issuance: Depósito Centralizado de Valores de Colombia - Deceval S.A.
Legal Counsel of the
Issuance:
Cárdenas & Cárdenas Abogados Ltda.
Good Governance Code:
We have in place a Good Governance Code that may be consulted on our website:
www.isa.com.co
Our Good Governance Code meets the requirements provided in Law 964 of 2005, framework
law for the public securities market and follows some regional recommendations, including the
Organization for Economic Co-operation and Development’s (OECD) “White Paper” on
Corporate Governance for Latin America and the Andean Development Corporation's
(CAF) Corporate Governance Code. Likewise, pursuant to External Circulars 028 and 056 of
2007 issued by the Colombian Financial Superintendency (Superintendencia Financiera de
Colombia), we will produce the annual report on Corporate Governance Practices contained in
the Country Code.
NEITHER THE REGISTRATION OF THE COMMON SHARES IN THE NATIONAL REGISTRY OF SECURITIES AND
ISSUERS, NOR THE AUTHORIZATION OF PUBLIC OFFERING ENTAIL ANY QUALIFICATION OR RESPONSIBILITY
BY THE COLOMBIAN FINANCIAL SUPERINTENDENCY (SUPERINTENDENCIA FINANCIERA DE COLOMBIA), AS TO
THE NATURAL OR LEGAL PERSONS REGISTERED, OR AS TO THE PRICE, SOUNDNESS OR TRADABILITY OF THE
SECURITY OR THE CONCERNED ISSUANCE, OR AS TO THE ISSUER’S SOLVENCY.
INSCRIPTION OF THE SECURITIES WITH BOLSA DE VALORES DE COLOMBIA S.A. ENTAILS NO CERTIFICATION
AS TO THE SECURITY’S SOUNDNESS OR THE ISSUER’S SOLVENCY.
READING THE INFORMATION PROSPECTUS IS INDISPENSABLE
ADEQUATELY ASSESS THE INVESTMENT CONVENIENCE.
FOR
PROSPECTIVE
INVESTORS
TO
2
Issuer:
Interconexión Eléctrica S.A. E.S.P.
Domicile:
Calle 12 Sur 18 - 168. Medellín,
Colombia.
Branches:
ISA Sucursal Peru. Domiciled at
Avenida Canaval and Moreyra
522, Piso 11, San Isidro, Lima 27
Peru.
ISA Sucursal Argentina. Domiciled
at Viamonte 1133, Piso 4º, Ciudad
Autónoma de Buenos Aires,
Argentina.
Primary Activity:
Linear infrastructure systems on
electricity and connectivity on
communications,
present
in
Colombia, Brazil, Peru, Bolivia,
Ecuador and Central America.
Target Market of the Securities:
All Common Shares will be traded
at the primary market of Colombia.
Offerees:
The General Public, including
pension and severance funds.
Registration and offering
Modalities:
All Common Shares are registered
in the National Registry of
Securities and Issuers, hereinafter
referred to as RNVE, and in the
Colombian Stock Exchange (Bolsa
de
Valores
de
Colombia),
hereinafter referred to as BVC.
Type of Securities Offered:
Common Shares.
Rules of Circulation:
All Common Shares are registered
shares and their circulation will be
dematerialized.
Nominal value per Share:
Thirty-two pesos point eight zero
zero zero zero zero zero zero five
three five two zero zero cents
($32.80000000535200).
Subscription Price:
The Subscription Price will be
twelve thousand Colombian pesos
(Col$12.000) per Common Share.
3
The Common Shares will be
subscribed
at
such
price
determined by the Board of
Directors, which will be informed
by written communication from
ISA’s Legal Representative to the
Financial
Superintendency
of
Colombia no later than one
business
day
before
the
publication of the Notice of Public
Offering. The Subscription Price
was determined discretionally by
our Board of Directors based on
the outcomes from the offering
book-building process in the terms
of Decree 3780 of October 1,
2007. The Subscription Price in no
case will be lower than the nominal
value of the share.
Number of Shares Offered:
The number of Common Shares
offered is thirty two million sixteen
thousand five hundred and twenty
(32.016.520) Common Shares.
The number of Common Shares
offered was determined by our
Board of Directors based on the
outcomes from the offering bookbuilding process in the terms of
Decree 3780 of October 1, 2007.
The number of shares offered will
not exceed of thirty two million
sixteen thousand five hundred and
twenty
Common
Shares
(32.016.520).
Issuance Amount:
Shall be the result of multiplying
the number of Common Shares
offered by the Subscription Price.
Minimum Investment:
Offerees willing to invest in our
Common Shares must acquire a
minimum of five hundred (500)
Common Shares. The minimum
investment amount will be the
result of multiplying five hundred
(500) by the Subscription Price
published under the Supplemental
Notice
of
Public
Offering.
Notwithstanding the foregoing, and
as an exception, an investor may
be allocated with a number of
shares lower than five hundred
4
(500) Common Shares as a result
of
applying
the
allocation
procedures set for both, Amount A
and Amount B Common Shares.
Rights inherent to the Shares:
Commissions and
related expenses:
Stock Exchange where the
shares are registered:
Placement Deadline and
Offering Term:
All owners of Common Shares will
be entitled to: (i) participate in all
deliberations of our General
Meeting of Shareholders and vote
thereat, (ii) receive dividends
subject to the provisions contained
in the law and, in our Bylaws, (iii)
trade the shares in the terms of our
Bylaws, (iv) freely inspect our
books and corporate records within
fifteen business days prior to the
meetings of the General Meeting
of Shareholders where year-end
balance-sheets
are
to
be
examined, (v) receive a prorate
portion of the corporate assets, in
the event of liquidation and after
due payment of all external
liabilities, (vi) every other as
provided in the law and our
Bylaws.
Investors must bear the cost
relating
fees
on
financial
transactions as these may accrue
under the process concerning
acceptance to the Offering and
subscription of the Common
Shares (4x1000).
It is likely that Investors must pay
certain fees to the relevant direct
depositor that serves as vehicle to
create the individual account with
Depósito Centralizado de Valores
de Colombia S.A. These fees will
be agreed between the Investor
and the relevant direct depositor.
Bolsa de Valores de Colombia
S.A.
Fifteen (15) business days, which
deadline may be reduced in case
that all Common Shares are being
placed according to the Process
on Construction of the Offering
Book described in PART I – AS TO
5
SECURITIES,
Chapter
II,
subparagraph
A
of
this
Prospectus, whichever occurs first,
counted as from the date when the
Notice of Public Offering is
published.
Placing Agents:
They are Corredores Asociados
S.A. and Valores Bancolombia
S.A.
Date of Financial Updating:
The financial information contained
herein is updated as of September
30, 2009. For further information
on ISA, please consult our
webpage www.isa.com.co
Administrator of Issuance:
Depósito Centralizado de Valores
de Colombia - Deceval S.A.
Legal Counsel of the Issuance:
Cárdenas & Cárdenas Abogados
Ltda.
Good Governance Code:
We have in place a Good
Governance Code that may be
consulted
on
our
website:
www.isa.com.co
Our Good Governance Code
meets the requirements provided
in Law 964 of 2005, framework law
for the public securities market and
follows
some
regional
recommendations, including the
Organization for Economic Cooperation
and
Development’s
(OECD)
“White
Paper”
on
Corporate Governance for Latin
America
and
the
Andean
Development
Corporation's
(CAF) Corporate
Governance
Code.
Likewise, pursuant to
External Circulars 028 and 056 of
2007 issued by the Colombian
Financial
Superintendency
(Superintendencia Financiera de
Colombia), we will produce the
annual report on Corporate
Governance Practices contained in
the Country Code.
6
READING THE INFORMATION PROSPECTUS IS INDISPENSABLE FOR
PROSPECTIVE INVESTORS TO ADEQUATELY ASSESS THE INVESTMENT
CONVENIENCE.
NEITHER THE REGISTRATION OF THE COMMON SHARES IN THE NATIONAL
REGISTRY OF SECURITIES AND ISSUERS, NOR THE AUTHORIZATION OF
PUBLIC OFFERING ENTAIL ANY QUALIFICATION OR RESPONSIBILITY BY THE
COLOMBIAN
FINANCIAL
SUPERINTENDENCY
(SUPERINTENDENCIA
FINANCIERA DE COLOMBIA), AS TO THE NATURAL OR LEGAL PERSONS
REGISTERED, OR AS TO THE PRICE, SOUNDNESS OR TRADABILITY OF THE
SECURITY OR THE CONCERNED ISSUANCE, OR AS TO THE ISSUER’S
SOLVENCY.
INSCRIPTION OF THE SECURITIES WITH BOLSA DE VALORES DE COLOMBIA
S.A. ENTAILS NO CERTIFICATION AS TO THE SECURITY’S SOUNDNESS OR
THE ISSUER’S SOLVENCY.
NOVEMBER – DECEMBER
2009
7
AUTHORIZATION, SPECIAL REPORTS AND OTHER GENERAL CAVEAT ON ALL
PROCESSES
A.
AUTHORIZATION
By the issuer’s competent bodies.
According to our Bylaws, hereinafter referred to as the Bylaws, and the Colombian
law, this issuance was authorized by our General Meeting of Shareholders at a special
meeting held on November 24, 2006, where the shareholders empowered the Board
of Directors to carry out the issuance of Common Shares, as evidenced in Minute 95
of the mentioned corporate body.
Our Board of Directors regulated the issuance and adopted the relevant Issuance and
Placement Resolution of the Common Shares, hereinafter referred to as the Issuance
and Placement Resolution, therein setting forth the rights and privileges of the
Common Shares, at the meeting of November 25, 2009.
Our Board of Directors will determine the number of Common Shares offered and the
Subscription Price, based on the outcomes from applying the offering book-building
process as per the terms of Decree 3780 of October 1, 2007. The number of shares
offered will not be greater than thirty two million sixteen thousand five hundred and
twenty Common Shares (32.016.520). The Subscription Price will not be lower than
the nominal value of the share.
By the administrative authorities.
We are registered in the RNVE and our Common Shares are registered with BVC.
Issuer’s Common Shares wre registered before the RNVE pursuant to Resolution 615
of August 28, 2002, under Supervalores code COAISAO00008.This public offering
was authorized by the Colombian Financial Superintendency (Superintendencia
Financiera de Colombia), by means of Resolution 1834 of November 27, 2009.
We are an entity supervised by the Colombian Superintendency of Home Utilities
(Superintendencia de Servicios Públicos Domiciliarios) and, in our capacity as Issuers
we are subject to control by the Colombian Financial Superintendency
(Superintendencia Financiera de Colombia).
Issuance of the Common Shares did not require of a prior authorization by the
Colombian Superintendency of Home Utilities (Superintendencia de Servicios
Públicos Domiciliarios).
B.
OTHER SECURITY OFFERINGS BY THE ISSUER
The number of Common Shares we will offer will be determined by our Board of
Directors based on the outcomes from applying the offering book-building process as
per the terms of Decree 3780 of October 1, 2007. The number of shares offered will
not be greater than thirty two million sixteen thousand five hundred and twenty
Common Shares (32.016.520).
The Common Shares will be offered to the general public under a public offering
subject to the Colombian law through the Placing Agents
8
At a special meeting held on November 24, 2006 our General Meeting of
Shareholders approved the issuance and placement of Common Shares without
submission to the preemptive rights, by means of public offering in the markets of
Colombia and/or abroad, up to an amount of eighty-eight million four hundred ten
thousand seven hundred thirty-one (88,410,731) Common Shares.
At a meeting held on June 29, 2007 our Board of Directors unanimously approved
exclusive placement in the local market, of a total of twenty-nine million one hundred
seventy-five thousand five hundred forty-one (29,175,541) common shares.
Subsequently, at meetings held in September and October 2007 our Board of
Directors unanimously approved placement of fifty-three million forty-six thousand four
hundred thirty-nine (53.046.439) Common Shares in the local market, with the
possibility of increasing the projected number up to an additional 25% or to decrease it
with no limitation, as it may be resolved through the Process on Construction of the
Offering Book. On extraordinary meeting of December 7, 2007, our Board of Directors
approved the placement of a total of fifty-six million three hundred ninety-four
thousand two hundred eleven (56.394.211) Common Shares at a subscription price of
seven thousand seventy six pesos (Col$7.076) per share.
On November 25, 2009, ISA’s Board of Directors approved the Issuance and
Placement Resolution.
As of September 30, 2009, we have one debt issuance and a program for notes
issuance and placement, for the amount of Col$ 1,031,365 million. The table below
provides a summary of the debentures issued and currently outstanding. For a further
detailed description, see ¨Current Debt Securities Publicly Offered and Pending
Redemption¨.
Maturity
Currency of
Nominal
Date
Origin
LOCAL NOTES THIRD ISSUANCE
Type of
Interest
Balance
COP
IPC + 8.1%
130.000
PROGRAM FOR NOTES ISUANCE AND PLACEMENT
7
20-Feb-11
100.000
COP
12
20-Feb-16
150.000
COP
15
07-Dec-19
108.860
COP
20
07-Apr-26
118.500
COP
IPC + 7.0%
IPC + 7.3%
IPC+ 7.19%
IPC + 4.58%
100.000
150.000
108.865
118.500
Credits
Execution Date
Term
SINGLE
SERIES
16-Jul-01
10
16-Jul-11
130.000
TRANCHE 1
TRANCHE 2
TRANCHE 3
TRANCHE 4
LOTE 1
TRANCHE 5
20-Feb-04
20-Feb-04
07-Dec-04
07-Apr-06
21-Sep-06
7
21-Sep-13
110.000
COP
IPC + 4.84%
110.000
TRANCHE 4
LOTE 2
TRANCHE 6
SERIE A
TRANCHE 6
SERIE B
04-Dec-08
17
04-Dec-26
104.500
COP
IPC + 4.58%
104.500
02-Apr-09
6
02-Apr-15
150.000
COP
IPC + 4.99%
150.000
02-Apr-09
9
02-Apr-18
59.500
COP
IPC + 5.90%
59.500
TOTAL NOTES
1,031,365
9
C.
PEOPLE AUTHORIZED TO PROVIDE INFORMATION OR STATEMENTS ON THE
CONTENTS OF THE INFORMATION PROSPECTUS
People authorized to provide information or statements on the contents of the Information
Prospectus are those mentioned below within service hours Monday thru Friday from 8:00 a.m. to
4:45 p.m.
Luis Fernando Alarcón Mantilla
Chief Executive Officer
E-Mail: gerenciageneral@ISA.com.co
Phone: (4) 3157310
Calle 12 Sur No. 18 – 168 Medellín
Camilo Barco Muñoz
Gerente Finanzas Corporativas
E- Mail: GFINANCIERA@ISA.com.co
Phone: (4) 3157210
Calle 12 Sur No. 18 – 168 Medellín
Juan David Bastidas Saldarriaga
General Secretary
E-Mail: SECGEN@ISA.com.co
Phone: (4) 3157111
Calle 12 Sur No. 18 – 168 Medellín
D.
INFORMATION ON PEOPLE INVOLVED IN THE ASSESSMENT OF CORPORATE
ASSETS OR LIABILITIES
The information included in this Information Prospectus is based on information furnished by us, as
well as by any other source duly identified herein.
E.
INFORMATION RELATING RELATIONS AMONG THE ISSUER AND ITS ADVISORS
Neither of the advisors is a company related to the issuer.
F.
CAVEATS
1. Prior Authorization
Prior to giving their consent to the Public Offering, all Investors willing to acquire the Common
Shares must previously procure any judicial, governmental, corporate or any other authorization
that may be required in view of their particular conditions.
2. Further caveats
This prospectus is not an offer or an invitation by or on behalf of the issuer or the placing agents, to
subscribe or purchase any of the securities referred to herein.
10
G.
NOTICE
The information contained in this Information Prospectus is deemed essential to allow
adequate assessment of the investment by prospective investors. The Common Shares have
been registered in the RNVE and the Public Offering has been authorized by the SFC by
means of Resolution No. 1834 OF November 27, 2009. Such registration and approval do not
constitute an opinion from the SFC with respect to the quality of the securities or our
solvency.
Without prejudice to other available information sources, you should only rely on the
information contained in this Information Prospectus. Neither we nor the Placing Agents
have authorized anyone to provide you with information that is different or additional from that
contained in this Information Prospectus. If anyone provides you with different or additional
information, you should not rely on it. You should assume that the information in this
Information Prospectus is accurate, only as of the date on the front cover, regardless of the time
of delivery of this Information Prospectus or any sale of our Common Shares. Our business,
financial condition, results of operations and prospects may change after the date on the front
cover of this Information Prospectus.
_________________
Unless otherwise indicated or the context otherwise requires, all references in this Information
Prospectus to "us", "our" and "we are" refer to Interconexión Eléctrica S.A. E.S.P.
This Information Prospectus is based on information provided by us and by other sources that we
rely on. We cannot assure you that this information is accurate or complete. This Information
Prospectus summarizes certain documents and other information, and we refer you to those
sources for a more complete understanding of what we discuss in this Information Prospectus. The
Placing Agents and our counsels make no representation or warranty, express or implied, as to the
accuracy or completeness of the information set forth in this Information Prospectus. Nothing
contained in this Information Prospectus is, or will be relied upon as, a promise or representation by
the Placing Agents, whether as to the past or to the future. The Placing Agents and our counsels
have not independently verified any of such information and assume no responsibility for its
accuracy or completeness. In making any investment decision, you must rely on your own
examination of us and the terms of this Offering and the Common Shares, including the merits and
risks involved.
Presentation of Financial Information
In this Information Prospectus, unless otherwise specified, references to "Col$" are references to
Colombian pesos, the legal currency of Colombia, references to "dollars," "$," or "US$" are to the
U.S. dollars, the legal currency of the United States, and references to "R$," or "reais" are to
Brazilian reais, the legal currency of Brazil. Our consolidated financial statements as of and for the
years ended December 31, 2008, 2007 and 2006, hereinafter referred to as Our Audited Financial
Statements, included in this Information Prospectus were prepared in Colombian pesos and in
accordance with Colombian GAAP, and the accounting principles and methodologies and
established by the SSPD and the CGN. Our Audited Financial Statements for the years ended on
December 31, 2008, 2007 and 2006 were audited by PricewaterhouseCoopers Ltda., our
independent auditors since April 1, 2005 until March 31, 2009. Our auditors since April 1, 2009 are
Ernst & Young Audit Ltda.
This Information Prospectus also includes our consolidated financial information with limited
revision as of September 30, 2009 and 2008, hereinafter referred to as Our Special-Purpose
Financial Statements, which along with Our Consolidated Audited Financial Statements, are part of
11
Our Financial Statements. Our Special-Purpose Financial Statements include, in opinoin of our
company’s management, all adjustments required (only encompassing periodical adjustments) for a
reasonable presentation of such information set out by them.
As of Sepmber 30, 2009, we consolidated the financial statements of Transelca, XM, Internexa, ISA
Peru, Internexa Peru, REP, Transmantaro, PDI, ISA Capital, CTEEP, ISA Bolivia and Transnexa.
Market Information
The information contained in this Information Prospectus concerning the Colombian electricity
sector and our participation in it was obtained from established public sources, such as trade
associations and government agencies, including the MME, CREG, DANE and UPME, as well as
from XM, as administrator of the SIC, among others.
Some of the statistical information and data related to our business were obtained from government
or sectoral entities or extracted from general publications. We have not independently verified such
information and data and, therefore, neither we nor our counsels can assure its accuracy or
completeness.
12
TABLE OF CONTENTS TO THE INFORMATION PROSPECTUS.
PART I - THE SECURITIES.............................................................................................................. 31
CHAPTER I. FEATURES OF THE SECURITIES, CONDITIONS AND RULES OF ISSUANCE.. 31
A.
TYPE OF SECURITIES OFFERED, RIGHTS INHERENT TO THE SECURITIES AND
RULES OF CIRCULATION ...................................................................................................... 31
1.
Type of securities offered ............................................................................................ 31
2.
Rights inherent to our Common Shares ...................................................................... 31
3.
Rules of circulation and secondary trading ................................................................. 34
B. NUMBER OF SECURITIES OFFERED, NOMINAL VALUE, SUBSCRIPTION PRICE,
MINIMUM INVESTMENT AND TOTAL OFFERING AMOUNT................................................ 34
1.
Number of Common Shares Offered........................................................................... 34
2.
Nominal value of Common Shares ............................................................................. 34
3.
Subscription price of Common Shares ........................................................................ 34
4.
Minimum Investment.................................................................................................... 35
5.
Total Offering Amount.................................................................................................. 35
C.
FEATURES OF THE SECURITIES OFFERED............................................................... 35
D.
FULL DEMATERIALIZATION OF THE ISSUANCE ........................................................ 35
E.
DATES FOR SUBSCRIPTION, BOOK-ENTRY AND ISSUANCE OF THE SECURITIES
……………………………………………………………………………………………………36
1.
Subscription Date ........................................................................................................ 36
2.
Book-entry date ........................................................................................................... 36
3.
Issuance Date.............................................................................................................. 36
F.
COMMISSIONS AND RELATED EXPENSES ................................................................ 36
G.
STOCK EXCHANGE WHERE THE SECURITIES ARE TO BE LISTED ........................ 36
H.
ECONOMIC AND FINANCIAL PURPOSES OF THE ISSUANCE................................. 36
I.
MEANS TO DISCLOSE INFORMATION FOR INVESTORS’ REFERENCE .................. 36
J.
K.
1.
2.
3.
4.
TAXATION REGIME APPLICABLE ON THE SECURITIES ........................................... 37
Profits from the transfer of shares ............................................................................. 336
Equity value of shares ............................................................................................... 336
Profits on dividend distribution................................................................................... 336
Presumptive Income and Wealth taxes ....................................................................... 38
1.
2.
3.
4.
5.
6.
ISSUANCE ADMINISTRATOR ...................................................................................... 38
Register the Global Certificate Representing the Issuance......................................... 38
Register and enter information on: .............................................................................. 38
Charge economic rights from the issuer...................................................................... 39
Submit reports to the issuer......................................................................................... 39
Information updating .................................................................................................... 39
Keep the registry of shares.......................................................................................... 39
13
L.
1.
2.
3.
4.
5.
6.
DEMATERIALIZATION MECHANISM, OPERATION. ................................................... 40
Calculation.................................................................................................................... 40
Charges and Setoff ...................................................................................................... 41
Control on Dividends .................................................................................................... 41
Payment of dividends in cash and check ..................................................................... 41
Payment of dividends through deposit ......................................................................... 41
Control on taxes and withholdings ............................................................................... 41
M.
RIGHTS AND OBLIGATIONS OF THE SECURITIES HOLDERS................................. 41
N.
OUR OBLIGATIONS....................................................................................................... 41
1. To the owners of the Common Shares. ........................................................................... 41
2. To the SFC. ...................................................................................................................... 41
O.
TYPE OF SHARES .......................................................................................................... 43
P.
SUBSCRIPTION PRICE, DETERMINATION OF SUBSCRIPTION PRICE AND SHARE
EQUITY VALUE........................................................................................................................ 42
1. Subscription Price. ....................................................................................................... 42
2. Share equity value........................................................................................................ 42
3.
Determination of Subscription Price ............................................................................ 43
Q. PROCEDURE TO CHANGE RIGHTS PROPER OF THE COMMON SHARES AND
LIMITATION TO THEIR ACQUISITION BY THE SHAREHOLDERS. ..................................... 43
1.
Procedure to change rights on the Common Shares .................................................. 43
2.
Limitations to acquire the Common Shares ................................................................ 44
R. CALL TO ORDINARY AND SPECIAL MEETINGS OF THE SHAREHOLDERS’
ASSEMBLY .............................................................................................................................. 44
S.
AGREEMENTS AFFECTING THE ISSUER’S CHANGE OF CONTROL ....................... 45
T.
TRUSTS RESTRICTING THE CORPORATE RIGHTS INHERENT TO THE COMMON
SHARES ................................................................................................................................... 45
U.
BYLAWS OR SHAREHOLDERS’ AGREEMENTS LIMITING OR RESTRICTING THE
COMPANY’S MANAGEMENT OR ITS SHAREHOLDERS. .................................................... 45
V.
RESTRICTIONS ON THE TRANSFER OF SHARES. ................................................... 45
W.
HISTORIC AVERAGE QUOTATION AND TRADED VOLUME OF OUR SHARES. ...... 44
CHAPTER II. OFFERING CONDITIONS BY THE OFFERING BOOK BUILDING PROCESS AND
PLACEMENT................................................................................................................................ 47
A. OPENING AND CLOSING OF OFFERING BOOK ......................................................... 47
B.
TERM OF OFFER AND DEADLINE FOR SUBSCRIPTION ......................................... 446
C. PUBLIC OFFER BY THE OFFERING BOOK BUILDING PROCESS AND MEANS TO
PRESENT THE OFFERING ................................................................................................... 446
14
D.
PUBLIC OFFERING PROCEDURE ................................................................................ 48
1. Opening and Closing of Offering Book............................................................................. 48
2. Establishing the Subscription Price and number of Common Shares to issue................ 48
3. Notice of Public Offering, Deadline for Subscription and Allocation ................................ 49
E.
PROCEDURE TO ALLOCATE COMMON SHARES ...................................................... 50
F.
COMMUNICATING THE ALLOCATION TO PLACING AGENTS ……………….. .......... 53
G.
FORM OF PAYMENT OF COMMON SHARES .............................................................. 53
H.
SECONDARY MARKET AND VALUATION METHODOLOGY ...................................... 53
PART II - INFORMATION RELATED TO THE ISSUER ................................................................. 54
CHAPTER I. GENERAL INFORMATION ..................................................................................... 54
A.
B.
CORPORATE NAME, LEGAL STATUS, TERM AND WINDING-UP EVENTS .............. 54
1.
2.
SUPERVISION ON THE ISSUER ................................................................................... 54
Laws and Regulations ................................................................................................. 54
Institutional Framework................................................................................................ 55
C.
CORPORATE DOMICILE AND MAIN BUSINESS OFFICES ......................................... 58
D.
MAIN CORPORATE PURPOSE..................................................................................... 58
E.
HISTORIC OVERVIEW ................................................................................................... 58
F.
SHAREHOLDING STRUCTURE AND INFORMATION ON OUR PRIMARY
SHAREHOLDERS .................................................................................................................... 61
1.
Shareholding Structure ................................................................................................ 61
2.
Information on our primary shareholders..................................................................... 62
G.
CORPORATE GOVERNANCE PRACTICES................................................................. 63
Independence of Board of Directors’ Members.................................................................... 63
Board of Directors’ Committees ........................................................................................... 63
Good Governance Code ...................................................................................................... 63
Disclosure of information...................................................................................................... 63
H.
OUR DIVIDENDS POLICY ............................................................................................. 64
CHAPTER II. CORPORATE STRUCTURE OF THE ISSUER...................................................... 66
A.
ORGANIC STRUCTURE OF THE ISSUER .................................................................... 66
B.
BOARD OF DIRECTORS .............................................................................................. 664
15
C.
MECHANISMS ADOPTED TO SECURE INDEPENDENCE .......................................... 73
D. RELATION BETWEEN THE BOARD OF DIRECTORS’ MEMBERS WITH THE
COMPANY OR ITS RELATED COMPANIES .......................................................................... 73
E.
EXECUTIVE OFFICERS ................................................................................................. 74
F.
STATUTORY AUDITORS................................................................................................ 76
G. SHAREHOLDING BY BOARD OF DIRECTORS MEMBERS AND EXECUTIVE
OFFICERS IN ISSUER............................................................................................................. 76
H. AGREEMENTS OR PROGRAMS TO ALLOW THE EMPLOYEES’ SHAREHOLDING IN
THE ISSUER’S CAPITAL STOCK ......................................................................................... 775
I.
CONTROL SITUATION ................................................................................................... 78
J.
SUBSIDIARIES ................................................................................................................ 81
K.
LABOR RELATIONS ..................................................................................................... 885
CHAPTER III - ASPECTS CONCERNING OUR PRODUCTION ACTIVITY AND OPERATING
INCOME........................................................................................................................................ 89
A. RELIANCE ON CORE SUPPLIERS AND CUSTOMERS, IN EXCESS OF
20% ……………………………………………………………………………………………………89
B.
1.
2.
3.
4.
5.
6.
OUR CORE PRODUCTIVE AND SALES ACTIVITIES ................................................... 89
ISA economic group’s Businesses .............................................................................. 89
Revenues from the Group’s Businesses ..................................................................... 92
Revenues from the Telecommunication Carrier Business .......................................... 96
Revenues from the Operation and Management Business ....................................... 97
Regulatory Framework for Electric Power Transportation Business ........................... 97
Regulatory Framework for Market Management and Operation Business ............. 135
CHAPTER IV. FINANCIAL INFORMATION ............................................................................... 138
A. AUTHORIZED, SUBSCRIBED AND PAID-IN CAPITAL OF THE ISSUER, INDICATING
THE NUMBER OF OUTSTANDING SHARES AND RESERVES ......................................... 138
B. PUBLIC OFFERINGS CARRIED OUT IN THE PAST YEAR TO ACQUIRE SHARES IN
THE ISSUER .......................................................................................................................... 138
C.
D.
PROVISIONS AND RESERVES FOR SHARE REACQUISITION................................ 138
1.
2.
3.
INFORMATION ON DIVIDENDS................................................................................... 138
Corporate dividend policy .......................................................................................... 138
Net profits and dividends decreed in the past three (3) years.................................. 139
Related information.................................................................................................... 139
16
E. INFORMATION RELATING EBITDA IN THE PAST THREE (3) YEARS AND AFTER
SEPTEMBER CLOSING ........................................................................................................ 142
F.
CAPITAL STOCK EVOLUTION IN THE PAST THREE (3) YEARS ............................. 143
G.
CONVERTIBLE LIABILITIES......................................................................................... 143
H.
1.
2.
I.
MAIN ASSETS OF THE ISSUER .................................................................................. 143
Main assets and Investments .................................................................................... 143
Investment management policy................................................................................. 151
INVESTMENTS IN EXCESS OF 10% OVER THE ISSUER’S TOTAL ASSETS......... 151
J.
RESTRICTIONS ON THE SALE OF ASSETS COMPRISING THE ISSUER’S
INVESTMENT PORTAFOLIO ................................................................................................ 152
1.
Restrictions under the bylaws.................................................................................... 152
K.
MAIN INVESTMENTS UNDER IMPLEMENTATION .................................................... 153
L.
FIRM COMMITMENTS FOR ACQUISITION OF FUTURE INVESTMENTS
…………………………………………………………………………………………………..153
M.
DESCRIPTION OF FIXED ASSETS.............................................................................. 153
N. PATENTS, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS OF
THE ISSUER CURRENTLY BEING USED UNDER THIRD-PARTY AGREEMENTS,
STATING ROYALTIES EARNED AND PAID......................................................................... 156
O. INFORMATION
ON
GOVERNMENTAL
PROTECTION
AND
PROMOTION
INVESTMENTS AFFECTING THE ISSUER .......................................................................... 156
P. TRANSACTIONS WITH RELATED PARTIES, ENTERED DURING THE PRECEDENT
YEAR ...................................................................................................................................... 156
1.
General information ................................................................................................... 156
2.
Main transactions with economically-related parties ................................................. 157
Q. CREDITS OR CONTINGENCIES REPRESENTING FIVE PERCENT (5%) OR MORE
OF THE TOTAL LIABILITIES IN THE LAST YEAR CONSOLIDATED FINANCIAL
STATEMENTS........................................................................................................................ 160
R. FINANCIAL LIABILITIES OF THE ISSUER AS OF THE END OF THE IMMEDIATELY
PRECEDENT CALENDAR QUARTER .................................................................................. 161
S.
RELEVANT PROCEEDINGS AGAINST THE ISSUER................................................. 161
T.
SECURITIES REGISTERED WITH THE NATIONAL REGISTRY OF SECURITIES AND
ISSUERS ................................................................................................................................ 161
U.
1.
2.
OUTSTANDING DEBT NOTES PUBLICLY OFFERED AND NOT YET REDEEMED . 162
Domestic offers.......................................................................................................... 162
Offering of ISA Capital’s notes .................................................................................. 166
17
V.
SECURITY INTEREST GRANTED IN FAVOR OF THIRD-PARTIES .......................... 166
W. CONSERVATIVE EVALUATION OF THE ISSUER’S PERSPECTIVES. ..................... 168
1.
Growth strategy ......................................................................................................... 168
2.
Medium-term investment opportunities ..................................................................... 169
CHAPTER V. COMMENTS AND ANALYSIS BY THE MANAGEMENT ON THE RESULTS OF
OPERATIONS AND FINANCIAL CONDITION OF THE ISSUER AND ITS SUBSIDIARIES .... 171
A. TRENDS, COMMITMENTS OR DISCLOSED OCCURRENCES THAT MAY
SIGNIFICANTLY AFFECT LIQUIDITY OF THE ISSUER, THE RESULTS OF ITS
OPERATIONS OR ITS FINANCIAL CONDITION.................................................................. 171
1.
General Aspects ........................................................................................................ 171
2.
Regulated Revenues ................................................................................................. 171
3.
Operating Revenues, last year’s performance .......................................................... 178
C. SIGNIFICANT CHANGES ON SALES, SELLING COSTS, OPERATION EXPENSES,
INTEGRAL FUNDING COSTS, TAXES AND NET INCOME (CONSOLIDATED FIGURES) 185
1.
Period ending on September 30, 2009, compared to and closing on September 30,
2008 ………………………………………………………………………………………………185
2.
Year ending on December 31st, 2008 compared with year ending on December 31st,
2007.................................................................................................................................... 188
3.
Year ending on December 31st, 2007 compared with year ending on December 31st,
2006.................................................................................................................................... 191
D.
1.
2.
3.
4.
E.
F.
PENSION LIABILITIES AND FRINGE BENEFITS PAYABLE ...................................... 194
Retirement pensions payable by the issuer .............................................................. 194
Extra-legal benefits granted by the issuer ................................................................. 195
Labor liabilities of the issuer ...................................................................................... 196
Consolidated figures .................................................................................................. 196
EFFECTS
FROM
INFLATION
AND
EXCHANGE
RATE
FLUCTUATION
…………………………………………………………………………………………………..197
1.
2.
3.
4.
CREDITS AND INVESTMENTS IN FOREIGN CURRENCY ........................................ 200
Financial liabilities in foreign currency ....................................................................... 200
Material credit agreements in foreign currency ......................................................... 202
Investments in foreign currency................................................................................. 203
Hedging instruments.................................................................................................. 203
G. RESTRICTIONS AGREED WITH SUBSIDIARIES FOR THE TRANSFER OF
RESOURCES TO THE COMPANY ....................................................................................... 203
1.
ISA Capital................................................................................................................. 203
2.
REP............................................................................................................................ 203
3.
ISA Peru .................................................................................................................... 204
4.
Consorcio Transmantaro ............................................................................................ 204
5.
ISA Bolivia .................................................................................................................. 204
H. INFORMATION RELATING INDEBTEDNESS LEVEL BY THE END OF THE THREE
LATEST FISCAL PERIODS ................................................................................................... 204
1.
Outstanding notes...................................................................................................... 205
18
2.
Financial liabilities...................................................................................................... 206
I.
INFORMATION ON LOANS OR FISCAL DEBTS OF THE ISSUER, EFFECTIVE IN THE
PAST FISCAL PERIOD ...................................................................................................... 20204
J.
INFORMATION RELATING CAPITAL INVESTMENTS COMPROMISED BY THE END
OF THE LAST FISCAL PERIOD AND THE LATEST QUARTER REPORTED, AS WELL AS
DETAILS CONCERNING SUCH INVESTMENTS AND THE NECESSARY SOURCE FOR
FUNDING ........................................................................................................................... 20204
K.
EXPLANATION TO MATERIAL CHANGES ON THE MAIN ITEMS OF THE LATEST
FISCAL PERIOD BALANCE-SHEET ..................................................................................... 208
1.
By the issuer .............................................................................................................. 208
2.
By the group .............................................................................................................. 210
3.
General trend of the balance-sheet items in the past three (3) fiscal years.............. 212
CHAPTER VI. FINANCIAL STATEMENTS ................................................................................ 215
A.
FINANCIAL INFORMATION, A SUMMARY .................................................................. 215
B. BASIC FINANCIAL STATEMENTS CORRESPONDING TO THE PAST THREE (3)
YEARS................................................................................................................................ 21214
C. BALANCE-SHEET AND STATEMENT OF RESULTS OF THE ISSUER AS OF THE
CALENDAR MONTH IMMEDIATELY PRECEDENT TO THE DOCUMENTATION
SUBMISSION ......................................................................................................................... 217
D. AUDITED FINANCIAL STATEMENTS OF THE ISSUER AS OF THE LAST FISCAL
YEAR APPROVED ................................................................................................................. 218
CHAPTER VII. INFORMATION ON THE RISKS RELATED TO THE ISSUER .......................... 234
A. MACROECONOMIC FACTORS AFFECTING REAL YIELDS ON THE SECURITIES
OFFERED............................................................................................................................... 234
B.
RELIANCE ON KEY STAFF (ADMINISTRATORS) ...................................................... 234
C.
RELIANCE ON A SINGLE BUSINESS SEGMENT....................................................... 234
D. DISRUPTION OF THE ISSUER ACTIVITIES, RESULTING FROM REASONS OTHER
THAN LABOR RELATIONS ................................................................................................... 235
E.
NO SECONDARY MARKET FOR SECURITIES OFFERED ........................................ 235
F.
NO HISTORIC RECORDS RELATING OPERATIONS BY THE ISSUER .................... 235
G.
NEGATIVE, INEXISTENT OR INSUFFICIENT RESULTS IN THE PAST 3 YEARS.... 236
H.
DEFAULT ON THE PAYMENT OF BANK OR STOCK-TRADE LIABILITIES .............. 236
19
I.
NATURE OF THE BUSINESS CONDUCTED OR PURSUED BY THE ISSUER ......... 236
J. RISKS GENERATED FROM PAYABLE FRINGE AND PENSIONAL BENEFITS; TRADE
UNIONS .................................................................................................................................. 239
1.
Retirement pensions.................................................................................................. 239
2.
Extra-legal benefits .................................................................................................... 240
3.
Trade Unions ............................................................................................................. 240
K.
RISKS INVOLVED IN THE CURRENT STRATEGY OF THE ISSUER ........................ 241
1.
Risks related with growth strategy............................................................................. 241
2.
Other risks related with growth strategy and investment on new businesses........... 241
3.
If we increase our financial leverage, our financial condition might be negatively
affected............................................................................................................................... 241
L.
VULNERABILITY OF THE ISSUER VIS-À-VIS VARIATIONS ON EXCHANGE AND/OR
INTEREST RATES ................................................................................................................. 242
M. RELIANCE ON LICENSES, CONTRACTS, TRADEMARKS, KEY STAFF AND OTHER
ITEMS NOT OWNED BY THE ISSUER................................................................................. 243
N.
1.
2.
SITUATIONS INVOLVING COUNTRIES WHERE THE ISSUER OPERATES............. 244
General Aspects ........................................................................................................ 244
Risks Relating to our operations in Brazil.................. 24¡Error! Marcador no definido.
O. ASSETS ACQUISITION, OTHER THAN IN THE ORDINARY COURSE OF BUSINESS
OF THE ISSUER .................................................................................................................... 255
P.
EXPIRATION OF SUPPLY AGREEMENTS.................................................................. 255
Q. IMPACT FROM THE REGULATIONS AND REGULATIONS CONCERNING THE
ISSUER AND POSSIBLE CHANGES THEREON ................................................................. 255
R.
IMPACT OF ENVIRONMENTAL REGULATIONS ........................................................ 258
S. EXISTENCE OF CREDITS COMPELLING THE ISSUER TO PRESERVE GIVEN
PROPORTIONS IN ITS FINANCIAL STRUCTURE............................................................... 259
1.
Loan-related commitments ........................................................................................ 259
2.
To International Bank of Reconstruction and Development ...................................... 259
T.
PENDING TRANSACTIONS LIKELY TO AFFECT THE ORDINARY COURSE OF
BUSINESS.............................................................................................................................. 260
U. POLITICAL FACTORS, SUCH AS SOCIAL INSTABILITY, ECONOMIC EMERGENCY,
ETC......................................................................................................................................... 260
V. COMMITMENTS KNOWN TO THE ISSUER, LIKELY TO ENTAIL CHANGE OF
CONTROL OVER ITS SHARES ............................................................................................ 261
W.
POTENTIAL DILUTION OF INVESTORS ..................................................................... 261
X.
RISKS RELATED WITH INSURANCE COVERAGE..................................................... 261
20
Y.
CHANGES ON TAXATION REGULATIONS................................................................. 262
Z.
PENDING LITIGATION.................................................................................................. 262
APPENDICES............................................................................................................................. 263
APPENDIX A – CERTIFICATE FROM LEGAL REPRESENTATIVE OF INTERCONEXIÓN
ELÉCTRICA S.A. E.S.P, ACCORDING TO HIS CAPACITY ................................................. 263
APPENDIX B – CERTIFICATE FROM STATUTORY AUDITOR OF INTERCONEXIÓN
ELÉCTRICA S.A. E.S.P., ACCORDING TO HER CAPACITY............................................... 264
APPENDIX C – PERFORMANCE REPORTS AND FINANCIAL INFORMATION ................ 265
FORM INCLUDING THE BALANCE SHEET AND THE STATEMENT OF RESULTS OF
ISSUER ENDING ON THE IMMEDIATELY PRECEDING CALENDAR QUARTER………..266
APPENDIX E – RELEVANT PROCEEDINGS UNDER WHICH THE ISSUER COMPANY IS A
PARTY .................................................................................................................................... 267
21
GLOSSARY
A.
Terms relating the Securities Market
Common Shares
They will be the Common Shares of ISA that we
project offering to the general public and registered in
the RNVE and in the BVC.
Acceptance to the Offering
Shall mean the irrevocable and unilateral declaration of
will whereby the investor makes a purchase order of
the Common Shares under Amount B and for a price
equal to the Subscription Price.
Purchaser
Any person that: (i) submits a Demand Bid according
to the conditions set for such effect in this Prospectus
and for a price equal or above the Subscription Price,
or (ii) submits Acceptance of Offer pursuant to the
conditions provided for such effect under this
Prospectus.
Book Runner
It will be Bolsa de Valores de Colombia S.A., entity in
charge of keeping the Offering Book containing
Demand Bids received by the Placing Agents during
the Book Opening Term, under the terms and
conditions of this Prospectus.
Notice of Opening
Shall mean the communication addressed to the public
in general and published on a nationwide circulating
newspaper, therein informing the Date of the Book
Opening and Closing and the procedure on
Construction of the Offering Book.
Notice of Public Offering
Shall mean the communication addressed to the
Offerees and published on a nationwide circulating
newspaper, therein informing the Board of Directors’
decision to either formalize or not the Public Offering,
the Subscription Price and the issuance volume, as the
case may be.
Actual Beneficiary
BVC
Market Capitalization
Placing Agents
It will have the meaning assigned under Resolution
400 of 1995 from the former General Board of the
Superintendency of Securities, presently the SFC and
any other regulations replacing, amending or
supplementing the same.
Bolsa de Valores de Colombia S.A.
Shall mean the value of a stock-listed company.
Calculated by multiplying each share quotation price by
the number of shares in the capital stock of the
relevant listed company.
Corredores Asociados S.A. and Valores Bancolombia
S.A.
22
DECEVAL
Shall mean Depósito Centralizado de Valores S.A. the
entity that will serve as vehicle to deposit and manage
the Common Shares.
Dematerialization
Shall mean the operation whereby the securities have
no longer physical existence, thus eliminating the risks
of physical handling and causing their administration to
be by means of electronic records.
Offerees
Shall mean the general public, including pension and
severance funds.
Dividend
Shall mean the value decreed by our Assembly of
Shareholders in favor of our shareholders, as return for
their investment, whether in money or in shares;
dividends are decreed in proportion to the number of
shares held and with resources from our profits and
reserves.
Issuer
Interconexión Eléctrica S.A. ESP
Opening Date
It will be the date set by the Board of Directors to open
the Offering Book. Such date will be after such date on
which authorization from SFC to carry out the Public
Offering is received.
Closing Date
It will be the date set by the Board of Directors to close
the Offering Book.
Rules of Circulation
Shall mean the mechanism or way to convey
ownership of a given security. There are three methods
therefor: 1. To the bearer: the mere delivery suffices. 2.
To the order: by means of endorsement and delivery.
3. Nominative: endorsement, delivery and recordation
with the issuer.
The Rules of Circulation concerning the Common
Shares are nominative.
Offering Book, Offering Book for Issuance or
Book
Amount A Common Shares
Shall mean the book to register all Demand Bids for
our Common Shares which satisfy the conditions set
forth in this Prospectus and received by the Placing
Agents during the Construction Period of the Offering
Book.
Shall mean the amount of Common Shares to be
allocated on a preferential basis during the Deadline
for Subscription, to purchasers which throughout the
term of the Offering Book opening have demanded
Common Shares for a price equal or above the
Subscription Price.
Amount A Common Shares in no case may be greater
than ninety-five percent (95%) of all Common Shares
23
placed by ISA.
Amount A Common Shares corresponds to 30,415,694
Common Shares.
Amount B Common Shares
Shall mean the amount of Common Shares to be
allocated throughout the Deadline for Subscription,
which will be allocated through the mechanism “first in
time, first in right”. Amount B Common Shares in no
case may be lower than five percent (5%) of all
Common Shares placed by ISA.
Amount A of Common Shares
1,600,826 Common Shares.
corresponds
to
Minimum Amount of Shares
It will be the amount of five hundred (500) shares.
Offering
It will be the offer of ISA’S shares addressed to the
general public.
Construction Period
Shall mean the period while the Offering Book will
remain open for reception and registration of Demand
Bids concerning our Common Shares.
Deadline for Subscription
Fifteen (15) business days from the publication date of
the Notice of Public Offering. In any case, the Deadline
for Subscription may be exhausted on an early basis
as per such terms provided in this Prospectus.
Demand Bid
Shall mean the purchase order made by an investor
regarding Amount A of the Common Shares.
Subscription Price
The price is twelve thousand Colombian pesos
(Col$12.000) per Common Share.
It is the value of each Common Share, which will be
determined by our Board of Directors in accordance
with the Offering Book Building Process as per the
terms of Decree 3780 of October 1, 2007 and this
Prospectus, to be published in the Notice of Public
Offering.
Process for Construction of the Offering
Book
It is the procedure whereby the issuer sets the price,
the distribution and allocation of the securities to issue
and the size of the issue through the trading,
preliminary promotion of securities, and receipt and
registration of the Demand Bids on the Offering Book..
See PART I – AS TO SECURITIES, Chapter 2,
Subparagraph A.
Prospectus or Information Prospectus
Shall mean
appendices.
RNVE
this
information
document
and
its
Shall mean the National Registry of Securities and
Issuers (Registro Nacional de Valores and Emisores).
24
Issuance and Placement Resolution
Shall mean the resolution for issuance and placement
of shares as approved by our Board of Directors on
November 25, 2009.
SFC
Shall mean the Financial Superintendency of Colombia
(Superintendencia Financiera de Colombia).
Underwriting at the Best Effort
Shall mean the mechanism for placement of securities,
whereby the Placing Agents agree with issuer to make
their best efforts to place the issuance with the investor
public within the term provided.
B.
Technical and Regulatory Terms
AE
Shall mean the Fiscalization and Social Control
Electricity Authority of Bolivia (Autoridad de
Fiscalización and Control Social de Electricidad de
Bolivia).
ANEEL
Shall mean the Brazilian National Electricity Energy
Agency (Agência Nacional de Energia Elétrica).
ASIC
Shall mean the Colombian Administrator of the
Commercial Exchange System (Administrador del
Sistema de Intercambios Comerciales de Colombia).
BMME
Shall mean the Brazilian Ministry of Mines and
Energy (Ministério de Minas e Energia).
BSIN
Shall mean the Brazilian National Interconnection
System (Sistema Interligado Nacional).
CGN
Shall mean the Colombian National Accounting
Office (Contaduría General de la Nación de
Colombia).
CGR
Shall mean the Colombian General Office of the
Comptroller (Contraloría General de la República de
Colombia).
CND
Shall mean the Colombian National Electricity
Dispatch Center (Centro Nacional de Despacho de
Electricidad de Colombia).
CNDC
Shall mean the Bolivian National Load Dispatch
Committee (Comité Nacional de Despacho de Carga
de Bolivia).
Networks Code
Shall mean the Networks Code (Código de
Networks) of Colombia enacted pursuant to CREG’s
Resolution 025 of July 13, 1995.
25
COES
Shall mean the Peruvian Committee of Economic
Operation of the Electrical System (Comité de
Operation Económica del Sistema).
CONPES
Shall mean the Colombian National Council of
Economic and Social Policy (Council Nacional de
Política Económica and Social).
CREG
Shall mean the Colombian Energy and Gas
Regulatory Commission (Comisión de Regulación
de Energía and Gas).
CRT
DANE
Shall mean the Colombian Telecommunications
Regulatory Commission (Comisión de Regulación
de Telecommunications).
Shall mean the Colombian National Department of
Statistics (Departamento Administrativo Nacional de
Estadística).
DGAAE
Shall mean the Peruvian General Office of
Environmental Matters (Dirección Jurídica de
Asuntos Ambientales).
DNP
Shall mean the Colombian National Department of
Planning (Departamento Nacional de Planeación).
DOE/EIA
Shall mean the U.S. Department of Energy/ Energy
Information Administration.
GW
Shall mean gigawatt; one gigawatt equals 1,000
MW.
GWh
IPC
Shall mean gigawatt hour; one gigawatt hour
represents one hour of electricity consumption at a
constant rate of 1 GW.
Shall mean the Colombian Consumer Price Index
(Índice de Precios al Consumidor) certified by
DANE.
IPCB
Shall mean the Bolivian Consumer Price Index
(Índice de Precios al Consumidor de Bolivia).
IPP
Shall mean the Colombian Producer Price Index
(Índice de Precios al Productor) certified by DANE
ISO 9001
Shall mean the ISO 9001 certification issued by the
International Organization for Standardization (ISO).
Km
Shall mean kilometer.
26
kV
Shall mean kilovolt; one kilovolt equals
thousand volts; a unit of electric voltage.
one
kW
Shall mean kilowatt; unit of power equal to 1,000
watts, where the vat or watt (symbol W) es the unit
of power of the International System of Units.
Expressed in units used in electricity, the vat is the
power produced by 1-volt potential difference and 1amper (1 VA) electric current.
kWh
Shall mean kilowatt hour; one kilowatt hour
represents one hour of electricity consumption at a
constant rate of 1 kWs.
MAVDT
Shall mean the Colombian Ministry of Environment,
Housing and Territorial Development (Ministerio de
Ambiente Vivienda and Desarrollo Territorial de
Colombia).
MEM
Shall mean the Colombian Wholesale Energy
Market (Mercado de Energía Mayorista).
MHCP
Shall mean the Colombian Ministry of Finance and
Public Credit (Ministry of Finance and Public Credit.
Mi
MINEM
Shall mean mile.
Shall mean the Peruvian Ministry of Mines and
Energy (Ministerio de Energía and Minas de Peru).
MME
Shall mean the Colombian Ministry of Mines and
Energy (Ministry of Mines and Energy.
MVA
Shall mean megavolt ampere; a unit used to
measure transformer capacity.
Mvar
MW
MWh
ONS
Shall mean megavar; megavolt ampere reactive, a
unit used to measure a transformer's capacity
compensation and inductive ability.
Shall mean megawatt: a megawatt is a unit of
energy representing the rate at which the electricity
produced equals 1,000kW.
Shall mean megawatt hour; one megawatt hour
represents one hour of electricity consumption at a
constant rate of 1 MW.
Shall mean the Brazilian National Operator of the
Electric System (Operador Nacional de Brasil del
27
Sistema Eléctrico).
OSINERGMIN
PAAG
PCGA
PCMA
PCSA
PPI
Shall mean the Peruvian electricity regulatory
authority (Organismo Supervisor de la Inversión en
Energía and Minas).
Shall mean the Colombian Percentage Adjustment
for the Taxable year (Porcentaje de Ajuste del Año
Gravable).
Shall mean the Generally Accepted Accounting
Principles.
Shall mean the Monthly Asset Compensation
Percentage (Porcentaje de Compensación Mensual
del Activo).
Weekly
Asset
Compensation
Percentage
(Porcentaje de Compensación Semanal del Activo).
Shall mean the United States Producer Price Index.
SDE
Shall mean the Bolivian Superintendency of
Electricity (Superintendencia de Electricidad de
Bolivia). As from February 7, 2009, it is replaced by
decree from the Bolivian government by the
Fiscalization and Social Control Electricity Authority
of Bolivia –AE-.
SDL
Shall mean the Colombian Local Distribution
Systems (Sistemas de Distribución Local). Electric
power transportation system made-up by the set of
lines and substations, along with its associated
equipment that operate at Voltage Levels 3, 2 and 1
engaged to the rendering of services to a
Comercialization Market.
Shall mean the Peruvian National Electric
Interconnected
System
(Sistema
Eléctrico
Interconectado Nacional).
SEIN
SIC
SIEPAC
SIN
Shall mean the settlement and clearance system for
the MEM (Sistema de Intercambio Comercial).
Shall mean the Central American Electricity
Interconnection System (Sistema de Interconexion
de los Países de Central America).
Shall mean the Colombian National Interconnected
System (Sistema Interconectado Nacional), which
consists of the following interconnected elements:
generation plants and equipment, interconnection
network, regional and interregional transmission
Netowkrs, distribution networks and the users’
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electric loads.
SINB
SMLMV
SSPD
STN
STR
TRM
UPME
Usuarios No Regulados
VRN
WPI
Shall mean the Bolivian National Interconnected
System (Sistema Interconectado Nacional de
Bolivia).
Legal Minimum Monthly Salary in force in Colombia
(Salario Mínimo Legal Mensual Vigente).
Colombian Superintendency of Home Utilities
(Superintendencia
de
Servicios
Públicos
Domiciliarios de Colombia).
Shall mean the Colombian National Transmission
System (Sistema de Transmisión Nacional). It is the
electric power transmission interconnected system
that consists of all lines, compensation equipment
and substations which voltage is 220 KV or more,
transformers with voltage equal or above 220 kV at
the low side and the relevant connection modules.
The Colombian Regional Transmission System
(Sistema de Transmisión Regional de Colombia).
Electric power transportation system that consists of
Connection Assets from the OR to the STN and the
set of lines, equipment and substations, with its
associated equipment, operating at a 4 Voltage
Level. STR may be composed by assets of one or
more Network Operators.
Shall mean the Colombian Representative Market
Exchange Rate (Tasa Representativa del Mercado).
Shall mean the Colombian Mining and Energy
Planning Unit (Unidad de Planeación Minero
Energética).
Shall mean power consumers in Colombia whose
peak demand is above 0.1 MW or un minimum
monthly consumption higher than 55.0 MWh.
Replacement Asset Value (Valor de Reposición
Nuevo.
Shall mean the U.S. Wholesale Price Index.
29
PART I - THE SECURITIES
CHAPTER I. FEATURES OF THE SECURITIES, CONDITIONS AND RULES OF ISSUANCE
A.
TYPE OF SECURITIES OFFERED, RIGHTS INHERENT TO THE SECURITIES AND
RULES OF CIRCULATION
1.
Type of securities offered
We offer to the general public registered Common Shares issued by us, freely tradable and
transferable by means of book-entry, subject to the terms set forth in our Corporate Bylaws. All
Common Shares will be offered by means of public offering in the primary market.
2.
Rights inherent to our Common Shares
Voting Rights
Each Common Share entitles its owner to cast one vote at any general meeting of shareholders.
General meetings of shareholders may be ordinary or special. Ordinary general meetings are held
at least once a year, no later than on the first day of April of the relevant year, in order to resolve on
our reports, accounts and financial statements of the previous fiscal year; to elect the Board of
Directors members and the statutory auditor; and, to resolve on the dividend policy and the
distribution of profits from the previous fiscal year, if any, as well as on the matter of profits retained
from previous fiscal years. The Board of Directors members are elected under the method of
proportional representation.
Under the proportional representation system, each owner of Common Shares is entitled to
nominate one or more members to the Board of Directors, by submitting a listing of nominees to the
Ordinary General Meeting of Shareholders. Each nomination of one or more members to the Board
of Directors is deemed a group for the election purposes, and each group of nominees must bear
the hierarchies of preference for election of nominees in such group. All nominees must expressly
consent to their nomination in writing. Following nomination of all groups, the Common Shares
owners may cast one vote per each Common Share held, in favor of a given group of nominees
included in a given list. No votes may be cast for specific nominees in one group, but for the entire
group; the total number of votes cast on the election is divided by the number of Board of Directors
members to be elected. The proportion resulting is the number of votes necessary to elect each
particular member of the Board of Directors. Every time that the number of votes cast by a group of
nominees is divisible by the proportion of votes, a nominee from the group will be elected, in the
relevant hierarchy order. Where no group receives sufficient residual votes to complete the required
proportion of votes necessary to elect a member of the Board of Directors, then, the remaining
position or positions in the Board of Directors will be filled-in by electing the top nominee with the
highest number of residual votes, until full completion of the vacant positions. In case of residue
ties, the member will be elected randomly. Under Law 964 of 2005, hereinafter referred to as Law
964, at least twenty-five percent (25%) of the Board of Directors members, that is, two principal and
two alternate members must be independent members.
Special general meetings of shareholders may be held when duly called for specific purposes, at
least five (5) calendar days in advance, or without prior call, in the presence of shareholders
representing the totality of shares subscribed. Quorum for both ordinary and special general
meetings will be a plural number of shareholders representing at least a majority of the shares
subscribed. In absence of sufficient quorum, a second meeting will be called, where the attendance
of at least two shareholders is sufficient quorum, regardless of the number of shares represented.
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According to the Colombian law and our Bylaws, the Board of Directors, the Chief Executive Officer,
the statutory auditor and the shareholders representing at least 20% of the subscribed capital, may
call the general assembly.
Unless the law or our Bylaws require of a special majority, decisions can be made at any general
assembly, through the vote of a plural number of shareholders representing a majority of the votes
present at the relevant assembly of shareholders. According to the Colombian law and our Bylaws,
special majorities are required to make the following decisions: (i) one favorable vote of minimum
70% of the Common Shares represented at the meeting to approve the issuance of shares without
submission to the preemptive rights in favor of our shareholders; (ii) the affirmative vote of at least
78% of the shares represented at the meeting, to distribute profits in percentages lower than the
minimum percentages set forth in the law; and (iii) the affirmative vote of at least 80% of the shares
represented at meeting to approve the payment of dividends on the shares.
The shareholders may grant proxy to third parties for the purposes of representation at the general
meetings of shareholders, therein indicating the proxy name, the person on whom the latter may
substitute the proxy, as the case may be, and the date or time of the meeting or meetings for which
the proxy is granted. Proxies may be submitted to the company by fax or other electronic media.
In the exercise of their office, the company’s administrators may not represent shares other than
their own at the General Meeting of Shareholders, except in those cases of legal representation.
Inspection Rights
At least once a year, no later than on the first day of April of the relevant year, the General Meeting
of Shareholders will hold an ordinary session to resolve the issues concerning our reports, accounts
and financial statements of the previous fiscal year, elect the Board of Directors members and the
statutory auditor and resolve on the distribution of dividends and profits of the previous fiscal year, if
any, as well as on the profits retained from previous fiscal years. The holders of our Common
Shares will be freely entitled to inspect our books and corporate records within fifteen business
days prior to the meetings where year-end financial statements are to be examined.
Dividends
Following approval of the financial statements, the holders of Common Shares must resolve on the
distribution of the previous year profits, if any, by means of resolution made with the affirmative vote
of a plural number of shareholders representing a majority of the Common Shares represented at
the Ordinary General Meeting of Shareholders, subject to prior recommendation from the Board of
Directors and our Chief Executive Officer. According to the Colombian law and our Bylaws, we are
obliged to distribute a minimum of 50% of our net profits to all the shareholders, calculated after
payment of income taxes, creation of the legal reserve and other reserves, and the discharge of
losses from previous fiscal years. The requirement concerning minimum dividend of 50% may be
discharged through the affirmative vote of the owners of at least 78% of the Common Shares
represented at the Assembly of Shareholders.
According to our Bylaws and the Colombian law, 10% of our net annual profits must be devoted to
create a legal reserve until the time when such reserve reaches at least 50% of our subscribed
capital. All Common Shares paid in full and outstanding by the time when dividends or other
distributions are decreed, will be entitled to a proportional fraction of such dividend or other
distribution. Common Shares partially paid-in will be entitled to dividends or distributions in the
same proportion as paid-in, by the time when the dividend or distribution is decreed.
Payment of dividends in the form of shares requires the approval of 80% of the Common Shares
present at the relevant meeting of the General Meeting of Shareholders.
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Any dividends decreed on Common Shares will be paid to the shareholders on-record, as shown on
the registry of shares kept by the company, on the relevant record dates that will initially be the
same dates corresponding to the payment of dividends.
In our last Ordinary General Meeting of Shareholders, held on March 30, 2009, the shareholders
approved: (a) Creating legal reserves for an amount of Col$25,487 million for the reserve as fiscal
provision provided in Article 130 of the Tax Code; (b) decree a dividend on the value of net profits
equal to Col$163,501 million, corresponding to 77.45% of 2008 net profits. The dividend per share
will be Col$152 corresponding to an 8.6% increase respect to the dividend per share for year 2007,
for 1,075,661,374 outstanding Common Shares. Payment will be made in four quarterly equal
installments of Col$38 per share: April 16, 2009, July 16, 2009, October 16, 2009 and January 27,
2010, and (c) Use the profits of the period to create an occasional reserve for equity strengthening
in the amount of Col$47,605 million in order to contribute to ISA’s growth strategy and keep its
financial soundness.
Liquidation Rights
We will be dissolved if (a) we are unable to carry out our corporate purpose, (b) the number of
shareholders is lesser than five, (c) the favorable vote of shareholders representing more than 50%
of the shares represented at the General Meeting of Shareholders will so decide, (d) a competent
authority will so decide, (e) losses cause our shareholders' equity to fall below 50% of our
subscribed capital stock, or (f) in certain other events expressly provided by law and in the By-Laws.
Upon our dissolution, the SSPD may take-up control of the company in order to ensure continuity in
the provision of electric transmission services, whether to manage the company or to wind up our
affairs.
In case of liquidation, the holders of fully paid Common Shares will be entitled to receive a
proportion of the corporate assets, after due payment of our external liabilities. Holders of Common
Shares partially paid-in will be entitled to receive a share proportional to the value actually paid.
Trading Rights
Holders of Common Shares will be entitled to freely trade our Common Shares under the terms of
our Bylaws.
Preemptive Rights and Other Anti-dilution Provisions
Pursuant to the provisions of the Commercial Code, we are permitted to have an amount of
subscribed capital smaller than the authorized capital stock set forth in our By-Laws. Under such
system, the General Meeting of Shareholders determines the amount of our authorized capital
stock. At the time a Colombian company is formed, its subscribed capital stock must represent at
least 50% of the authorized capital. Any increase in the authorized capital stock or decreases in the
subscribed capital stock must be approved by the affirmative vote of two or more shareholders
representing a majority of the shares present at a shareholders' meeting.
Colombian law requires that, whenever a company issues new shares of any outstanding class, it
must offer the holders of each class of shares the right to purchase a number of shares of such
class sufficient to maintain their existing percentage ownership of the aggregate capital stock of the
company. These rights are called preemptive rights on the subscription of shares.
The General Meeting of Shareholders may suspend preemptive rights with respect to a particular
capital increase through the affirmative vote of a plural number of shareholders representing at
least a majority of the Common Shares represented at a general shareholders' meeting held to that
effect.
32
In the event that the holders of the Common Shares approve a reduction in our capital stock by the
affirmative vote of more than 50% of the Shares represented at the meeting, the portion of our
capital stock represented by the Common Shares will be reduced proportionately, provided that the
Superintendency of Companies (in case of actual capital reimbursements) or the competent labor
officer (in case external liabilities consist of fringe benefits) so authorize. If such approval is granted,
holders of Common Shares who either voted against the capital decrease or were not present at
the meeting at which the vote was taken are entitled to redeem such shares provided that such
capital decrease does not lead to reduction on the equity or nominal value of the share. The right of
withdrawal must be exercised within fifteen (15) days of notice by us to the dissenting and absent
holders of Common Shares, in the sense that our capital stock will be reduced.
3.
Rules of circulation and secondary trading
Our Common Shares are registered securities transferable by means of book entries on the
holders’ deposit account or sub accounts opened with DECEVAL. Conveyance and transfers of
individual rights will be made by means of electronic data records and systems, pursuant to
procedures set out in DECEVAL’ rules of operation.
Our Common Shares will have a secondary market through the BVC and may be freely traded by
their legitimate holders in the BVC transaction systems.
When performing records or book-entries in its capacity as administrator of the issuance, DECEVAL
will credit the Common Shares subscribed by the owner to the relevant deposit account.
B.
NUMBER OF SECURITIES OFFERED, NOMINAL VALUE, SUBSCRIPTION PRICE,
MINIMUM INVESTMENT AND TOTAL OFFERING AMOUNT
1.
Number of Common Shares offered
The number of Common Shares we plan to offer will be determined by our Board of Directors based
on the outcomes from applying the offering book-building process as per the terms of Decree 3780
of October 1, 2007. The number of shares offered will not be greater than thirty two million sixteen
thousand five hundred and twenty Common Shares (32,016,520)
2.
Nominal value of Common Shares
Our Common Shares have a nominal value of thirty two pesos point eight zero zero zero zero zero
zero zero five three five two zero zero cents ($32.80000000535200) each.
3.
Subscription price of Common Shares
The Common Shares will be subscribed at such price determined by the Board of Directors,
informed by written communication sent by ISA’S Legal Representative to the Colombian Financial
Superintendency no later than the business day before the publication of the Notice of Public
Offering. The Subscription Price will be discretionally determined by our Board of Directors, based
on the outcomes obtained from the application of the Offering Book Building Process as per the
terms of Decree 3780 of October 1, 2007. The Subscription Price will not be lower than the nominal
value of the share.
33
4.
Minimum Investment
Any Offerees of the Common Shares willing to invest in our Common Shares must acquire a
minimum of five hundred (500) Common Shares. The minimum investment amount will be the result
of multiplying five hundred (500) by the Subscription Price.
Notwithstanding the foregoing, and as an exception, an investor may be allocated with a number of
shares lower than five hundred (500) Common Shares as a result of applying the Allocation
procedures set for both, Amount A and Amount B Common Shares.
5.
Total Offering Amount
The Total Offering Amount is the result of multiplying the number of Common Shares we offer by
the Subscription Price.
The price of each Common Share will in no event be lesser than the nominal value. Any difference
between the nominal value and the Subscription Price of each Common Share will be carried to the
Capital Surplus account, as Placement Premium, non susceptible of dividend distribution.
C.
FEATURES OF THE SECURITIES OFFERED
Our Common Shares have the following features and grant to their holders the rights mentioned in
Chapter I Section A of this Prospectus.
On the other hand, acquisition of our Common Shares entails the following duties to be complied
with by the Investors: (i) abide by and comply with all decisions made by our corporate bodies, (ii)
abide by the provisions contained in our Corporate Bylaws and co-operate in the achievement of
our corporate purpose, (iii) pay the subscribed Common Shares in the agreed terms and conditions,
(iv) refrain from performing any acts that may entail conflicts of interest, (v) inform DECEVAL as to
their domicile and home address or the address of their legal representatives or attorneys, for the
purpose of delivering any required correspondence to the address so registered pa, (vi) co-operate
with the issuer for the compliance with any regulations relating prevention and control of criminal
activities through the securities market.
D.
FULL DEMATERIALIZATION OF THE ISSUANCE
Issuance of the Common Shares will be fully dematerialized and deposited with DECEVAL, for the
management and custody thereof. The Common Shares may not be re-materialized thereafter and
therefore, upon acceptance to the Offering the purchasers expressly waive the power to request
materialization of the Common Shares. Consequently, every purchaser of the Common Shares
must enter into a mandate agreement with an entity authorized to participate as direct depositor in
DECEVAL. Deposit and management of the Common Shares through DECEVAL will be governed
by Law 964 of 2005, Law 27 of 1990, Regulatory Decree 437 of 1992, Resolution 1200 of 1995
issued by the SFC, and every other regulation that may regulate or amend the matter, as well as
DECEVAL rules of operation.
Common Shares are represented in the form of a global certificate in custody with DECEVAL and,
therefore, ownership of the relevant Common Shares will be proven by the relevant book-entry
made by DECEVAL. Owners of the Common Shares will evidence the rights represented by such
book-entry through deposit certificates issued by DECEVAL in accordance with the applicable
regulations and its own rules.
34
E.
DATES FOR SUBSCRIPTION, BOOK-ENTRY AND ISSUANCE OF THE SECURITIES
1.
Subscription Date
For all purposes, the subscription date of our Common Shares will be the date when the relevant
subscription agreement is perfected.
2.
Book-entry date
For all purposes, the book-entry date will be the date when DECEVAL makes the relevant bookentry relating subscription of the Common Shares or the date of record of any transfers thereof.
3.
Issuance Date
For all purposes, the issuance date will be the business day when the Notice of Public Offering
relating the Common Shares is published on a nationwide circulating newspaper.
F.
COMMISSIONS AND RELATED EXPENSES
Subscription commissions on this issuance will be borne by the Issuer.
Investors must bear all expenses accrued on occasion of financial transactions fees (4x1000)
concerning payment of the Common Shares.
Most likely, Investors must assume payment of certain commissions payable to their respective
direct depositors who will serve as vehicles to create individual accounts for each Investor at
DECEVAL. These commissions will be agreed upon between the Investor and the relevant direct
depositor.
Acquisition or conveyance of shares at the BVC by means of any stock broker firm may entitle the
latter to receive payment of commissions to be agreed upon between the Investor and the relevant
stock broker firm.
G.
STOCK EXCHANGE WHERE THE SECURITIES ARE TO BE LISTED
Our Common Shares are listed before the BVC.
H.
ECONOMIC AND FINANCIAL PURPOSES OF THE ISSUANCE
We will use all resources obtained from the issuance to fund our investment plan and optimize the
capital structure. ISA, in compliance with the MEGA, is assessing and developing enlargement
projects which are intended to be funded with the public share offering, approximately as follows: (i)
40% will be used to the capitalization of affiliate companies, and (ii) 60% will be used for eventual
acquisitions and new businesses. The economic increase will strengthen ISA’s solvency ratio and
will provide a basis to continue with its growth.
I.
MEANS TO DISCLOSE INFORMATION FOR INVESTORS’ REFERENCE
Both the Notice of Opening in connection with the Offering Book, and the Notice of Public Offering
will be published in a nationwide circulating newspaper.
To the extent that we are a company registered with the RNVE in the terms of Law 964 of 2005, our
relevant information for the Investors’ reference is published on the SFC’s website
35
(www.superfinanciera.gov.co). Our financial information, both semiannual and year-end, is also
published in such website.
Any relevant fact concerning this Offering occurred during the term thereof, which in our opinion or
in the opinion of the SFC, must be informed to the Offerees, will be notified by means of publication
on a nationwide circulating newspaper of Colombia and through suitable means of information, as
appropriate.
J.
TAXATION REGIME APPLICABLE ON THE SECURITIES
1.
Profits from the transfer of shares
According to the first sub-paragraph of article 36-1 of the Tax Code, hereinafter referred to as E.T.,
profits earned from the transfer of shares are neither income nor capital gains, that is, the proportion
corresponding to the shareholder on any profits retained by the company and suitable for non-taxed
distribution accrued between the acquisition and transfer dates, according to the procedure set forth
in paragraph 3. As to losses resulting from the transfer of shares, generally, these are nondeductible from income taxes.
Second sub-paragraph of article 36-1 of the E.T., provides that profits from the transfer of shares
listed in a Colombian stock exchange and owned by the same Actual Beneficiary are neither
income nor capital gains, when such transfer is lesser than ten percent (10%) of the outstanding
shares in the relevant company, during the same taxable year. Therefore, the benefit of untaxed
profits only applies when the number of shares disposed of by the same Actual Beneficiary is lesser
than 10% of the outstanding shares.
2.
Equity value of shares
According to article 78 of Law 1111 of 2006, which in part repealed article 272 of the E.T., shares in
any type of company should be declared as per their fiscal cost, taking into account that the system
for integral inflation adjustments was set aside. Fiscal costs correspond to the acquisition price or to
the cost declared in the precedent year, as the case may be, without prejudice of the particular
modality of adjustment provided in articles 70 and 73 of the E.T.
For taxpayers obliged to use special systems for investment assessment, in accordance with the
regulations enacted by control entities, the equity value will be that resulting from those assessment
methods.
3.
Profits on dividend distribution
On the other hand, dividends attained by shareholders who are not individuals residing in the
country or domestic companies, will not be income nor capital gains, provided that these are profits
subject to income tax payable by the company. To determine such benefit, the company distributing
the concerned dividends, must deduct the basic income tax liquidated for the same taxable year
from the net taxable income of the relevant year. The result will be the maximum profits susceptible
of untaxed distribution; such value may in no event exceed the amount of profits after taxes.
Dividends received from other companies other than as income or capital gains, may be distributed
to shareholders as non-levied, although no taxes in connection therewith have been paid by the
company.
Where taxed dividends are distributed to individuals residing in the country, in conformity with the
rules above, those dividends will be subject to source withholding at the rate of 33% if the
beneficiary of such payment or advance is not bound to file income tax returns. Notwithstanding the
foregoing, the source withholding rate applicable on dividends will be 20% in case the individual or
36
aggregate value of any such payments or advances in favor of individuals is equal or higher than
1.400 UVT (Tax Value Units) during the relevant taxable year (Decree 567 of 2007).
Where taxed dividends are distributed to domestic companies or to individuals obliged to file
income tax returns, the source withholding rate will be 20% (Decree 567 of 2007).
In case of dividends corresponding to profits subject to income taxes payable by the company and
which dividends are attained by non-resident or non-domiciled foreigners, the income tax rate will
be 0%. Where those dividends correspond to profits that, if distributed to residents, would have
been taxed as provided above, those dividends will be subject to a 33% rate over the payment or
advance.
4.
Presumptive Income and Wealth taxes
Finally, it is worth mentioning that the net equity value of shares held in domestic companies is not
basis to calculate and determine presumptive income or Wealth Taxes, as provided in articles 189
and 295 of the E.T., respectively amended by articles 10 and 28 of Law 1111 of 2006.
K.
ISSUANCE ADMINISTRATOR
The entity in charge of the issuance administration will be Depósito Centralizado de Valores de
Colombia S.A., DECEVAL S.A. DECEVAL is domiciled in the city of Bogotá and its main business
th
offices are located in Cra. 10 No. 72-33 Torre B, 5 Floor.
DECEVAL will be entitled to payment of the fees agreed with us.
DECEVAL will hold custody and will carry out the administration and will further serve as agent for
the issuance payment. Likewise, DECEVAL will perform all operative activities concerning deposit
of the issuance, including the following duties and obligations:
1.
Register the Global Certificate Representing the Issuance
Shall mean the accounting record of the issuance, custody, management and control of the global
certificate, including control over the number of outstanding shares, the amount of Common Shares
issued, placed, re-acquired, pending placement and cancelled. The global certificate so registered
will back the amount actually placed.
2.
Register and enter information on:
a. Individual participation of each shareholder on the rights inherent to the dematerialized
issuance.
b. Conveyance and transfer of individual rights entered on deposit accounts or sub-accounts.
Registration of conveyances relating deposited rights will be in conformity with the
procedure set out under DECEVAL rules of operation.
c.
Voidance of certificate rights pursuant to our instructions, in the terms set out under
DECEVAL rules of operation.
d. Orders relating issuance or voidance of rights entered on deposit accounts.
e. Pledges and liens, for which purpose the owner or owners of rights will follow the procedure
set out under DECEVAL rules of operation. In the event where the information relating
conveyance or liens originates from the subscriber or the competent authority, DECEVAL
37
will be bound to inform the circumstance to the issuer during the business day thereafter,
provided that it refers to registered securities.
f.
3.
The outstanding balance under the book-entry mechanism.
Charge economic rights from the issuer
DECEVAL will charge all economic rights represented by book-entries in favor of the relevant
beneficiaries, when these are direct depositors providing securities management services or
represented by one thereof. Payment of economic rights to direct depositors which do not provide
securities management services will be in accordance to DECEVAL rules of operation.
To that effect, DECEVAL will produce two liquidations: previous and definite. Pre-liquidation of
amounts payable by us will be submitted within five (5) business days prior to the date when the
relevant draft is due. We will verify the pre-liquidation drafted by DECEVAL and will agree on the
relevant adjustments, in case of discrepancies. Subsequently, within two (2) business days prior to
the payment of dividends, DECEVAL will submit a definite liquidation of payable amounts, for the
purposes of paying any dividends decreed.
4.
Submit reports to the issuer
DECEVAL should provide us with monthly reports within five (5) business days following the
relevant closing, as follows:
a. Payments made to legitimate holders of the Common Shares.
b. Outstanding balances of the issuance on-deposit.
c. Voidances made during the relevant month, as these may affect the issuance circulation
ceiling.
5.
Information updating
Upon our request, update the amount of the global certificate or certificates on-deposit, based on
transactions involving issuance or voidance of securities, for which purpose DECEVAL will enjoy
broad powers.
6.
Keep the registry of shares
DECEVAL manages our registry of shares, by making book-entries relating conveyance of shares,
liens and restrictions thereon. To that effect, DECEVAL must arrange a historic database containing
sufficient details and easily readable. To that end, DECEVAL must register and enter information
on:
a. Conveyance and transfer of the Common Shares. Registration of conveyance and transfers
will be in conformity with the procedure set out in DECEVAL rules of operation. When
referring to special transactions, the procedure set forth in SFC External Circular No. 7 of
1998 will apply.
b. Creation or transmission of rights in rem over the shares and any other liens, for which
purposes, the owner or owners of securities will follow the procedure set out in DECEVAL
rules of operation.
38
c. Attachments on the Common Shares. DECEVAL will inform the court as to the attachment,
within three business days following receipt of the relevant communication from us or from
the competent authority.
d. Sale transactions subject to repurchase option (Repos) entered on the Common Shares.
e. Changes on the entity issuer of the shares, evidenced by means of entries made on
occasion of transformation, merger or spin-off.
f.
Enforcement of withdrawal rights by the shareholders owners of Common Shares.
g. Dates when payment of dividends on the Common Shares are decreed, as well as their
accrual and the payment date thereof.
h. The registry of shares must reflect all transactions concerning the shares during the exdividend period in accordance with the terms provided in SFC External Circular No. 13 of
1998 and External Circular No. 4 of 1999, in the BVC rules, in DECEVAL rules of operation
or in any other regulations amending or replacing the same.
i.
Subject to prior legal review on our side, enter all transactions referred to in Circular No. 7
of 1998 issued by the Superintendency of Securities on the book of registered certificates
or, upon express request from us and subject to prior legal opinion from the Legal VicePresidency of DECEVAL, enter all special book-entry transactions on the book of registered
certificates.
j. Balance of outstanding Common Shares by means of book-entry.
k. Individual placement of our shares corresponding to new issuances.
L.
DEMATERIALIZATION MECHANISM, OPERATION
In the development of its duties as administrator of the issuance of our Common Shares and in
accordance with its own operative rules, DECEVAL will issue – as per request of the owners of
Common Shares or the direct depositors - the deposit certificate concerning the Common Shares
managed and owned by the relevant shareholder. Certificates relating the enforcement of corporate
or economic rights or security interests on the securities deposited are not to be traded and are only
useful to enforce the rights embodied on the concerned certificate.
In its capacity as administrator of the issuance, DECEVAL may further perform as our payment
agent. Tasks concerning payment of dividends to the owners of Common Shares, and procedures
for such payment, will be as follows:
1.
Calculation
DECEVAL will calculate the payment of dividends and, to that effect, it will take account of the rules
concerning entitlement to dividends, in cash and term transactions, repo transactions, temporary
transfers of securities, encumbrances, among others.
Likewise, it will take into account the application or not of source withholding, according to the
shareholder status. We will be liable for effectuating any source withholding as appropriate and for
compliance of the related tax obligations.
39
2.
Charges and Setoff
DECEVAL will charge us for all dividends decreed. When the process for collection of dividends
gives rise to cash payments, we will pay to DECEVAL all amounts corresponding to shareholders
who are direct depositors or represented by direct depositors providing securities management
services.
Payment of dividends in cash or in kind over shares traded at stock exchanges is regulated under
SFC External Circular No. 13 of 1998, which refers to ex-dividend period in connection to
determination of dividends. In the management of Common Shares and, in the calculation of
dividends DECEVAL will apply the rules corresponding to ex-dividend period.
The amount and date to pay dividends will be determined by the General Meeting of Shareholders;
therefore, no later than one day after the relevant meeting, we will submit to DECEVAL the relevant
decision on distribution of profits, for the purposes of adequate calculation and control on the
dividends.
For the purposes of dividends, DECEVAL will produce two liquidations: previous and definite.
Pre-liquidation of amounts payable by ourselves will be submitted within five (5) business days prior
to the date when the relevant payment or advance of decreed dividends is due.
We will verify the pre-liquidation drafted by DECEVAL and will agree on the relevant adjustments, in
case of discrepancies. Subsequently, within two (2) business days prior to the payment of
dividends, DECEVAL will submit a definite liquidation of payable amounts, for the purposes of
paying dividends as decreed.
3.
Control on Dividends
DECEVAL will keep control over paid and outstanding dividends.
DECEVAL assumes no liability if we fail to provide resources for timely payment of dividends, or for
any failures or errors in the information furnished by us or by direct depositors in connection to
issuance orders, subscription, transfers, liens or attachments on the Common Shares delivered in
deposit, including any information originating from special transactions under External Circular No.
7 of 1998.
On the business day following expiry of the date provided to pay dividends, DECEVAL will inform
the holders of Common Shares and the control agencies as to any default in the payment thereof,
wherever we had failed delivering the necessary resources, to thus allow the holders’ exercise of
the relevant actions.
4.
Payment of dividends in cash and check
Pursuant to a banking network agreement DECEVAL will administer and control the payment of
dividends in cash and check, to any shareholders so requesting, including extemporary payments,
that is, dividends untimely paid. We will bear all costs relating this service, as it may be agreed with
DECEVAL.
5.
Payment of dividends through deposit
Pursuant to an agreement with CENIT and ACH, DECEVAL will administer and control payments to
direct depositors or to shareholders so requesting.
40
6.
Control on taxes and withholdings
DECEVAL will control and record on its system, all takes and withholdings corresponding to
dividend payments, pursuant to the regulations in force.
M.
RIGHTS AND OBLIGATIONS OF THE SECURITIES HOLDERS
The rights and obligations of the holders of Common Shares are set forth under Sections 1.A.2 and
1.C. of this Prospectus.
N.
OUR OBLIGATIONS
1.
To the owners of the Common Shares
We are obliged to the following with respect to owners of the Common Shares:
a.
b.
c.
d.
e.
f.
2.
Acknowledge the Investors’ right to participate in deliberations of our General Meeting of
Shareholders and vote thereat,
Pay the shareholders all dividends to which they may be entitled, subject to the law and our
Bylaws,
Acknowledge the shareholders’ right to trade the Common Shares in the terms of our
Bylaws,
Allow the shareholders’ free examination of our books and corporate records within fifteen
(15) business days prior to the General Meeting of Shareholders where year-end balancesheets are to be examined,
Acknowledge the Investors’ right to a proportion of the corporate assets upon liquidation of
the company and after due payment of external liabilities,
Acknowledge every other right provided in law and the Bylaws for legitimate holders of
Common Shares.
To the SFC
We must keep the RNVE permanently updated by submitting to the SFC all periodic and relevant
information referred to in articles 1.1.2.15, 1.1.2.16 and 1.1.2.18 of Resolution 400 of 1995 issued
by the SFC, which, according to article 1.2.1 of the BVC Sole Circular must likewise be submitted to
the BVC, as appropriate, within the same deadlines provided for submission to the SFC.
In particular, we are obliged to submit the following information:
a. Year-end information: we must submit to the SFC year-end information as instructed by it. At
the minimum, such information must include all documentation to be submitted to the General
Meeting of Shareholders, within the deadlines set by the SFC;
b. Mid-period information: we must submit to the SFC mid-period financial statements and any
other information established by it, as often and in the terms and conditions instructed by the
SFC. Mid-period financial statements must be drafted at least every three months.
c.
Relevant information: we must fairly, clearly, sufficiently and timely disclose to the market,
through the SFC and in the manner instructed by it, all and any situation relating us or the
issuance of Common Shares, as it would have been considered by a prudent and diligent
expert in purchasing, selling or preserving the securities issued (the Common Shares included)
or when enforcing voting rights proper of those securities.
41
b. Mid-period information: we must submit to the SFC mid-period financial statements and any
other information established by it, as often and in the terms and conditions instructed by the
SFC. Mid-period financial statements must be drafted at least every three months.
c.
Relevant information: we must fairly, clearly, sufficiently and timely disclose to the market,
through the SFC and in the manner instructed by it, all and any situation relating us or the
issuance of Common Shares, as it would have been considered by a prudent and diligent
expert in purchasing, selling or preserving the securities issued (the Common Shares included)
or when enforcing voting rights proper of those securities.
Furthermore, we are obliged to adopt procedures aimed at the adequate knowledge of our
investors, an obligation which we meet through the Placing Agents, and submit to the Unit on
Financial Information and Analysis - UIAF any reports concerning suspicious transactions detected
in accordance to regulations issued by the SFC on the prevention and control of money-laundering
actions through the securities market.
O.
TYPE OF SHARES
We plan to offer Common Shares.
P.
SUBSCRIPTION PRICE, DETERMINATION OF SUBSCRIPTION PRICE AND SHARE
EQUITY VALUE
1.
Subscription price
The Subscription Price will be as provided in Section 1.B.3 of this Prospectus.
2.
Share equity value
Our shares equity value is four thousand eight hundred fifty seven pesos point seventy two
(Col$4,857.72) per share as of September 30, 2009.
3.
Determination of Subscription Price
The Subscription Price will be as determined by our Board of Directors based on the outcomes of
the Offering Book Building Process, as per the terms of Decree 3780 of October 1, 2007 and this
Prospectus. “See Chapter II – Establishing the Subscription Price and Number of Common Shares
to issue”.
Q.
PROCEDURE TO CHANGE RIGHTS PROPER OF THE COMMON SHARES AND
LIMITATION TO THEIR ACQUISITION BY THE SHAREHOLDERS
1.
Procedure to change rights on the Common Shares
Neither our General Meeting of Shareholders or our Board of Directors may disregard the rights
legally vested upon the Common Shares.
According to the law and our Bylaws, the General Meeting of Shareholders may, with the affirmative
vote of a plural number of shareholders representing at least 78% of the shares represented at
relevant meeting, resolve the non-distribution of profits to our shareholders. Likewise, the Common
Shares may be converted into privileged shares or into preferential dividend, non-voting shares,
through the affirmative vote of a plural number of shareholders representing a majority of the shares
present or represented at the meeting.
42
2.
Limitations to acquire the Common Shares
Pursuant to the laws of Colombia any person or group of persons who form part of the same Actual
Beneficiary, whether directly or indirectly, may only become the Actual Beneficiary of a share equal
or higher than twenty-five percent (25%) of the voting stock in a company which shares are listed in
stock exchange – as in our case – by acquiring securities to reach such percentage by means of a
public offering for acquisition, as provided in Resolution 400 of 1995 issued by the SFC.
Likewise, any person or group of persons being the Actual Beneficiary of a sharing equal or higher
than twenty-five percent (25%) of the voting stock in a stock listed company, may only increase their
share in a percentage higher than five percent (5%), by means of a public offering for acquisition,
as provided in Resolution 400 of 1995 issued by the SFC.
On the other hand, our administrators are also restricted under the applicable laws, in connection to
the acquisition of shares.
R.
CALL TO ORDINARY AND SPECIAL MEETINGS OF THE SHAREHOLDERS’ ASSEMBLY
Ordinary meetings of the General Meeting of Shareholders will be held at the corporate domicile,
within the first three months of each year, on the day, hour and place indicated in the call and,
failing such call, no later than on the first business day of April. Call to ordinary sessions of the
General Meeting of Shareholders must be given at least fifteen (15) business days in advance
through notice published on a wide-circulation newspaper or, by written communication addressed
to each of the shareholders, to such addresses on-record in our books.
Special sessions of the General Meeting of Shareholders will be held when the company’s
unforeseen or urgent needs so require, upon the call by the Chief Executive Officer, the Statutory
auditor or the Board of Directors or, upon request to either of the above, by a number of
shareholders representing at least twenty percent (20%) of the total shares subscribed.
Nevertheless, the Assembly may validly meet at special sessions and without prior call, in presence
of the totality of shares subscribed. The relevant call will be made at least five (5) calendar days
prior to the meeting, through letter addressed to the shareholder to the latest address on-record in
our books, or through publication in a nationwide circulating newspaper, therein setting forth the
matters to be specially addressed.
Deliberation quorum for both ordinary and special meetings will consist of a plural number of
shareholders representing at least a majority of the shares subscribed. If a duly called General
Meeting of Shareholders is not held due to lack of quorum, a new meeting will be called to validly
session and decide with a plural number of shareholders, regardless of the number of shares
represented thereat. The new meeting must be held not earlier than ten (10) business days and no
later than thirty (30) business days counted as from the date scheduled for the first meeting. When
the Assembly holds ordinary sessions as per its own right on the first business day of April, it may
also deliberate and decide validly, with a plural number of shareholders, regardless of the shares
represented thereat.
Unless the law or our Bylaws require a special majority, decisions at a General Meeting of
Shareholders can be made through vote of a plural number of shareholders representing the
majority of votes present at the relevant meeting of shareholders. According to the Colombian law
and the Bylaws, special majorities are required to make the following decisions: (i) the affirmative
vote of at least 70% of the Common Shares represented at the meeting to approve the issuance of
shares without submission to the preemptive rights in favor of our shareholders; (ii) the affirmative
43
vote of at least 78% of the shares represented at the meeting, to distribute profits in percentages
lower than the minimum percentages set forth in the law; and (iii) the affirmative vote of at least
80% of the shares represented at meeting to approve payment dividends in the form of shares.
S.
AGREEMENTS AFFECTING THE ISSUER’S CHANGE OF CONTROL
Following is a brief description of agreements containing restrictive clauses relating any change of
control in the company:
Credit agreement entered on November 3, 2005 between BNP Paribas as lender, and us, as
borrowers for an amount up to US$34 million for Tranche A and 3 million Euros for Tranche B, both
at a semiannual Libor rate plus an annual 0.35% margin, for the term of 10 years counted as from
the date of the agreement execution. Resources raised under such credit were used to fund the
import of materials for the construction of substations in projects UPME 01-2003 and UPME 022003. As to changes of control in the company, the agreement expressly provides that in the event
where the Colombian Government is the owner of less than 50% of our voting capital stock and,
where the rating of our indebtedness is lesser than the ratings set forth in clause 8.2 of the
agreement, the contractual obligations and term will be accelerated and the agreement will
terminate.
T.
TRUSTS RESTRICTING THE CORPORATE RIGHTS INHERENT TO THE COMMON
SHARES
There are no trusts restricting the corporate rights inherent to our Common Shares.
U.
BYLAWS OR SHAREHOLDERS’ AGREEMENTS LIMITING OR RESTRICTING THE
COMPANY’S MANAGEMENT OR ITS SHAREHOLDERS
There are no Bylaws or shareholders’ agreements limiting or restricting our administrators or our
shareholders.
V.
RESTRICTIONS ON THE TRANSFER OF SHARES
Our Common Shares are not subject to restrictions on their transfer and may be traded through the
BVC transaction systems. See “Process required for changing the rights inherent to the Common
Shares and limitations on their acquisition by the shareholders.”
W.
HISTORIC AVERAGE QUOTATION AND TRADED VOLUME OF OUR SHARES
The table below shows the average quotation and the monthly traded volume of our shares as from
January 2006 to September 2009.
44
Month – Year
Jane-06
Feb-06
Mar-06
Apr-06
May-06
Jun-06
Jul-06
Aug-06
Sep-06
Oct-06
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dic-07
Jan-08
Feb-08
Mar-08
Abr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Abr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Average Price
Volume Trade
per Share
5.885
20.325.417
5.768
19.256.446
5.927
10.714.261
6.007
9.972.858
5.315
14.401.579
4.741
11.939.966
5.023
5.168.074
5.215
4.575.647
5.138
8.460.054
5.437
12.753.137
5.522
9.969.532
5.743
10.167.134
5.732
6.048.349
5.762
11.808.313
5.778
10.887.967
6.148
8.391.681
6.562
16.083.982
6.916
22.999.459
7.112
16.438.577
7.029
14.809.194
6.909
6.289.451
6.676
14.742.562
7.032
17.884.200
7.135
16.693.610
6.760
16.733.194
6.940
7.890.074
7.013
5.746.920
7.389
14.362.408
7.824
6.747.697
7.734
5.214.871
7.563
3.782.149
7.527
4.596.739
7.731
5.606.310
6.791
7.265.784
6.782
3.683.069
7.252
6.113.840
7.337
4.406.102
7.302
6.791.148
7.332
3.938.186
7.821
5.562.006
8.529
3.996.551
8.961
4.289.807
9.469
8.299.120
10.883
5.131.063
11.648
7.822.223
45
CHAPTER II. OFFERING CONDITIONS BY THE OFFERING BOOK BUILDING PROCESS AND
PLACEMENT
A.
OPENING AND CLOSING OF OFFERING BOOK
After obtaining authorization from the Colombian Financial Superintendency to carry out the Public
Offering of Securities, Issuer will publish the Notice of Opening and will open the Offering Book for
Issuance for up to ninety-five percent (95%) of the total amount of Common Shares that the Board
of Directors decides to place; the Book will remain open until the Closing Date thereof.
Both the Opening Date and the Closing Date of the Offering Book will be determined by the Issuer’s
Board of Directors, and previously informed to the general public in the Public Notice of Book
Opening.
While the Offering Book remains open, the Placing Agents may receive Demand Bids from
investors, which will include information on the number of Common Shares demanded by each
investor as well as such price offered per Common Share. The Placing Agents will daily enter the
relevant information into the Offering Book building system managed by the Book Runner for it to
collect data encompassing the same, by pointing out among others, the number of Common Shares
demanded by each Investor, as well as the price offered per Common Share. The Book Runner
must receive all Demand Bids for such values complying with the criteria defined by the Issuer in
the Information Prospectus.
Likewise, while the Offering Book remains open, investors may include, exclude, amend and/or add
their demands.
The recording into the Offering Book of a Demand Bid will not be binding in any case for the Issuer.
B.
TERM OF OFFER AND DEADLINE FOR SUBSCRIPTION
The Issuer will address the Public Offering to the investor public in general, once the Offering Book
has been closed and the Board of Directors has determined the Subscription Price and the number
of Common Shares to place under Amount A and Amount B, as per the terms provided for such
effect in Decree 3780 of 2007.
The effective term of the Offering, which corresponds to the Deadline for Subscription of Common
Shares, will be fifteen (15) business days counted from the publication date of the Notice of Public
Offering. In any case, the term of the Offering or the Deadline for Subscription may be early
terminated as per such terms described in subparagraph E of this Section 14.
For the effects of Offering the Common Shares, the deadlines will expire on the provided business
date at four in the afternoon (4:00 p.m.).
C.
PUBLIC OFFER BY THE OFFERING BOOK BUILDING PROCESS AND MEANS TO
PRESENT THE OFFERING
The Public Offer by the Offering Book building process, will be made as per the terms described for
such effect under Decree 3780 of 2007, Resolution 2375 of 2006 of the Colombian Financial
Superintendency and Resolution 400 of 1995 of the Superintendency of Securities (today
Colombian Financial Superintendency).
46
The Public Offer by the Offering Book building process will be published in a nationwide-circulating
newspaper in Colombia, once it has been authorized by the Colombian Financial Superintendency
and the Offering Book has been closed.
D.
PUBLIC OFFERING PROCEDURE
The procedure to carry out the offering of Common Shares by the Offering Book building
mechanism will be made through the Placing Agents and entails the following stages:
1.
Opening and Closing of Offering Book
As described in subparagraph A of this Section 14, once authorization is obtained from the
Colombian Financial Superintendency to carry out the Public Offering of Securities, the Offering
Book will be opened at the Offering Book Opening Date and will remain open until the Closing Date
thereof.
While the Offering Book remains open, the Placing Agents may receive Demand Bids from
investors. Likewise, while the Book remains open, investors may amend and/or withdraw their
demands.
The recording into the Offering Book of a Demand Bid will not be binding in any case for the Issuer.
2.
Establishing the Subscription Price and number of Common Shares to issue
Once the Offering Book is closed at the Closing Date, and no later than the immediately following
five (5) business days, the Board of Directors will hold a meeting and proceed at its discretion to
determine if an offering will take place as well as to the Subscription Price and the number of
Common Shares to place, based on the outcomes obtained by application of the Offering Book
Building Process, in accordance with Decree 3780 of 2007. If it decides to further proceed with the
Offering, then the Subscription Price and the amount of shares to be placed under Amount A and
Amount B, will be informed to the general public within three (3) business days following such date
when the decision is made, by publication of the Notice of Public Offering in a nationwide-circulating
newspaper.
Likewise, the Board of Directors will establish:
i.
The amount of Common Shares to be allocated on a preferential basis during the Deadline
for Subscription, to such investors that within the opening of the Offering Book have
demanded Common Shares for a price equal or above the Subscription Price ("Amount A"
of Common Shares), which, in no event will be greater than ninety five percent (95%) of all
Common Shares and,
ii.
The amount of Common Shares to be allocated during the Deadline for Subscription, under
the “first in time, first in right” mechanism ("Amount B" of Common Shares), which in no
case will be lower than five percent (5%) of all Common Shares.
This information will be published, no later than within three (3) business days following the
decision made by the Board of Directors, in the Notice of Public Offering. In any case, the
Allocation of Common Shares will be made pursuant to the rules and conditions provided in
Subparagraph E of this Section 14.
In spite of the above, the Board of Directors, based on the outcomes of the Offering Book
may decide that it is not convenient to offer the Common Shares to the public. In this case,
47
the Board of Directors will make the corresponding decision and will inform the same to the
general public through notice published in a nationwide-circulating newspaper.
3.
Notice of Public Offering, Deadline for Subscription and Allocation
Once the Board of Directors has established the Subscription Price, which is the same for both,
Amount A and Amount B, and the number of Common Shares to be placed for both Amount A and
Amount B, Issuer will publish the Notice of Public Offering.
The effective term of the Offering, which corresponds to the Deadline for Subscription of Common
Shares, will be fifteen (15) business days counted from the publication date of the Notice of Public
Offering. In any case, the term of the Offering or the Deadline for Subscription may be early
terminated as per such terms described in subparagraph E of this Section 14.
Once the Deadline for Subscription begins, allocation will proceed on a preferential basis for those
who during the Offering Book opening period have demanded Common Shares for a price equal or
above the Subscription Price determined by the Board of Directors. This preferential allocation will
be made pursuant to the records made in the Offering Book, as per the terms and conditions
described in Subparagraph E of this Section 14.
The following, among other general rules, will be taken into account for the placement of Common
Shares:
a.
As regards Amount A Common Shares, without prejudice of that provided under
Subparagraph E of this Section 14, the recording in the Offering Book of a Demand Bid will
in no event result in the obligation for the Issuer to allocate such Common Shares.
b.
Such Demand Bids for an amount lower than five hundred (500) Common Shares will not
be taken into account.
c.
After closing the Offering Book at the Closing Date, the Book Runner will send the results of
the Offering Book building process to the Board of Directors for it to decide whether or not
to carry out the placement, determine the Subscription Price and the number of Common
Shares to be placed and allocated, as the case may be.
d.
Such Demand Bids which price offered for Common Share is below the Subscription Price
will not be taken into account for the allocation process and therefore, no Common Shares
will be allocated in connection with said Demand Bids.
e.
The placement of Common Shares by the Placing Agents will be carried out through
Underwriting at the Best Effort.
f.
To participate in the placement process, investors willing to acquire the Common Shares
must deliver all documents required and/or comply with such procedures established in this
connection by the Placing Agents.
Investors may submit their Demand Bids, the amendments, additions and/or cancellations
thereof, and Offer Acceptances at the offices of the Placing Agents mentioned below,
between 8:00 a.m. and 4:00 p.m. on business days while the Offering Book remains open
or the Offer remains in effect, as the case may be:
48
Placing Agents:
1. CORREDORES ASOCIADOS S.A.
NIT 860079174
Carrera. 7 71-52, Torre B, Piso 16
Phone: 5941600 ext.121
Fax: 3122728
Bogotá D.C.
2. VALORES BANCOLOMBIA S.A.
NIT 800128735
Carrera 48 26-85, Torre Sur Sector C, Piso 6
Phone: 4046000
Fax: 5763514
Medellín
E.
h.
The Placing Agents will see that the Demand Bids and Investors follow the rules contained
in this Prospectus, the Notice of Public Offering and BVC’s instructions.
i.
The Placing Agents will be responsible for: (i) the compliance with the System for Managing
the Risk on Money-Laundering and Terrorism Funding (SARLAFT), to the instructions
provided in Appendix I, Chapter 13 of External Circular 062 of 2007 of the Colombian
Financial Superintendency and External Circular 060 of 2008 of the Colombian Financial
Superintendency, to other provisions on money-laundering prevention and the Manual on
Prevention of Money-Laundering and Terrorism Funding adopted by ISA on December 19,
2008. Within fifteen (15) business days immediately after ISA so requests, the Placing
Agents will send ISA the file with the documentary information on activities in compliance
with the regulations applicable for the prevention of money-laundering and terrorism
funding, which should be collected from the different Placing Agents involved in the
issuance and placement of Common Shares process. (ii) Collect the moneys for the value
of each allocated Common Share. (iii) Transfer to ISA the total value for allocated Common
Shares.
j.
Only such acceptances complying with the conditions provided in the Prospectus will be
taken into account.
PROCEDURE TO ALLOCATE COMMON SHARES
As from the effective date of the Offer or Deadline for Subscription of the Common Shares, BVC,
acting on behalf of ISA, will proceed to allocate the Common Shares, in the following terms:
First Stage: Allocation of Amount A Common Shares
Based on the information of the Offering Book, the Board of Directors will determine, if so decided
at its discretion, the Amount A Common Shares to be allocated on a preferential basis to investors
that within the Offering Book opening period demanded Common Shares for a price equal or above
the Subscription price.
Amount A Common Shares will be allocated as follows:
a.
The Demand Bids recorded in the Offering Book will be classified from the highest price
offered per Common Share to the lowest price offered per Common Share.
49
b.
The Demand Bids recorded in the Offering Book which price offered per Common Share is
lower than the Subscription Price will not be taken into account for the allocation process;
thus, no Common Shares will be allocated regarding such Demand Bids.
c.
The Demand Bids registered as of the Book closing and that are equal or higher than the
Subscription Price, will be automatically regarded as binding, irrevocable and unconditional
purchase orders.
d.
The allocation of such Demand Bids recorded in the Offering Book, which price offered per
Common Share is equal or above the Subscription Price, will proceed as follows:
1. Initially, the allocation will refer to individual Demand Bids which shares’ whole numbers are
lower or equal to TEN MILLION PESOS (Col$10,000,000).
If the demand for Common Shares is equal or lower than the balance of Amount A Common
Shares, then all Common Shares demanded by Purchasers will be allocated. If after allocating
the Amount A Common Shares there are still Amount A Common Shares remaining for
allocation, such Common Shares will be then allocated in accordance with paragraph 2 below.
On the contrary, if the aggregate of these Demand Bids exceeds the number of Amount A
Common Shares, then the Demand Bids will be allocated by prorating.
If the application of the prorating method results in Demand Bids with a number below five
hundred (500) shares, then the number of shares resulting from the application of such factor
will be allocated.
The aforementioned mechanism will allocate a whole number of Common Shares, by
rounding-up any tenths to the lowest whole number.
If, due to the prorating method, the total amount allocated results in less than the number of
Common Shares to be allocated, then the balance will be added: (i) to the Demand Bid to
which the lesser amount was allocated by the prorating method, provided that the total
allocated value does not exceed the demanded value; (ii) in case the total allocated value
exceeds the demanded value, then only the total demanded value will be allocated and the
difference will be added to the following demand bearing a lower amount allocated, taking also
into account the amount of such demand, and so on until the total amount offered is allocated,
and (iii) if there are two demands with the same amount, they will be allocated by their order of
entry and if entered in the same date, they will be allocated by alphabetical order.
2. The balance of Amount A Common Shares, if any, will be allocated regarding such Demand
Bids recorded in the Offering Book whereby a price per Common Share above the
Subscription Price has been offered.
If the demand for Common Shares is equal or lower than the balance of Amount A Common
Shares, then all Common Shares demanded by Purchasers will be allocated. If after the
allocation of Amount A Common Shares there are still Amount A Common Shares pending of
allocation, such Common Shares will be allocated in accordance with section 3 below.
In case the amount of these Demand Bids exceeds the number of Amount A Common
Shares, the Common Shares will be allocated pursuant to the price offered per investor under
the higher-to-lower offered price method. In case of equal prices, allocation to the Demand
Bid first entered into the Offering Book building system will be preferred, and if entered at the
same time, they will be classified by alphabetical order.
50
In case that a Demand Bid exhausts the balance of Amount A Common Shares, allocation will
be made up to the possible number of Common Shares, even if such amount is below the
Minimum Amount of Shares.
3. After allocation of the Amount A Common Shares according to paragraphs 1. and 2. Above,
the balance of Amount A Common Shares, if any, will be allocated to Demand Bids recorded
in the Offering Book that have offered a price per Common Share equal to the Subscription
Price.
If the demand for Common Shares is equal or lower than the balance of Amount A Common
Shares, then all Common Shares demanded by the Purchasers will be allocated.
On the contrary, if the aggregate of these Demand Bids recorded in the Offering Book that
offered a price per Common Share equal to the Subscription Price exceeds the number of
Amount A Common Shares, then the Demand Bids will be allocated by prorating.
If the application of the prorating method results in Demand Bids with a number below five
hundred (500) shares, then the number of shares resulting from the application of such factor
will be allocated.
The aforementioned mechanism will allocate a whole number of Common Shares, by
rounding-up any tenths to the lowest whole number.
If, due to the prorating method, the total amount allocated results in less than the number of
Common Shares to be allocated, then the balance will be added: (i) to the Demand Bid to
which the lesser amount was allocated by the prorating method, provided that the total
allocated value does not exceed the demanded value; (ii) in case the total allocated value
exceeds the demanded value, then only the total demanded value will be allocated and the
difference will be added to the following demand bearing a lower amount allocated, taking also
into account the amount of such demand, and so on until the total amount offered is allocated,
and (iii) if there are two demands with the same amount, they will be allocated by their order of
entry and if entered in the same date, they will be allocated by alphabetical order.
4. All Common Shares allocated will be subscribed at the Subscription Price within the term
and form provided under Subparagraph D of this Section 14.
Second Stage: Allocation of Amount B Common Shares
Amount B Common Shares, in no event lower than five percent (5%) of all Common Shares, will be
allocated under the “first in time, first in right” mechanism”. This way, Common Shares will be
allocated by order of entry into the electronic records corresponding to Offer Acceptances sent by
the Placing Agents to BVC, once the Deadline for Subscription begins, until reaching the total of
Amount B Common Shares.
In the event that the Offer Acceptances exceed Amount B Common Shares during the Deadline for
Subscription, the term of the Offering will be deemed to be exhausted.
If an Acceptance to the Offering exhausts the balance of Amount B Common Shares, then the
Common Shares will be allocated up to the possible amount, even if such amount is lower than the
Minimum Amount of Shares.
If by the Deadline for Subscription there are still Common Shares without allocation, they will be
returned to the reserve.
51
F. COMMUNICATING THE ALLOCATION TO PLACING AGENTS
In the first business day on which the Deadline for Subscription starts running, the BVC will inform,
in writing or electronic means, to the Issuer and the Placing Agents, of the allocations made for
Amount A, so they may inform Purchasers accordingly. The Placing Agents will inform Purchasers
no later than the business day immediately following the date they were informed by BVC of the
allocations made for Amount A.
On the first business day after the Deadline for Subscription takes place, the BVC will inform, in
writing or electronic means, to the Issuer and the Placing Agents, of the allocations made for
Amount B Common Shares, so they may inform Purchasers accordingly. The Placing Agents will
inform Purchasers no later than the business day immediately following the date they were informed
by BVC of the allocations made for Amount B. In any case, the Deadline for Subscription may be
early exhausted as per the terms described under Subparagraph E of this Section 14.
The allocation will be informed by the Placing Agents to the Purchasers, pointing out the number of
allocated Common Shares, the total allocated amount, as well as the date in which allocated
Common Shares are to be paid. Such notice will be made by any means that the Placing Agent
deems suitable to each participant investors.
G.
FORM OF PAYMENT OF COMMON SHARES
Within three (3) business days following the date of receipt of the information provided under the
last paragraph of Subparagraph F of this Section 14, the Purchasers will pay in cash in Colombian
pesos to the relevant Placing Agent for the total amount corresponding to the Common Shares
allocated to them.
H.
SECONDARY MARKET AND VALUATION METHODOLOGY
Our Common Shares are registered in the BVC and, therefore, are freely-tradable through the BVC
transaction systems.
The valuation methodology for the Common Shares will be as instructed by the SFC and the BVC.
52
PARTE II - INFORMATION RELATED TO THE ISSUER
CHAPTER I. GENERAL INFORMATION
A.
CORPORATE NAME, LEGAL STATUS, TERM AND WINDING-UP EVENTS
We are INTERCONEXIÓN ELÉCTRICA S.A. E.S.P., a mixed public utility company, incorporated
by public deed No.3057 granted before the eighth Notary of Bogotá, on September 14, 1967,
recorded before the Chamber of Commerce of Medellín on July 1, 1977, as a national business
stock company and ascribed to the MME, subject to the legal regime provided under the Home
Utilities Law, the Electricity Law (Laws 142 and 143 of 1994), and registered with the RNVE as
issuer of securities. We have administrative, economic and budgetary autonomy and perform our
activities within the scope of private law.
We will be dissolved if (i) we are unable to carry out our corporate purpose, (ii) the number of
shareholders is lesser than two, (iii) the favorable vote of shareholders representing more than 50%
of the shares represented at the General Meeting of Shareholders shall so decide, (iv) a competent
authority shall so decide, (v) losses cause our shareholders' equity to fall below 50% of our
subscribed capital stock, or (vi) in certain other events expressly provided by law and in the ByLaws. Upon our dissolution, the SSPD may take-up control of the company in order to ensure
continuity in the provision of electric transmission services. In such event, we would be managed by
an administrator in charge of our management or of the winding-up of our affairs. Presently, we are
not under any liquidation or winding-up events and, our duration term is indefinite.
Our Corporate Bylaws have been amended in several opportunities. The latest amendment to the
Bylaws was formalized in public deed No. 523 of the Sole Notary of Sabaneta granted on April 29,
2008, and duly registered before the Chamber of Commerce of Medellín. You may consult our
Bylaws in our website: www.isa.com.co
Furthermore, we rely on a Code of Ethics and a Good Governance Code, both addressed to our
shareholders, employees, officers and to the Board of Directors members. These codes seek
protection for all persons investing in the company, maintaining, among others, adequate
management of the corporate affairs, and promoting timely and adequate disclosure of all corporate
information. You may consult our Good Governance Code in our website: www.isa.com.co.
B.
SUPERVISION ON THE ISSUER
In our capacity as a public utility company we are subject to inspection and surveillance by the
SSPD and to the legal regime provided in Law 142 of 1994 (“Law 142) and Law 143 of 1994 (“Law
143”). Furthermore, we are subject to concurrent control by the SFC, to the extent that we are
registered with the RNVE and the BVC as issuer of securities and registered company.
1.
Laws and Regulations
The Colombian Constitution provides that it is the government's duty to ensure that utilities are
made available in an efficient manner to all of the country's inhabitants. Law 142 provides the
broad regulatory framework for the provision of residential utilities, including electricity and
telecommunications, and Law 143 provides the regulatory framework for the generation, trading,
transmission and distribution of energy. Resolutions issued by the CREG give effect to the general
principles set forth in Law 142 and Law 143.
53
Law 142: Law 142 establishes that the provision of electricity and telecommunications are essential
utilities which may be provided by public and private sector entities. Utility companies are required
to (i) ensure continuous and efficient service without monopolistic abuse, (ii) comply with the
regulations that impose subsidizing lower-income users, (iii) inform users regarding efficient and
safe usage, (iv) protect the environment, (v) allow universal access to their services and (vi) report
to the appropriate regulatory commission and the Superintendency of Utilities. Notwithstanding the
foregoing, the subsidization requirement under Law 142 has been interpreted to apply to the
provision of electricity to low-income end-users and, therefore, has not affected ourselves, because
we are not engaged in electricity trading.
Law 143: Law 143 sets out the following principles for the electricity industry, which are
implemented in the resolutions issued by the CREG and other regulatory bodies governing the
electricity sector: (i) efficiency - correct allocation and utilization of resources and the supply of
electricity at minimum cost; (ii) quality - compliance with the technical requirements established in
regulations affecting the sector; (iii) continuity - continuous electricity supply without unreasonable
interruptions; (iv) adaptability - incorporation of modem technology and administrative systems to
promote quality and efficiency; (v) neutrality - impartial treatment of all electricity consumers;
(vi) solidarity – funding by higher-income consumers to subsidize the subsistence consumption of
lower income consumers; and (vii) equity - adequate and non-discriminatory supply of electricity to
all regions and sectors of the country.
2.
Institutional Framework
The electricity sector is under the jurisdiction of the MME, which defines the Colombian
Government's policies for the energy sector. This duty is carried out in collaboration with other
governmental agencies such as the SSPD, the CREG, the UPME, the MHCP, the MAVDT, the
DNP, the National Operations Council, the Trading Advisory Committee and municipal and state
governments. The responsibilities of such governmental agencies are described below.
54
Ministry of Mines and Energy (MME)
The MME is responsible for the overall policy-making and supervision of the electricity sector. It
regulates generation, transmission, trading, interconnection and distribution and approves generation
and transmission programs. Direct supervisory authority over the electricity sector is entrusted to a
number of agencies under its control, including the CREG and the UPME.
CREG
The CREG is a special administrative unit with administrative, technical and patrimonial autonomy
of the MME created in 1994 and whose membership consists of the Minister of Mines and Energy,
the Minister of Finance, the Director of the Department of National Planning and five experts
appointed by the President for four-year periods. The Superintendent of Domiciliary Utilities attends
CREG meetings with voice but no vote. Resolutions of the CREG require the approval of a majority
of the CREG's members, which gives the expert appointees effective control over the CREG's
actions. The following functions have been assigned to the CREG by Laws 142 and 143 of 1994:
(i) establishing the conditions for the gradual deregulation of the sector towards an open and
competitive market; (ii) approving connection and usage fees for the transmission and distribution of
electricity; (iii) establishing the methodology for calculating fees for the regulated market;
(iv) defining the regulated and unregulated end-user markets; (v) establishing the regulations for the
planning and coordination of the operation of the STN; (vi) establishing technical criteria relating to
the quality, reliability, and security of supply; (vii) defining the methodology to calculate fees for
access and usage of electricity networks, and charges for dispatch and coordination services
provided by regional dispatch centers and the CND; (viii) establishing the tariffs for electricity sale;
(ix) instructing the merger of companies where any studies prove that doing so is indispensable to
extend coverage and to render costs less expensive for the users; and (x) protecting the rights of
consumers. The CREG performs its functions by issuing regulations.
UPME
UPME is a special administrative unit of the MME enjoying of its own patrimony, legal capacity and
a special regime for contracting, personnel management, salaries and fringe benefits. It is
responsible for developing and updating the National Energy Plan and the National Reference
Expansion Plans. UPME is also responsible for forecasting the overall energy requirements of
Colombia, planning and developing ways and means to satisfy such energy requirements, including
the development of alternative sources of energy, and establishing programs to conserve and
optimize the use of energy. All electricity transmission companies are required to prepare and
submit relevant information to UPME upon UPME's request.
SSPD
The SSPD is a technical body enjoying of legal capacity, administrative and patrimonial autonomy.
SSPD is provided for in the Colombian 1991 Constitution to exercise – upon delegation of the
President of the Republic – control, inspection and surveillance over all companies providers of
residential utilities. Primary functions of SSPD are: (i) establishing the information and accounting
systems which providers of residential utilities are bound to apply, (ii) supervise and control that all
entities providers of residential utilities comply with Law 142, and the relevant regulations as well as
any other promulgated by the Regulating Commissions, (iii) investigating any irregularities occurred
with respect to companies providers of residential utilities and (iv) penalizing the entities responsible
for providing residential utilities, on the bases of breach to the applicable regulations.
55
MAVDT
The MAVDT was created by Law 99 of 1993. All projects that affect the landscape or impact the
environment must obtain a license from the Ministry of the Environment. While other environmental
authorities can issue certain licenses, only the Ministry of the Environment has the authority to issue
licenses for the construction of large-scale generation projects or the electricity transmission lines
forming part of the STN.
CNO (NATIONAL OPERATIONS COUNCIL)
The National Operations Council was created by Laws 142 and 143. Its primary function (Article
172, Law 142) is to agree on technical aspects to secure the joint operation of the national
interconnected system on a safe, reliable and economic way. The CNO is the body executing the
operation regulations, all subject to the general principles of this law and the preservation of
competition conditions. The decisions of the National Operations Council may be appealed before
the Gas and Energy Regulatory Commission.
CAC (TRADING ADVISORY COMMITTEE)
The Trading Advisory Committee –CAC- is a Committee created by the Gas and Energy Regulatory
Commission –CREG- by Resolution 68 of 1999, to assist on the tracking and review of the
commercial aspects of the Wholesale Energy Market.
C.
CORPORATE DOMICILE AND MAIN BUSINESS OFFICES
Our corporate domicile is the city of Medellín and our business offices are located in Calle 12 sur 18
-168, Medellín.
D.
MAIN CORPORATE PURPOSE
Pursuant to our bylaws the following is our corporate purpose: (i) the operation and maintenance of
our own transmission network; (ii) the enlargement of the national interconnection system; (iii) the
planning and coordinating the operation of resources from the National Interconnected system; (iv)
management of the Energy Exchange and Trading System of the Wholesale Market; (v) develop
telecommunication systems, activities and services; (vi) participate, directly or indirectly, on
activities and services related with transportation of other energy products, except those restricted
by law; (vii) rendering of technical services on activities related with our corporate purposes and
such professional services required by the group’s companies; (viii) develop any other activity for
third parties related with electric power and telecommunication services, under the standing legal
framework; and (ix) participate, directly or indirectly, on activities, services and investments related
with engineering works.
We are a Colombian company organized as mixed public utility company and, our main corporate
purpose is the transmission of electricity from generation plants towards distribution networks and
consumption centers in Colombia, Brazil, Peru and Bolivia. Our business of electricity transmission
is carried out directly and through our subsidiaries Transelca in Colombia, CTEEP, Pinheiros and
Serra do Japi in Brazil, REP, ISA Peru, Transmantaro and Proyectos de Infraestructura del Perú –
PDI- in Peru, and ISA Bolivia in Bolivia.
Our business activities are carried out directly and through our subsidiaries Transelca, Internexa,
XM, ISA Capital and CTEEP in Brazil, REP, ISA Peru and Transmantaro in Peru and ISA Bolivia in
Bolivia.
56
E.
HISTORIC OVERVIEW
We were established in 1967 to construct, hold and administer a national electricity network called,
the STN, connecting the regional electricity transmission networks located around Colombia at that
time. Since then, other companies have owned and operated portions of the STN, but over the last
12 years we have owned and operated at least 70% of the transmission lines comprising the STN
and have been responsible for the coordination of its operation and management. In 1977, we
entered into the electricity generation business with the construction of the Chivor hydroelectric
plant, a 1,000-MW plant located in the province of Boyacá, which was Colombia's largest power
plant at the time it was built. We subsequently built and operated several other plants and by 1994
we accounted for approximately 30% of Colombia's installed generation capacity. During the period
from 1977 to 1994, the costs of operating and maintaining our transmission network were
accomplished by our sale of electricity generated by plants we owned at the time.
In July 1994, the Colombian Congress enacted the legislation to restructure the electricity sector
and, eventually, privatize the government-owned entities from the electricity sector. Pursuant to
Laws 142 and 143 of 1994, as amended, hereinafter referred to as Law 142 and Law 143, the
Colombian electricity industry was divided into the four separate activities of generation,
transmission, distribution and trading. Electricity transmission had not previously existed as a
stand-alone commercial activity. Law 143 facilitated the emergence of an electricity transmission
business by enabling the provision of transmission services on a stand-alone basis and providing a
price at which such services were required to be sold that would compensate electricity
transmission companies for their interests in the STN and the availability of their electricity
transmission assets.
In connection with the establishment of a commercial electricity transmission sector, we were
required by Law 142 and Law 143 to account for our electricity transmission and generation
activities separately and to divest all of our electricity generation assets and operations. On
January 1, 1995, we began to separately record our electricity generation and electric transmission
activities. On that same date we began to conduct our transmission activities on a commercial
basis, and started receiving revenues from electricity generation companies (including, ourselves)
making available our electricity transmission assets comprising the STN and charging electricity
traders for electricity transmitted to them over our transmission network. On April 30, 1995, we
transferred all our operations and assets for electricity generation to a newly formed and
independently managed corporation, ISAGEN S.A. E.S.P., hereinafter referred to as ISAGEN.
Since then, our main business activities have been: transmission of electricity, operation of the SIN
and management of the MEM, presently, through XM.
In 1998, we expanded our electricity transmission network by buying 64.99% of Transelca, the
company that owned and operated the transmission network along the Atlantic Coast (north of the
country), which represented 10% of Colombia's total transmission network, and also expanded our
telecommunications business as a carrier of carriers. In the same year, we received a national
award for environmental management and issued registered bonds in the Colombian market for the
first time in the amount of near Col$95,000 million, which were rated AAA by Duff & Phelps,
hereinafter referred to as Duff & Phelps.
In 1999, the expansion of Colombia's transmission network was opened to competition through two
public auctions, where we participated (UPME 01 and 02 of 1999) and were awarded the
construction and operation of lines in Santander, Norte de Santander and Atlántico. In the same
year, we placed with investors the last tranche of our first registered bond offering in Colombia in an
approximate amount of Col$35,000 million and made a second bond offering in the amount of
Col$180,000 million, again obtaining a AAA-rating from Duff & Phelps.
57
In 2000, we became the first state-owned company in Colombia to conduct a public offering in the
Common Stock primary market. We offered 300 million of our privileged shares to the public in
Colombia, which represented 13.34% of our capital stock, through a program called “ISA shares for
everyone” (ISA acciones para todos). Presently, we have no outstanding privileged shares.
In 2001, we became ISO 9001 certified for electricity transmission services and won the 2001
Colombian Award for Quality, as a reward for the high-quality of electricity transmission our
services. In the same year we successfully completed a third domestic registered bond offering in
the approximate amount of Col$130,000 million, obtaining a AAA rating from Duff & Phelps.
In 2002, we completed a second issuance of 120 million privileged shares with voting rights, under
the Program “ISA shares para todos”. Presently, we have no outstanding privileged shares.
In 2003, through two international public bidding processes, or UPME 01 and UPME 02, we were
awarded the right to build, operate and maintain a 1,000-km transmission line connecting the
central region of the country (Bogota area) with the Atlantic coast region in Northern Colombia.
These two projects became operational in December 2006 and May 2007, respectively.
In order to fund our expansion and capital expenditures programs, in 2004, we established a new
program for the issuance of registered bonds in the Colombian market in the amount of near
Col$450,000 million, which was subsequently increased to Col$850,000 million. We successfully
placed Col$587,365 million in registered bonds under this program among retail and institutional
investors in Colombia.
In December, 2006 we acquired an additional 34.99% of the capital stock of Transelca from
ECOPETROL, through a share exchange in which ECOPETROL received 58.925.480 of our
outstanding Common Shares, then representing 5.78% of our shares.
In January 2007, our subsidiary ISA Capital do Brazil successfully completed two concurrent
international bond offerings in the amounts of US$354 million and US$200 million, respectively, to
refinance short-term debt incurred by ISA Capital to finance the acquisition of 21.00% in CTEEP’s
capital stock and the purchase of additional 16.46% of CTEEP stock through a mandatory tender
offer completed in January 2007.
Our expansion in Latin America began with the incorporation of ISA Peru in 2001, and together with
Empresa de Energía de Bogotá, or EEB, of REP in 2002 to participate in a public bidding process
for the development, construction and operation of the electricity transmission assets of Etecen and
Etesur. We entered the Bolivian electricity market in 2003 when we formed ISA Bolivia following
our successful participation in an international bidding process for the construction and operation of
five substations and three electricity transmission lines for a period of 30 years. In 2005, we
entered the Central American electricity market, through our acquisition of a 12.5% equity interest in
EPR. In 2006 we consolidated our presence in Peru through the acquisition of 60% of the capital
stock of Transmantaro, thereby increasing our participation in the Peruvian electricity transmission
market to 91.03% based on the total assets and according to data compiled by the MEMP, and
entered the Brazilian electricity transmission sector with the initial acquisition of 21.00% (50.12% of
the voting stock) of CTEEP and the subsequent increase of such participation to 37.46% (89.40%
of the voting stock).
By the end of 2007, two relevant facts took place, that is, the commissioning of the optic fiber first
phase by Internexa, which interconnected the cities of Lima, Paramonga, Huacho, Huarmey,
Chimbote, Trujillo, Guadalupe, Chiclayo, Piura, Talara and Tumbes. On the other hand, on the
same year, December 7, ISA’s Board of Directors formalized the public offering of Common Shares
of the company, by defining the total size of the offer for 56,394,211 shares, and a subscription
price per share of Col$7.076 pesos.
58
Year 2008 was important for ISA at its enlargement process, achieved by the creation of new
companies as Interligação Elétrica Norte e Nordeste S.A -IENNE- and the awarding of seven new
projects for energy transmission in Brazil. In the same year, Duff & Phelps de Colombia restated
the AAA-rating to the second and third issuance of ISA’S ordinary notes for Col$180,000 million and
for Col$130.000 million respectively, and to the issuance and placement program for ordinary notes
for Col$850,000 million. In August of that year, the Company’s Board of Directors, authorized the
process for creation of a branch office in Colombia of Interconexión Eléctrica Colombia – Panamá
S.A.
At the beginning of 2009, ISA is authorized to extend the current note program in Col$350,000
million for a total of Col$1,200,000 million. Concurrently, in February, ICONTEC certified the
Energy Transportation services in Medellín and the South-Western Energy Transmission Center
under ISO 14001 (environmental) standards and OHSAS 18001 (safety and occupation health).
Likewise, it certified the Infrastructure Project business with ISO 90001:2000 quality standards. On
the other hand, ISA’s participation on the Infrastructure for Competitiveness Group was publicly
announced, a sole initiative in the country for introducing the Company into the road concession
business. The project is currently known as the Mountain Expressways and it is purported to build
four 900-km. double-track roads and operate and keep 1,251 km. of roads under the same
specifications.
In April 2009, ISA and ETESA commissioned in the city of Panama its new company called
Interconexión Eléctrica Colombia- Panamá –ICP–. Isa’s enlargement in Brazil is still in progress; it
was awarded through subsidiary CTEEP of four lots auctioned in this country. On the other hand,
company Duff & Phelps de Colombia confirmed ISA with the Triple A rating for the third issuance of
common notes and the issuance and placement program for common notes. ISA won an
th
international public bidding process in Peru on last August 10 through which it will reinforce the
south-medium transmission system with the Independencia Ica line. And finally, on past September
th
15 , the Company was awarded under UPME’s open bidding process to build substation El Bosque
in the city of Cartagena.
November 6, 2009: ISA was elected in Lime under the international public bidding process
promoted by Proinversión to develop the transmission line connecting the city of Trujillo with the
district of Zapallal.
The concession contract derived from this process will allow the design, funding, construction,
operation and maintenance of a 543-km. energy transmission line and its associated substations,
which works will be energized at 500.000 volts. The contract will have a 30-year term since the
commissioning of the project, estimated in 30 months after the process closing.
F.
SHAREHOLDING
SHAREHOLDERS
STRUCTURE
1.
Shareholding Structure
AND
INFORMATION
ON
OUR
PRIMARY
Our controlling shareholder is the Colombian Government (52.94%) and our shareholders include
Empresas Públicas de Medellín, hereinafter referred to as EEPPM, a Colombian utility company
engaged in water distribution and electricity generation and distribution services, controlled by the
city of Medellín (10.17%), ECOPETROL S.A., hereinafter referred to as ECOPETROL, the
Colombian State-owned gas and oil company (5.48%), and Empresa de Energía de Bogotá,
hereinafter referred to as EEB, an electricity transmission company controlled by the District of
Bogotá (1.72%). Our Common Shares are traded at the BVC and are registered with the RNVE
and the BVC.
The table below summarizes our capital stock structure as of September 30, 2009:
59
NO. SHARES
SEPTEMBER 30-09
SHAREHOLDERS
STATE INVESTORS
COLOMBIAN GOVERNMENT
EEPPM
PRIVATE AND STATE-OWNED COMPANIES
ECOPETROL S.A.
EMPRESA DE ENERGÍA DE BOGOTÁ
PRIVATE INVESTORS
INSTITUTIONAL
INDIVIDUALS
CORPORATE ENTITIES
FOREIGN F.I.
ISA ADR PROGRAM
OUTSTANDING SUBSCRIBED AND PAID-IN CAPITAL
OWN REACQUIRED SHARES (1)
TOTAL SUBSCRIBED AND PAID-IN CAPITAL
678.823.336
569.472.561
109.350.775
77.373.530
58.925.480
18.448.050
319.464.508
195.583.506
95.176.173
15.384.335
11.418.669
1.901.825
1.075.661.374
17.820.122
1.093.481.496
%
63,11%
52,94%
10,17%
7,19%
5,48%
1,72%
29,70%
18,18%
8,85%
1,43%
1,06%
0,18%
100,00%
(1) Actions belonging to CORELCA, reacquired in August 1998. At this date, all rights inherent
thereto are suspended and thus they are neither entitled to dividend distribution nor account for
deliberation and deciding quorum.
2.
Information on our primary shareholders
The Colombian Government
For further information on the Republic of Colombia, you may consult website
www.gobiernoenlinea.gov.co
Empresas Públicas de Medellín S.A. E.S.P.
1
EEPPM is a State-owned industrial and commercial enterprise, fully owned by the municipality of
Medellín, created in 1955. Its corporate purpose is the provision of the following residential utilities:
aqueduct, sewage, power, fuel gas distribution, basic switched fixed-telephone services and mobile
local telephone services and other telecommunication services.
EEPPM holds a comprehensive investment portfolio in companies such as CHEC S.A. E.S.P., EPM
Bogotá Aguas S.A. E.S.P., UNE – EPM Telecommunications, Empresa de Energía del Quindío,
GENSA, ISAGEN and Aguas de Urabá, among others. To date, EDATEL, EMTELSA, EMTELCO,
ETP, EPM Bogotá, Orbitel and Colombia Móvil form part thereof, among others.
For further information on EEPPM you may consult website www.eeppm.com
ECOPETROL S.A.
1
2
Information from www.eeppm.com in October 2009.
60
Ecopetrol S.A. is a public-stock mixed-economy business company of the national level, ascribed to
the Ministry of Mines and Energy, pursuant to Law 1118 of 2008, governed by its Bylaws duly
formalized under Public Deed number 5314 of December 14, 2007, granted before the Second
Notary of Bogotá D.C.
ECOPETROL operates as a business company primarily engaged in business or industrial
activities, in Colombia or abroad, relating the exploration, refinery, carriage, storage, distribution and
trading of hydrocarbon, by-products and products.
ECOPETROL is the parent company of Andean Quemicals Ltd., Black Gold Re Limited, Ecopetrol
America Inc., Ecopetrol del Peru S.A. and Ecopetrol Oleo e Gas Do Brazil Ltda.
For further information on ECOPETROL you may consult website www.ecopetrol.gov.co
Empresa de Energía de Bogotá S.A. E.S.P. – EEB S.A. E.S.P.
3
EEB is a public utility company, incorporated as a stock company pursuant to Law 142, enjoying of
administrative, budgetary and patrimonial autonomy, exercising its activities under private law,
which main corporate purpose is the generation, transmission, distribution and trading of power,
including gas and all kinds of fuel liquids. EEB is governed by Law 142 and Law 143 of 1994, its
Bylaws, the takeover master agreements and the Commercial Code.
Presently, it holds an investment portfolio in major companies of the power sector, including
CODENSA, EMGESA, GAS NATURAL and ISAGEN, among others. Besides, EEB holds interest
on Red de Energía del Peru and Transmantaro S.A.
For further information on EEB you may consult website www.eeb.com.co
G.
CORPORATE GOVERNANCE PRACTICES
Our Good Governance Code meets the requirements provided in Law 964, that follow certain
regional recommendations including the Organization for Economic Co-operation and
Development’s (OECD) “White Paper” on Corporate Governance for Latin America and the Andean
Development Corporation's (CAF) Corporate Governance Code. Likewise, pursuant to External
Circulars 028 and 056 of 2007 issued by the SFC, we will produce the annual report on Corporate
Governance Practices contained in the Country Code.
Independence of Board of Directors’ Members
Law 964 requires the Board of Directors to be composed of at least 25% of independent directors.
Additionally, Colombian law mandates that all directors exercise independent judgment under all
circumstances. The composition of our Board of Directors complies with these requirements, and
our Bylaws include a provision stating that Board of Directors members will exercise independent
judgment when voting a decision.
Board of Directors’ Committees
The Board of Directors has a Board Issues Committee, a New Business Committee and an Audit
Committee, each of which is composed of members and alternate members of the Board of
Directors. The Audit Committee was established by the Board of Directors on September 26, 2003
2
3
Information from www.ecopetrol.gov.co in October 2009.
Information from www.eeb.com.co in October 2009.
61
and the Board Issues Committee and the New Business Committee were established on April 30,
2004. These committees supervise the performance of our administrative staff in areas such as
internal controls, new projects, talent development and compliance with our Good Governance
Code, in accordance with Colombian corporate governance standards applicable to us.
Good Governance Code
On November 15 2001 our Board of Directors adopted a Good Governance Code directed to all our
shareholders, administrators and employees; this Code is in compliance with the criterion set forth
in Resolution No. 275 of 2001 of the SFC. The Good Governance Code has been amended by the
Board of Directors, and the last of such amendments was in August 31, 2007. The Code seeks,
among others, to protect all those persons who invest in the company, maintaining an adequate
administration of our corporate affairs, and promoting the timely and adequate disclosure of the
required corporate information.
Disclosure of information
We are subject to the following obligations on periodic disclosure of information:
H.
•
CGN. We must annually submit to the CGN information relating significant changes on our
accounts receivable, shareholders’ accounts and assets, as well as updated financial
statements together with their relevant notes.
•
CGR. We must annually submit to the CGR information on our accounting methods,
compliance with applicable laws and regulations, our contractual policies and our
organization manuals.
•
SSPD. Twice per year we must submit administrative, commercial and financial information
to the SSPD, including information relating capital expenditures.
•
SFC and BVC. We must regularly submit information to the SFC and the BVC concerning
meetings of our General Meeting of Shareholders, dividends paid by us, consolidated
financial statements, relevant information and quarterly financial statements and statutory
auditor reports, among others.
OUR DIVIDENDS POLICY
We acknowledge and pay dividends in accordance with PART I – AS TO SECURITIES, Chapter I,
Subparagraph A numeral 2 of this Prospectus.
The tables below show the history on payment of dividends by us to our shareholders and by our
subsidiaries to us, during the stated period:
Dividends paid by us
Year ending on December 31,
2008
2007
2006
(Col$ in millions)
147.372
124.848
111.880
Dividends paid to us by our subsidiaries
62
2008
Transelca
Internexa
XM
ISA Capital(*)
CTEEP (**)
ISA Peru
REP
Transmantaro (**)
ISA Bolivia
Internexa Peru
PDI
Transnexa
Year ending on December 31,
2007
2006
(Col$ en million)
21.807
18.297
23.945
8.123
18.122
753
2089
1936
4.021
9433
8.406
-
(*) Under the provisions of the Indenture regulating notes issued by ISA Capital on December 29,
2006, ISA Capital may not distribute dividends to us. Consequently, while these notes are
outstanding, dividends paid by CTEEP to ISA Capital may not be distributed to us or to any of our
subsidiaries.
CHAPTER II. CORPORATE STRUCTURE OF THE ISSUER
A.
ORGANIC STRUCTURE OF THE ISSUER
Organization Chart
63
B.
BOARD OF DIRECTORS
Our Board of Directors is comprised of seven members and seven alternate members, one per
each member of our Board of Directors, each of whom has the full voting power of his or her related
member in that member's absence. The members and their alternates are elected by our
shareholders at the General Meeting of Shareholders by the proportional representation voting
method for a one-year period, based on the knowledge, experience and leadership of the
candidates. Pursuant to our Bylaws, the members and alternate members of our Board of Directors
are subject to reelection or removal by our shareholders.
Under the proportional representation system, each owner of Common Shares is entitled to
nominate one or more members to the Board of Directors, by submitting a listing of nominees to the
Ordinary General Meeting of Shareholders. Each nomination of one or more members to the Board
of Directors is deemed a group for the election purposes, and each group of nominees must bear
the hierarchies of preference for election of nominees in such group. All nominees must expressly
consent to their nomination in writing. Following nomination of all groups, the Common Shares
owners may cast one vote per each Common Share held, in favor of a given group of nominees
included in a given list. No votes may be issued for specific nominees in one group, but for the
entire group; the total number of votes cast on the election is divided by the number of Board of
Directors members to be elected. The proportion resulting is the number of votes necessary to elect
each particular member of the Board of Directors. Every time that the number of votes cast by a
group of nominees is divisible by the proportion of votes, a nominee from the group shall be
elected, in the relevant hierarchy order.
Where no group receives sufficient residual votes to complete the required proportion of votes
necessary to elect a member of the Board of Directors, then, the remaining position or positions in
the Board of Directors shall be filled-in by electing the top nominee with the highest number of
residual votes, until full completion of the vacant positions. In case of residue ties, the member shall
be elected randomly. Under Law 964, at least twenty-five percent (25%) of the Board of Directors
members, that is, two principal and two alternate members must be independent members.
Some of the Board of Directors' main responsibilities are: to appoint, remove and reelect, as
applicable, our Chief Executive Officer and his two alternates; to approve our labor policies, number
of employees and their compensation guidelines; to approve our annual budget and our Corporate
Governance Code; to present accounts, balance sheets and inventories to the General Meeting of
Shareholders; to propose to the General Meeting of Shareholders the approval of discretionary
reserve funds and payments of dividends, to regulate the issuance and placement of our shares
and bonds; to authorize the establishment of branch offices and the sale, liquidation, transfer,
disposal, or lease of our assets or property, with a value of between 5.0% and 15.0% of our market
capitalization; to establish the criteria, procedures and authority which our employees must adhere
to regarding contractual matters; to ensure compliance with the Governance Code and to settle
claims arising from its non compliance; to present to the General Meeting of Shareholders
information regarding the adoption of, and compliance with, specific measures pertaining to our
governance, conduct and disclosure of information.
The Board of Directors meets at our offices, or at any other place designated by the Board of
Directors, at least once a month. A meeting of the Board of Directors may also be called by the
Chief Executive Officer, the statutory auditor or by two members of the Board of Directors. Every
call for a meeting of our Board of Directors must contain the agenda for such meeting, and the
reports to be presented by the Chief Executive Officer and any other executive officers. The Chief
Executive Officer may participate in the meetings of our Board of Directors, but has no vote. The
Board of Directors may not deliberate nor validly adopt any decisions with less than six of its
64
members, of which, at least three of whom must be principal members, as opposed to alternate
members. Decisions shall be adopted with the favorable vote of at least five of the members
present.
On December 26, 2003 the Board of Directors created the Audit Committee, responsible, among
others, for approving all control policies and supervising the compliance thereof; informing the
Board of Directors or the General Meeting of as to any material risks that may occur in connection
to the company’s financial condition; submitting to the General Meeting of Shareholders the
outcomes relating assessment of candidates for the auditor position; supervising compliance of the
Good Governance Code, and settling matters concerning claims filed by the shareholders and the
investors before the Board of Directors, as contemplated in our Bylaws and in the Good
Governance Code.
Presently, the Colombian Government elects most members of our Board of Directors and other
directive officers; therefore, in the event where the Colombian Government ceases to be our
controlling shareholder, the Board of Directors members and our directive officers would change.
See “Information on the Issuer’s Risks”.
The table below sets forth the members and alternate members of the Board of Directors as of the
date of this Information Prospectus.
Members
Minister
of
Mines
and
Energy(presently, Mr. Hernán
Martínez Torres)
Vice-Minister
of
Finance
(presently, Mrs. Gloria Inés
Cortés Arango)
Position
held since
03/06/06
03/29/04
Isaac Yanovich Farbaiarz
03/18/02
Federico Restrepo Posada*
Santiago Montenegro Trujillo*
31/03/08
03/30/07
Alternate Members
Vice-Minister
of
Mines
and
Energy(presently, Mrs. Silvana
Giaimo Chávez)
Legal Advisor for Minister of
Finance
and
Public
Credit
(presently, Mrs. Nhora Abuchar
Chamie)
Director General of Public Credit
and National Treasury (presently,
Mrs.Viviana Lara Castilla)
Jesús Aristizábal Guevara*
Jorge
Hernán
Cárdenas
Santamaría*
Luis Fernando Uribe Restrepo*
Luisa
Fernanda
Lafaurie 03/27/06
Rivera*
Orlando Cabrales Martínez
03/27/03
Andrés Felipe Mejía Cardona
* Independent Members as provided in Law 964 of 2005.
Position
held since
03/27/03
03/29/04
11/24/06
03/29/05
06/11/01
03/30/00
03/22/01
A brief biographical description of our Board of Directors members is set forth below
Ministry of Mines and Energy – Minister Hernán Martínez Torres
Chemical Engineer from Universidad Pontificia Bolivariana, with graduate studies in Petroleum
Management at Northwestern University in Chicago.
He has worked as President of International Resources Corporation - Intercor, and as a
representative executive officer for EXXON MOBIL in Colombia; and several EXXON MOBIL
st
companies and since July 31 , 2006 he is acting as Minister of Mines and Energy.
65
He has been a member of the Board of Directors of Cartón Colombia S.A., INVERSURA,
TRANSELCA S.A. E.S.P., Interconexión Eléctrica S.A. E.S.P. (ISA), and Representative of the
President of Colombia to the National Hydrocarbons Agency.
Ministry of Mines and Energy – Vice-Minister Silvana Giaimo Chávez
Vice Minister of Finance, Ms. Silvana Giaimo Chavez is graduated from Architecture with a Master’s
Degree on Environmental Management for Sustainable Development. She has worked in the
public and private sector, serving as Executive Director of the Chamber of Commerce of Cartagena,
Planning Director of the Major’s Office of Cartagena, Dean of the Architecture School of
Universidad Jorge Tadeo Lozano, Management Advisor for Sociedad Portuaria de Cartagena,
among others.
Ministry of Finance and Public Credit- Vice-Minister General Gloria Inés Cortés Arango
Economist from Universidad Javeriana, Ms. Cortés Arango has attended several refreshing courses
in management, administration, markets, finance, derivatives and operating systems and English,
among others. She has ample experience in the private and public sectors. Great direction and
leadership abilities, performed with reliability, respect, application and development of values, team
work and forward-looking vision.
In the past, Dr Cortés Arango held administrative positions in Financiera COLPATRIA S.A., en
Pinski y Asociados S.A., Banco Extebandes de Colombia, Telestudio Ltda., Banco Tequendama,
FOGAFIN and at the Ministry of Finance and Public Credit she began working as Director General
of the National Treasury and now she is the General Vice-Minister.
She has been a member of the Board of Directors of Compañía de Seguros La Previsora,
CORPAVI, Pronta S.A. Compañía de Financiamiento Comercial, GRANBANCO and GREG.
Ministry of Finance and Public Credit – Legal Advisor for Minister, Nhora Abuchar Chamie
Attorney from Universidad de Medellín and attended specialization courses on Economic Law, at
Universidad Externado de Colombia.
She worked at INDERENA as chief of the General Services Division, Manager of the Bogotá branch
of Constructora de Cocinas Limitada, Chief Executive Officer of APV Fabricando Limitada, and at
present Mrs Abuchar is a counsel to the Office of the Minister of Finance and Public Credit and has
often served as Acting General Secretary of the Ministry of Finance and Public Credit.
Isaac Yanovich Farbaiarz
Industrial Engineer from the Engineering School of Universidad de los Andes, Colombia and from
the Engineering School of Pittsburgh University. Mr. Yanovich obtained a Masters degree at the
Industrial Masters MGMT in the Massachusetts Institute of Technology, M.I.T.
Mr. Yanovich was a founding partner and an officer of Investment Bank Betainvest S.A., and has
also served as president of Invesa S.A., president of Lloreda Gasas S.A. and executive vicepresident of Tecnoquimicas S.A.
In the past, Mr. Yanovich has participated as a member of the Board of Directors of each of
ECOPETROL, INTERBANCO, INTERNACIONES S.A., ALIADAS S.A., Banco Popular, Women's
World Banking for Colombia, Banco Agrario, Avianca, Universidad ICESI and ISA, among others.
66
Ministry of Finance and Public Credit - Director General of Public Credit and National
Treasury Viviana Lara Castilla
Attorney-at-law from Universidad de los Andes with Master’s Degree on Administrative Law from
Université de Paris II Sorbonne, París.
Since February 2008, she works as Director General of Public Credit and National Treasury of the
Ministry of Finance and Public Credit. She has held positions as Infrastructure Vice-president for
the Corporación Andina de Fomento –CAF, Multilateral Banking Advisor for the Ministry of Finance
and Public Credit, Administrative and Financial Manager at Organización Terpel, District Director of
Public Credit of the Secretariat of Finance of Bogotá, Associate of law firm Brigard & Urrutia
Abogados, Subdirector of Contracting and Tracking for the Ministry of Finance and Public Credit –
Public Credit General Direction, entity where she also worked as Advisor for the Legal Office.
Ms. Viviana Lara has attended courses and seminars on Construction and maintenance of
infrastructures: railroads, ports and roads, Capital market and handling of the financial risk, Course
on Public Finances, Practical aspects on control and tax adjustment laws, Credit Ratings and Bond
Issuing at the Subnational Level, “The Export-Import Bank of Japan, Financial Math for financial
executives, Total Quality Seminar, Seminar on Direction-Leadership Skills, the National Public
Function and Regional Integration, II Inter-American Seminar on formulation, assessment and
management of investment projects, Seminar on Risk Coverage and interest rates, Financial math
Course and investment analysis. Ministry of Finance and Public Credit, Updating courses on
financial, tax, exchange and labor and accounting amendments.
Federico Restrepo Posada
Civil engineer from Universidad Nacional and Master on engineering with emphasis on hydrology
and planning of hydraulic resources from Mississippi University.
Mr. Restrepo Posada worked for consulting engineering company INTEGRAL S.A. from March
1979 to December 2003 and held several positions therein, including the Executive Presidency. He
worked as Director of the Planning Administrative Department of the Municipality of Medellín for the
2004-2007 period, and currently he is the CEO for Empresas Públicas de Medellín.
He has been member of the Board of Directors of the following entities: Comité de Empresarios
para el Apoyo a la Investigación y a la Gestión Tecnológica of Universidad de Antioquia, Instituto
para el Desarrollo de Antioquia - IDEA, Metro de Medellín, Empresas Públicas de Medellín, Túnel
de Occidente, Centro de Ciencia and Tecnología de Antioquia (CTA).
Jesús Arturo Aristizábal Guevara
Civil Engineer from Universidad Nacional de Colombia, School of Minas - Medellín - Colombia, with
Specialization on Roads and Transportation.
Since January 2001 until January 31, 2006 Mr. Aristizabal was appointed as the energy generation
st
manager of Empresas Públicas de Medellín E.S.P. (EEPPM). Since February 1 , 2006 he has
worked as Energy Director for EEPPM. At this same entity, he has worked as Administrative
Manager, Assistant Manager and acting Chief Executive Officer in several opportunities.
Mr. Aristizábal has acted as Administrative Manager, Service Manager and Chief Executive Officer
of Empresa de Transporte Masivo del Valle de Aburrá Ltda. (Metro de Medellín); Chief Executive
Officer for Empresa Antioqueña de Energía S.A. E.S.P. (EADE); Public Works Secretary for the
Department of Antioquia (Governor’s Office of Antioquia); Principal of Universidad de Antioquia;
Principal of Politécnico Colombiano Jaime Isaza Cadavid; Chief Executive Officer of Empresas
67
Varias de Medellín (EEVVM); Chief Executive Officer of Corporación Forestal de Antioquia S.A.
(CORFORESTAL S.A.); Dean for the School of Economy and Civil Engineering of Universidad de
Medellín, among others.
He is a member of the Boards of Directors of ISA, ISAGEN and Hidroeléctrica Pescadero – Ituango
S.A. E.S.P.
Santiago Montenegro Trujillo
Economist from Universidad de los Andes with Master’s Degree from the same university; MSc on
Economy from the London School of Economics and PHD from Oxford University.
He was economist for the World Bank, Consultant for the Government on Coffee-related Matters,
Dean of the School of Economics of Universidad de los Andes, President of Asociación Nacional de
Instituciones Financieras, Anif; Director of the National Planning Department and presently he is
President of the Colombian Association of Pension and Severance Pay Fund Managing Companies
(Asociación Colombiana de Administradoras de Fondos de Pensiones and Cesantías Asofondos).
Author of books El arduo tránsito hacia la modernidad: historia de la industria textil colombiana
durante la primera mitad del siglo XX (2002); Sociedad abierta, geografía and desarrollo (2006);
director and editor of Visión Colombia Segundo Centenario, 2019 (2005); co-author with José
Antonio Ocampo of Crisis Mundial, Protección e Industrialización, Fondo Editorial CEREC (1984).
He has also been editor of several books and articles on the exchange rate, public finances,
external strokes, coffee-related economy and political economy. In 1997, he founded the
International Summer School of the School of Economics of Universidad de los Andes.
Jorge Hernán Cárdenas Santa María
Industrial Engineer from Universidad de los Andes and obtained a Masters’ degree in Economics
from the University of Minnesota and a Masters’ degree of Science in Management - MIT Sloan
School. He was granted a Fulbright scholarship.
He was Dean of the Management School in Universidad de los Andes; Special Counsel to the
Secretary General of the Organization of American States (OAS), Presidential Advisor for the State
Modernization, General Vice-principal of Universidad Nacional de Colombia, CID Director at
Universidad Nacional and Head of the Special Division of Regional Corporations from the
Colombian National Department of Planning (DNP) and member of the Board of Interconexión
Eléctrica S.A. E.S.P.
Luisa Fernanda Lafaurie Rivera
Graduated as Economist from Universidad Javeriana, Colombia, with post-graduate course on
Finances from Universidad de los Andes where she also obtained a master's degree in High
Management and Business Administration (MBA).
Mrs. Lafaurie has worked under different positions in the public and private sectors, the most
outstanding of which are: Minister and Vice-Minister of Mines and Energy, Independent Consultant,
financial and commercial advisor of Scudder Kemper - Termotasajero and Parsons de Colombia,
Chief of the Europe Department, Regional Coordinator for Europe – Central and Sales Director of
Carbones de Colombia S.A. CARBOCOL.
She currently works as an independent consultant for management, formulation and
implementation of corporate and finance strategies. Mrs. Lafaurie has also been a member of the
Board of Directors of OCENSA S.A. Oleoducto Central de Colombia S.A. ECOPETROL, ISA,
ECOGAS, ISAGEN, MINERCOL and INGEOMINAS, among others.
68
Luis Fernando Uribe Restrepo
Attorney-at-Law graduated from Universidad Pontificia Bolivariana (Medellín). Specialization degree
on Economic Law from Universidad del Rosario (Bogotá), Finance Law from Universidad de los
Andes (Bogotá), and International Law Studies (LLM – Master of Law) from American University in
Washington D.C.
He has served as professor at Universidad Pontificia Bolivariana, Universidad de los Andes,
Universidad del Rosario and Universidad Externado de Colombia; Legal Counsel, Secretary
General and President to the National Commission of Securities (Comisión Nacional de Valores)
presently, the Superintendency of Finance; Legal Secretary to the Office of the President of the
Republic; President of Bolsa de Medellín S.A.; President of Fundación para el Progreso de
Antioquia (PROANTIOQUA) and Dean of the School of Law and Political Sciences of Universidad
Pontificia Bolivariana.
Mr. Luis Fernando Uribe has been a member to the Boards of Directors of Fondo de Garantías de
Instituciones Financieras (FOGAFIN), Depósito Centralizado de Valores de Colombia S.A.
(DECEVAL S.A.), Cadena de Almacenes Colombianos S.A. (CADENALCO S.A.), among others.
Presently, he is member of the Boards of Directors of ISA and ISAGEN.
Orlando Cabrales Martínez
Chemical Engineer from Universidad Pontificia Bolivariana with ample experience in the oil and
petrochemical industry. He has served as president and member of the Board of Directors of
several petrochemical and energy companies and has also served as Minister of Mines and Energy
and Minister of Economic Development of Colombia.
He has attended courses at CIDENAL (National Defense Comprehensive Course) at the Colombian
Army Superior War School, High Management lectured by Professors from the University of
Columbia at Medellín; Management Strategy and Human Resources lectured by professors from
Harvard University in Paipa, among others.
Mr. Cabrales Martínez is the President of Polipropileno del Caribe S.A.(PROPILCO) and has
occupied the following positions: Minister of Mines and Energy, Minister of Economic Development,
President of Diners Club de Colombia S.A., Founding President of Compañía de Registros
Sísmicos para Exploración Petrolera S.A. (SISMOCOL S.A.), President of Avianca S.A., and
Financial Vice-president of ECOPETROL for ten years and in such period he was in charge of the
Presidency for several times, among others.
Mr. Cabrales Martínez has been a member of the boards of directors of CARBOCOL, Monomeros
Colombo Venezolanos, COLGAS, PROMIGAS, VIKINGOS, INVERCRÉDITO, SURTIGAS, Gases
del Caribe, TERPEL-Bucaramanga, Banco Santander, Petroquímica Del Atlántico, UNIAL S.A.,
Networks de Colombia, SISMOCOL, Leasing Arfisa, PROELÉCTRICA LTDA., INGESER,
PETRONOR, AMERICATEL, ACOPLÁSTICOS, IFI, ISA, ISAGEN, CORELCA, FEN,
ECOCARBÓN, Valores Bavaria, Corporación Financiera del Norte, SOFASA, Avianca, Espectador,
Colseguros, ACOPLÁSTICOS, ALGRANEL and AIRES.
69
Andrés Felipe Mejía Cardona
Economist graduated from the University of Michigan, Ann Arbor. He attended Magister studies on
Management at Universidad EAFIT; Diploma on Strategic Management from Universidad de
Barcelona, and Diploma on High Management from Universidad de los Andes and Diploma on
International Businesses from CBI-Rotterdam-Holland University. Presently he is the Chief
Executive Officer of Mecánicos Unidos S.A.
He is a member to the Board of Directors of Federación Colombiana de Industrias Metalmecánicas
(FEDEMETAL), Empresa Departamental de Telecommunications S.A. E.S.P. (EDATEL),
Pensiones and Cesantías Protección S.A. (PROTECCION S.A.), Compañía de Financiamiento
Comercial Sufinanciamiento S.A. (SUFINANCIAMIENTO S.A.), ISAGEN and ISA.
C.
MECHANISMS ADOPTED TO SECURE INDEPENDENCE
Law 964 requires the Board of Directors to be composed of at least 25% of independent directors.
For the purposes of such law, it is understood that an independent person shall in no event be:
1. An employee or director of the issuer or of any of its affiliates, subsidiaries or controlling
companies, including persons who may have held such capacity during the year immediately
precedent to their designation, unless it refers to the reelection of an independent person.
2. Shareholders who, whether directly or by virtue of an agreement direct, instruct or control most of
the entity’s voting rights or determinant on the majorities of the entity’s management, directive or
control bodies.
3. A partner or employee or associations or companies which provide consulting or advisory
services to the issuer or to companies pertaining to the same business group, where their
income derived from such activities represents twenty percent (20%) or more of their operative
revenues.
4. An employee or director of foundation, association or company that receives major bequests from
the issuer.
Major bequests shall mean those representing more than twenty percent (20%) of the total
bequests received by the relevant entity.
5. Administrator of an entity which board of directors comprises a legal representative of the issuer.
6. A person who receives remuneration from the issuer other than fees as member of the board of
directors, of the audit committee or of any other committee created by the board of directors.
Additionally, Colombian law mandates that all directors exercise independent judgment under all
circumstances. The composition of our Board of Directors complies with these requirements, and
our by-laws include a provision stating that members of the Board of Directors shall exercise
independent judgment when voting a decision.
D.
RELATION BETWEEN THE BOARD OF DIRECTORS’ MEMBERS WITH THE COMPANY
OR ITS RELATED COMPANIES
Neither of the Board of Directors members is engaged in labor basis with ourselves or with any of
our subsidiaries to perform additional positions.
70
The following principal and alternate members of our Board of Directors are in turn members of the
board of directors in some of our subsidiaries, as shown below.
Name
Isaac Yanovich Farbaiarz
Santiago Montenegro Trujillo
Luisa Fernanda Lafaurie Rivera
Orlando José Cabrales Martínez
Viviana Lara Castilla
Jorge
Hernán
Santamaría
Cárdenas
Andrés Felipe Mejía Cardona
E.
Board of Directors
Principal member Board of Directors ISA
Member Board of Directors CTEEP
Principal member Board of Directors ISA
Principal member Board of Directors REP
Principal member Board of Directors
Transmantaro
Principal member Board of Directors ISA
Member Board of Directors CTEEP
Principal member Board of Directors ISA
Member Board of Directors CTEEP
Member Board of Directors Transelca
Alternate Member Board of Directors ISA
Principal member Board of Directors XM
Alternate Member Board of Directors ISA
Principal member Board of Directors ISA
Bolivia
Alternate Member Board of Directors ISA
Principal Member Board of Directors
Internexa
EXECUTIVE OFFICERS
Our Chief Executive Officer and his alternates are elected by the Board of Directors. The other
executive officers listed below are selected by the Chief Executive Officer. The table below sets
forth our executive officers as of the date of this Information Prospectus:
Name
Luis Fernando Alarcón Mantilla
Ana Mercedes Villegas Mejía
Carlota María Nicholls Estrada
Julián Cadavid Velásquez
Guillermo Márquez Moreno.
Alfonso Camilo Barco Muñoz
John Byron Pérez Díez
Juan David Bastidas Saldarriaga
Position
Chief Executive Officer
Corporate Strategy Manager
Administrative Manager
Energy Transportation Manager
Infrastructure Project Manager
Corporate Finance Manager
Corporate Auditor
General Secretary
Position held
since
01/07
02/09
06/05
02/07
02/07
09/08
12/06
06/05
A brief biographical description of our executive officers is set forth below:
Luis Fernando Alarcón Mantilla
Born on August 10, 1951, Mr. Alarcón obtained a degree in Civil Engineering from the Engineering
School of Universidad de Los Andes, Colombia (1975), and received a master's degree in Civil
Engineering (systems of hydraulic resources) from the Massachusetts Institute of Technology
71
(1979). He participated in the Advanced Program of the University of Oxford (1995). Mr. Alarcón
served as the Minister of Finance of Colombia from May 1987 to August 1990, Colombia's
representative at the Inter-American Development Bank, where he was executive director from
September 1990 to June 1991, and president of Flota Mercante Grancolombiana (1991-1997),
President of Comunican Multimedios (2000) and President of Asofondos (2001-2007). Before his
engagement with the company as Chief Executive Officer, Mr. Alarcón served as chairman of our
Board of Directors for five years. Presently, Mr. Alarcón is the chairman of all our subsidiaries’
boards of directors.
Ana Mercedes Villegas Mejía
Born in June 27, 1962, Mrs. Villegas obtained Electric Engineering degree from Universidad
Pontificia Bolivariana (1985), obtained Master’s Degree on the Use of Hydraulic Resources from
Universidad Nacional de Colombia (1991). Her professional career began at the company in 1985,
holding different directive posts as Energy Planning Director, Energy Transportation Service
Development Director, Maintenance Management Director, Energy Transportation Director; she
moved to Brazil from October 2006 to June 2008 to our affiliate CTEEP where she worked as
Directoria de Gestão Organizacional; she is currently the Corporate Strategy Manager.
Carlota María Nicholls Estrada
Born on May 3, 1958, Ms. Nicholls is an Industrial Engineer from Universidad de Antioquia (1985),
with a Master's Degree in Development of Hydraulic Resources from Universidad Nacional de
Colombia (1988) and specialization in Energy Economics from Instituto Argentino de Economía
Energética (1992). Ms. Nicholls joined us in 1982 as an Assistant Engineer and has been the Head
of Generation Planning Analysis, Head of Investment Analysis Department, and Strategy and
Development Manager.
Julián Cadavid Velásquez
Born on November 29, 1962, Mr. Cadavid is an Electrical Engineer from Universidad Pontificia
Bolivariana (1985) and is currently enrolled in the Top Management Program at Universidad EAFIT.
Mr. Cadavid Velásquez joined us in 1986 as Maintenance Engineer for the Northwestern Region.
He has since worked as Coordinator of the Control Room at the Energy Control Center, Director of
the Northwestern Energy Transmission Center, and Maintenance Manager and Deputy
Maintenance Manager of the Energy Transport Office of our affiliate REP.
Guillermo Márquez Moreno
Born on June 14, 1956, Mr. Márquez is an Electric Engineer from Universidad de los Andes,
graduated in 1981. He has been working with us since 1983, initially, as engineer in the area of
power transmission planning (1983-1985); afterwards, as engineer in the area of substations
construction (1985-1986) in his capacity as specialist in substations design (1986-1993) and as
project director (1993-1996). From 1996 to 2007 he occupied several executive positions in the
company, including areas such as Projects, Tenders and Bids and, most recently, New Business in
Brazil. Mr. Márquez was designated Infrastructure Project Manager in February 2007.
Alfonso Camilo Barco Muñoz
Born in December 25, 1966, Mr. Barco obtained Law Degree from Colegio Mayor de Nuestra
Señora del Rosario (1989). He also obtained specialization degree on Financial Laws from
72
Universidad de los Andes (1993). Since November 1997 to May 2001 he worked at the Ministry of
Finance and Public Credit as advisor for special projects; thereafter, he worked with Deloitte from
May 2001 to August 2007 as Financial Consulting Manager; then he worked for COREMAR as
Chief Financial Officer (CFO) from December 2007 to August 2008, from which date he joined the
company as Corporate Finance Manager.
John Byron Pérez Díez
Born on February 14, 1967, Mr. Pérez is a Public Accountant from Universidad de Medellín (1993).
Before joining us, Mr. Pérez worked as Corporate Auditor for C.I. Banacol S.A. and also participated
in the audit departments of Orbitel and Pricewaterhouse Coopers.
Juan David Bastidas Saldarriaga
Born on January 5, 1968, Mr. Bastidas is a lawyer from Universidad Pontificia Bolivariana (1989)
and obtained a specialization degree on Business Law from the same University (1990). In 1993 he
obtained an MBA degree from New York University and a specialization degree on International
Businesses from Universidad EAFIT. He joined us as Assistant Secretary General in April 1996.
Mr. Bastidas worked with the finance manager as substitute director of the project “ISA shares para
todos” in 2000 and as Coordinator of the financing and debt management team. Between 1994 and
1995, Mr. Bastidas worked at Banco Industrial Colombiano as lawyer in charge of international
businesses.
F.
STATUTORY AUDITORS
Our Statutory Auditor is the firm Ernst & Young Audit. Ltda. which designated Alba Lucía Guzmán
Lugo as principal statutory auditor and Jimena Medina Portela as alternate statutory auditor.
Following is a brief biographical description of our statutory auditors.
Alba Lucía Guzmán L.
Certified Public Accountant from Universidad Santo Tomás, with over 15 years of professional
experience on auditing, she has participated in fiscal auditing projects, external auditing, purchase
auditing and corporate advise on financial and real sectors. Her experience includes the revision
and assessment of financial statements and conversion of the same, as well as the analysis and
application of US accounting standards –USGAAP and international – IFRS and compliance with
Sarbanes-Oxley standards for financial sector companies. In her professional career she has
participated in projects for important national and international entities from the financial and real
sectors.
Additionally, Mrs. Guzmán has attended updating courses on matters such as: International
Accounting Standards - IFRS, International Auditing Standards, US Accounting Standards – US
GAAP, Integrated Auditing - SOX, Change management, Auditor’s Reports, Tax Accounting –
Deferred Taxes, Audit plan Development, Consolidation and conversion of financial statements,
fraud and Money-laundering and control on Money-laundering.
She has participated in projects for important national and international entities. Some of their most
important clients have been Grupo ISA, Grupo Peldar, Grupo Corona, Bolsa and Renta S.A., Mapre
Crediseguros, Chubb de Colombia Compañía de Seguros, Terpel, Procter & Gamble, Sagem,
Fiserv, Coloidales, Teleantioquia, Grupo Colpatria, Grupo Corficolombiana, Grupo Bolívar, Filiales
Grupo Bancolombia, Fiduciaria Bancolombia, Banca de Inversión Bancolombia and Suleasing
Internacional, Grupo Banco Santander Colombia; Grupo Banco Sudameris Colombia, Central
73
Banks: Banco de la República, Banco Central de Reserva del Peru and Banco Central de Costa
Rica, among others.
Jimena Medina Portela
Audit Manager for the firm. She is a Certified Public Accountant from Universidad de Antioquia,
specialized on High Management from Universidad de Medellín. Her 11-year auditing work
includes external auditing, fiscal auditing, internal control and general advise mostly on the
financial, manufacturing and services sector.
She has attended different seminars and courses related to her career in connection with Capital
Market and Financial Information Related Standards IFRS.
For the last years, Mrs. Medina has been involved with different audit and fiscal auditing projects at
diverse companies in Colombia, such as: Grupo ISA, Bolsa and Renta, Loceria Colombiana S.A.,
Sumicol S.A., Electroporcelana Gamma S.A., Tampa Cargo S.A., Jen Colombia S.A., Mapfre
Crediseguro S.A., McDonalds, Grupo Nacional de Chocolates, Grupo Postobon, Coltefinanciera
S.A., Isagen S.A. E.S.P. among others.
G.
SHAREHOLDING BY BOARD OF DIRECTORS MEMBERS AND EXECUTIVE OFFICERS
IN ISSUER
As of September 30, 2009 the following members of our Board of Directors hold a shareholding in
our capital stock: Orlando Cabrales Martínez with 26,265 shares, Jorge Hernán Cárdenas
Santamaría with 13,603 shares and Yanovich and CIA. S C S with 5,247 shares.
Following is a listing of ISA’S executive officers with the interest held by each of them.
Name
Julian D Cadavid Velasquez
Guillermo Márquez Moreno
Carlota María Nicholls Estrada
Martha Ruby Falla González
Gonzalo León Maya Agudelo
Andres Villegas Ramelli
Juan Felipe Munera Yepes
Enrique Ángel Sanint
Edgar Enrique Díaz Henao
Alberto Mauricio Bernal Latorre
Olga Lucía López Marín
Dayron Esteban Urrego Moreno
Soraya Naranjo Betancourt
Jorge Ivan López Betancourt
Cristian
Augusto
remolina
alvarez
Jose Alberto López Acevedo
Adriana María Cano Franco
Margarita Duque Gómez
Sara P Delgordo Castillo
Position
Energy transportation Manager
Infrastructure Project Manager
Administrative Manager
Social and Environmental Manager
Financial Resources Manager
Interconex col-panama Project Director
Tax financial planning Director
Corporate planning Director
Logistics Director
Legal Director
IT Director
Project Execution Director
Organizational Development Director
Road Concessions Director
Energy transmission center Director
Energy transmission center Director
Audit Director
Administrative Coordinator
Administrative Coordinator
No. Shares
7374
3762
4964
4056
1450
7801
1321
1333
7613
2053
2784
923
6823
4727
1358
2484
1677
1879
831
74
H.
AGREEMENTS OR PROGRAMS TO ALLOW THE EMPLOYEES’ SHAREHOLDING IN THE
ISSUER’S CAPITAL STOCK
There are no agreements or programs allowing our employees to own shareholding in our capital
stock. According to our Good Governance Code, ISA’S administrators and workers may not
purchase or sell, either in the open market or under private transactions, when they hold corporate
material information not yet disclosed to the public. Managers and workers must abstain from
disclosing such information to third parties. They may neither recommend third parties to purchase
or sell shares from the company based on such information.
I.
CONTROL SITUATION
Pursuant to articles 260 and 261 of the Commercial Code, amended by Articles 26 and 27 of Law
222 of 1995, we are subject to control by our controlling shareholder, the Colombian Government,
to the extent that it holds, directly, more than fifty percent of our outstanding capital represented in
voting Common Shares, as shown in the table below concerning the capital stock shareholding as
of September 30, 2009:
SHAREHOLDERS
STATE INVESTORS
COLOMBIAN GOVERNMENT
EEPPM
PUBLIC AND PRIVATE ENTITIES
ECOPETROL S.A.
EMPRESA DE ENERGÍA DE BOGOTÁ
PRIVATE INVESTORS
INSTITUTIONAL
INDIVIDUALS
CORPORATE ENTITIES
FOREIGN F.I.
ISA ADR PROGRAM
OUTSTANDING SUBSCRIBED AND PAID-IN CAPITAL
N° SHARES
SEPTEMBER 30-09
678.823.336
569.472.561
109.350.775
77.373.530
58.925.480
18.448.050
319.464.508
195.583.506
95.176.173
15.384.335
11.418.669
1.901.825
1.075.661.374
%
63,11%
52,94%
10,17%
7,19%
5,48%
1,72%
29,70%
18,18%
8,85%
1,43%
1,06%
0,18%
100,00%
Declaration by the Colombian Government.
On December 15, 2000, the Colombian Government acting as controlling shareholder, signed a
4
Declaration, hereinafter referred to as the Declaration, aimed at protecting minority shareholders ,
whereby the Colombian Government undertook voting in favor of the following issues, among
others:
4
For the purposes of the Declaration, minority shareholders mean all those shareholders owners or actual beneficiaries of
privileged shares individually representing maximum 15.00% of the privileged shares and any person owner or actual
beneficiary of common shares individually representing maximum 1.00% of the outstanding common shares during the term
of the concerned privileged shares, or all those shareholders owners or actual beneficiaries of common shares individually
representing maximum 3.00% of the outstanding shares, once the privileged shares become common shares. Presently, we
have no outstanding privileged shares as all those privileged shares became common shares on December 31, 2002.
75
•
Information Policy. The company should establish and maintain a center for provision of
information to the shareholders, to make available to the shareholders, on quarterly basis,
any financial information as well as any other information as the company management
shall prepare from time to time to make available among the shareholders.
•
Dividends. Clear policies relating dividends distribution, whereby we must distribute to our
shareholders the minimum percentages provided in the law, after due payment of taxes,
creation of the legal reserve and discharge of losses from previous years.
•
Dividends. In order to effectively assure the right of all shareholders to receive such
percentages provided under articles 155 and 454 of the Code of Commerce, the Colombian
Government understands that for the purposes of profit distribution and application of the
aforementioned articles, net profits are those resulting upon the following procedure: (a)
Profits accrued by the company according to each year’s true and actual Financial
Statements are solely deducted with items corresponding to: (i) discharge of losses from
previous years (if any), (ii) legal reserve, and (iii) allocations for payment of taxes; (b) the
balance so determined is applied with the percentages to be distributed in conformity with
the above-mentioned articles of the Commercial Code. The resulting value shall be the
minimum amount to be distributed as dividend each period; (c) any remainders after the
distribution of minimum dividends shall remain available to the Assembly in order to make
any statutory or voluntary reserves or to be distributed as dividends in addition to minimum
dividends set forth in subparagraph b).
The Colombian Government undertakes, pursuant to its share interest on ISA, to propose to
the Assembly and vote on the necessary amendments on ISA’S bylaws for application of
the aforementioned dividend policy.
•
Meetings of the General Meeting of Shareholders. The Colombian Government undertook
the following:
(i)
submit to consideration of the Assembly and voting any amendments as necessary
to our Bylaws to permit the call of special meetings of the General Assembly as per
request of a number of shareholders representing at least 20% of the total
subscribed shares.
(ii)
submit to consideration of the Assembly and voting in a such a manner that every
activity, deliberation or decision relating the matters listed below should be adopted
by the Assembly General through the affirmative vote of a plural number of
shareholders representing minimum 65% of the subscribed shares. Otherwise, the
Colombian Government should vote against the relevant decision:
a. amendment to our shareholding capital, issuance of shares, the obligation of
converting debentures which may represent capital contribution by minority
shareholders in excess of 2 SMMLV.
b. terms and conditions of the relevant rules for issuance and placement of
shares, as well as any decision relating shares issuance and offering under
capitalization processes without submission to preemptive rights. Nevertheless,
failing such majority, the Colombian Government must call a second General
Assembly where an ordinary majority shall suffice if the mentioned special
majority is not reached.
c. changes on the dividend policy as described in the Declaration.
d. payment of dividends in shares to minority shareholders.
76
(ii)
submit to consideration of the Assembly and voting in a such a manner that the
sale, liquidation, transfer or disposition or lease of our properties or assets, in one
single transaction or related transactions exceeding 15.00% of our market
capitalization, or the sale or transfer of all or part of the company’s commercial
establishment, whether in one single transaction or related transactions, in the term
of 12 calendar months, requires approval by the General Meeting of Shareholders
through the affirmative vote of a plural number of shareholders representing 70% of
the subscribed shares. Failing such majority, the concerned decision can be
adopted by the simple majority of the total shares subscribed, but any absent or
dissenting minority shareholders shall be entitled to withdrawal or sale, as referred
to herein below.
•
Board of Directors. The Colombian Government undertakes including in the listing of
candidates to the Board of Directors, a person designated by mutual agreement by the 10
minority shareholders holding the largest shareholding, provided that the aggregate shares
held by minority shareholders is less than 15% of our voting shares.
•
Special majorities at the Board of Directors. The Colombian Government undertakes
submitting to consideration of the Assembly and voting in such a manner that in any of the
events listed below, the Board of Directors shall deliberate with the attendance of at least 6
of its members and the relevant decisions must be adopted with the affirmative vote of at
least 5 of the attending members:
(i)
the sale, liquidation, transfer or disposition or lease of our properties or assets, in
one single transaction or related transactions exceeding 5.0% and up to 15.00% of
our market capitalization, or the sale or transfer of all or part of the company’s
commercial establishment, whether in one single transaction or related
transactions, in the term of 12 calendar months.
(ii)
the realization of investments in other sort of companies or associations, as well as
the realization of investments by our subsidiaries, regardless of the investment being
realized in one single transaction or related transactions, in the term of 12 calendar
months, when the investment amount exceeds five 5.0% of the company’s market
capitalization.
(iii)
transactions with affiliates exceeding 20,000 SMMLV.
•
Transactions with Affiliates. Any acquisition of assets and services involving our
controlling shareholders or their parent companies, affiliates or subsidiaries shall be
entered under market conditions. The acquisition of assets and services among this type
of companies, in excess of 20.000 SMLMV must be approved by our Board of Directors.
•
Right of Withdrawal and Sale. In the event of exercising the right of withdrawal pursuant to
Law 222 of 1995 by a number of minority shareholders representing minimum 5% of our
outstanding shares, those shareholders shall be entitled to sell their share to the
Colombian Government provided that the latter has affirmatively voted the decision which
jeopardized the minority shareholders’ economic rights.
The Declaration shall be in force until January 24, 2011. In the event where the Colombian
Government decides to transfer its interest to any third party, the Colombian Government agrees on
transferring the obligations contained in the Declaration to the relevant third party.
77
The obligations and commitments undertaken by the Colombian Government under the Declaration
shall terminate and cease to be effective upon the occurrence of either of the following events: (i)
the Colombian Government as well as a number of the minority shareholders representing more
than the majority of the total shares owned by the minority shareholders, consent to such
termination, and (ii) in the event of winding-up, liquidation or take-over by a control body.
J.
SUBSIDIARIES
Our business activities are conducted directly and through our subsidiaries Transelca, Internexa
and XM in Colombia, ISA Capital, CTEEP, IEPinheiros, Serra Do Japi, Internexa Participações e
Infra-Estructuras Do Brazil in Brazil, REP, Transmantaro, ISA Perú and Internexa Peru, PDI in Peru
and ISA Bolivia in Bolivia. The table below shows our ownership structure and the share
percentage in each of our subsidiaries:
78
COLOMBIAN
GOVERNMENT*
EEPPM
10.17%
ECOPETROL
5.78%
EEB
1.72%
OTHER
O
29.70%
52.94%
INTER.
PERÚ
99.99%
INTER.
PARTIP.
99.98%
ISA
XM
99.73%
TRANSELCA
99.99%
REP1 1
30
30.00%
ISA2
PERU2
28.07%
TRANSMANTARO
60
60.00%
ISA3
BOLIVIA
51
51.00%
IE PINHEIROS 99.99%
SERRA DO JAPI S.A. 99.99%
ISA
CAPITAL
99.99%
CTEEP
89.40% CS
0.00% PS
37.46% TC
37.46%TC
INTERNEXA
99.27%
PDI
99.97%
Infraestructuras
do Brasil
99.90%
INTER.
PERÚ
99.99%
INTER.
PARTIP.
99.98%
CS = Common Shares
PS = Privileged Shares
TC = Total Capital
1. We hold 60.00% of REP’s capital stock, of which we directly own 30.00% and Transelca owns
the remaining 30.00%.
2. We hold 82.92% of ISA Peru’s capital stock, of which we directly own 28.07% and Transelca
owns the remaining 54.86%.
3. We hold 100.00% ISA Bolivia’s capital stock, of which we directly own 51.00%, and Transelca
holds 48.99% and Internexa the remaining 0.01%.
4. We hold 100.00% of the capital stock of PDI – Proyectos de Infraestructura del Peru S.A.C.-, of
which we directly own 99.97% and Transelca owns the remaining 0.03%.
Transelca S.A. E.S.P.
Transelca is a Colombian, combined-capital, public utility company domiciled in the city of
Barranquilla. It was incorporated on July 6, 1998 and it is engaged in electric power transmission,
coordination and control of the Regional Dispatch Center and connection to the National
Transmission System. After us, Transelca is the second largest company involved in electricity
transmission and is the owner of 8.4% of the STN. We hold directly 99.99% of Transelca’s capital
stock and, we receive dividends on such shareholding amounting to Col$18,297 in 2008, which,
divided by the book value of our share in Transelca is equal to 3.03%. In 2008 Transelca’s results
were Col$37,043 million and its capital stock and reserves amounted to Col$180,974 million and
Col$52,232 million, respectively.
79
Red de Energía del Peru S.A. - REPREP is a Peruvian company domiciled in the city of Lima. It was incorporated on July 3, 2002, with
participation from ISA, TRANSELCA and Empresa de Energía de Bogotá -EEB-. REP provides
electric power transmission services, associated services, including operation and maintenance
services for transmission facilities and energy transportation and specialized technical services.
Currently it is the main electricity transmission company in Peru accounting for 52.44% of the
assets comprising the national electricity transmission system and 5,837.46 km of 220,138 and
60kV electricity transmission circuits supported by 10,908 overhead towers and 46 substations. We
own 30% of REP’s capital stock and, in turn, Transelca owns an additional 30%, whereby we hold
indirect control over REP. In 2008 we received no payment of dividends from REP, its results
amounted to Col$40,830 million, and its capital stock and reserves amounted to Col$53,134 million
5
and Col$10.627 million , respectively.
Interconexión Eléctrica ISA Peru S.A.
ISA Peru is a Peruvian company domiciled in the city of Lima. It was incorporated on February 16,
2001 and its primary activity is the electric power transmission, operation and maintenance of
transmission networks.
ISA Perú's transmission network consists of six substations (all of them partially attended), 262 km
of lines at 220kV, and 131 km of lines at 138 kV. Its transformation capacity is 235 MVA, and its
reactive compensation is 8 MVAr. Its infrastructure represents 3.55% of Peru's national
interconnected system. We own 28.07% of ISA Peru’s capital stock and Transelca owns 54.86%,
whereby we hold indirect control over ISA Peru. In 2008 we received dividends from ISA Peru
amounting to Col$2,089 million, which, divided by the book value of our share in ISA Peru equals
13.70%. In 2008 ISA Peru’s results were Col$8.108 million, and the amount of its capital stock and
6
reserves was the amount of Col$48.594 million and Col$3.011 million , respectively.
Consorcio Transmantaro S.A.
Transmantaro is a Peruvian company domiciled in the city of Lima. It was incorporated on January
1998 and until December 12, 2006 it was a subsidiary of Hydro-Quebec International, Inc. of
Canada. Since December 13, 2006, we directly hold 60% of Transmantaro’s capital stock. Its
primary activity consists of the transmission of electric power from generating companies and it
provides operation and maintenance services to diverse facilities.
Transmantaro has 3 substations and a microwave network and operates 1,227 km. of 220kV
electricity transmission lines that connect the Central-North subsystem, from C.H. Mantaro and the
Southern subsystem in the Socabaya substation in Arequipa, the two primary transmission
subsystems in Peru. In 2008 we received no payment of dividends from Transmantaro, its results
amounted to Col$21,863 million, and the amount of its capital stock and reserves was the amount
7
of Col$88,418 million and Col$9,698 million , respectively.
5
For convenience purposes, these figures were converted from US Dollars into Colombian pesos using the exchange rate in
force on 2,243.59 Colombian pesos per dollar.
6
For convenience purposes, these figures were converted from US Dollars into Colombian pesos using the exchange rate in
force on 2,243.59 Colombian pesos per dollar.
7
For convenience purposes, these figures were converted from US Dollars into Colombian pesos using the exchange rate in
force on 2,243.59 Colombian pesos per dollar.
80
Interconexión Eléctrica ISA Bolivia S.A.
ISA Bolivia is a Bolivian company domiciled in the city of Santa Cruz. It was incorporated in July 14,
2003, its primary activity consists of the electric power transmission and the construction, operation
and maintenance of electricity networks. ISA Bolivia is the second-largest electricity transmission
company in Bolivia accounting for 34.13% of the 220 kV and higher voltage transmission system.
ISA Bolivia owns 588 km of lines (Santivañez-Sucre, 246 km; Sucre-Punutuma, 177.5km; CarrascoUrubo, 164.5 km) and five associated substations. It provides electricity transmission at 230 kV,
integrated services of connection to the transmission system and electricity feasibility studies. We
hold directly 51.00% of ISA Bolivia’s capital stock and 48.99% and 0.01%, indirectly through
Transelca and Internexa, respectively. In 2008 ISA Bolivia reported profits for Col$25,246 million, its
8
capital stock was Col$59.510 million and Col$216 million and we did not receive dividends from
ISA Bolivia.
ISA Capital Do Brazil Ltda.
ISA Capital Do Brazil is a Brazilian company domiciled in the city of São Paulo. It was created in
April 28, 2006 as investment vehicle. Its corporate purposes comprises holding interest on the
capital stock of other companies or other businesses, as partner or shareholder, in Joint Venture,
member of consortium or any other form of business cooperation. On September 2006 it was
transformed into an open capital stock held company.
Our operations in Brazil are consolidated through ISA Capital, which holds 89.40% of CTEEP’s
voting shares and 37.50% of the total capital stock of CTEEP. We directly own 99.99% of ISA
Capital’s capital stock. In 2008 ISA Capital reported losses for the amount of Col$9,627 million and
9
its capital stock was Col$807.598 million .
Under the provisions of the Indenture regulating notes issued by ISA Capital on January 29, 2007,
ISA Capital may not distribute dividends to us. Consequently, while these notes are outstanding,
dividends paid by CTEEP to ISA Capital may not be distributed to us or to any of our subsidiaries.
Companhia de Transmissão de Energia Elétrica Paulista – CTEEP.
CTEEP, a Brazilian publicly-traded company, with domicile in the city of São Paulo is authorized to
operate as concessionaire of the electric power utility. Its main activities are the planning,
construction and operation of electric power transmission systems, as well as research and
development programs related with energy transportation and other activities correlated with
available technology. Its activities are ruled and supervised by the Agencia Nacional de Energía
Eléctrica - ANEEL.
CTEEP transmits approximately 30% of all electricity in Brazil and 60% of the electricity in Brazil's
southeastern region. CTEEP operates an open-access electricity transmission network that
comprises 18,687 Km of electricity transmission lines with a voltage capacity equal to or greater
than 69kV and 104 operated substations with a total of 516 transformers and an aggregate
transformation capacity of 43,148 MVA, which, as of September 30, 2009, accounted for
approximately 25% of the available transformation capacity in Brazil, according to data compiled by
the ONS. CTEEP's high voltage transmission network is part of the Brazilian Interconnected
System operated by the ONS. Through CTEEP, we operate 10% of the electricity networks
comprising the Brazilian Interconnected System.
8
For convenience purposes, these figures were converted from bolivares into Colombian pesos by using the December 31st,
2008 exchange rate of 317.34 Colombian pesos for one Bolivar.
For convenience purposes, these figures were converted from Brazilian Reais into Colombian pesos by using the December
31st, 2008 exchange rate of 961.68 Colombian pesos for one Reais.
9
81
We control CTEEP indirectly through our holding ISA Capital which holds 89.40% of CTEEP’s
voting shares and 37.50% of the total capital stock in CTEEP. In 2008 CTEEP’s results were
Col$795,372 million, and the amount of its capital stock and reserves amounted to Col$961,680
10
million and Col$2.983.737 million , respectively.
In 2009 CTEEP paid dividends to its shareholders as follows: R$228 million in January, R$61
million in July and R$103 million in October; besides, it paid for Juros on its own capital in 2009:
R$63 million in April, R$64 million in July and R$62 million in October.
Under the provisions of the Indenture regulating notes issued by ISA Capital on January 29, 2007,
ISA Capital may not distribute dividends to us. Consequently, while these notes are outstanding,
dividends paid by CTEEP to ISA Capital may not be distributed to us or to any of our subsidiaries.
In September 2007 CTEEP entered into a funding agreement with BNDES for the amount of
R$764.2 million, to finance the budget of new investments between years 2006 to 2008 in the
Transmission System. Likewise, the company signed in 2008 a second agreement for R$329 million
for enlargement plans between years 2008 to 2010.
CTEEP holds 99.99% interest on the capital stock of Interligação Elétrica Pinheiros S. A. - IE
Pinheiros and in Interligação Elétrica Serra Do Japi S.A., where it fully owns these companies. In
addition, CTEEP holds the following interests on companies having shared control:
Interligação Elétrica Norte e Nordeste S.A. –IENNE: Brazilian Company with domicile in the city of
São Paulo, incorporated on December 3, 2007 with the purpose of exploiting the concession of the
utility concerning electric power transmission, namely transmission lines Colinas (Tocantins) Riveiro Gonzalves (Piauí) and Riveiro Gonzalves – São João do Piauí (Piauí). CTEEP holds a
share interest of 25.00% on this company. The capital stock of IENNE is R$187.6 million, this
company has not entered into commercial operation and thus has no reserves and has paid no
dividends.
Interligação Elétrica de Minas Gerais S.A. – IEMG: Brazilian Company with domicile in the city of
São Paulo, incorporated on December 13, 2006 with the purpose of exploiting the concession of the
utility for transmission, rendered through the implementation, construction, operation and
maintenance of transmission facilities, including support and administrative services, supply of
equipment and reserve materials, programming, measuring and other supplementary services
required for electric power transmission; in particular the Neves 1 – Mesquita transmission line.
IEMG’s capital stock is R$70.25 million. In compliance with the shareholders agreement entered
into with CYMI Holding S.A, ISA assigned 40% of its interest to this company and the remaining
60% to CTEEP, ISA’S subsidiary company. The project started commercial operation on December
2008.
Interligação Elétrica Sul S.A. – IESUL: Brazilian Company with domicile in the city of São Paulo,
incorporated on July 23 2008 with the purpose of exploiting the concession of electric power
transmission, namely transmission lines Nova Santa Rita–Scharlau and Substation Scharlau,
transmission line Joinville Norte – Curitiba, Jorge Lacerda B – Siderópolis and Substation
Forquilhinha. CTEEP holds 50.10% of interest on this company. IESUL’s capital stock is R$6.8
million, this company has not started commercial operation and therefore has no reserves and has
paid no dividends.
Interligação Elétrica do Madeira S.A. – IEMADEIRA: Brazilian Company with domicile in the city of
São Paulo, incorporated on December 18 2008 with the purpose of executing projects for electric
power transmission collector line Porto Velho (Rondônia) - Araraquara 2 (São Paulo) awarded in
10
For convenience purposes, these figures were converted from Brazilian Reais into Colombian pesos by using the
December 31st, 2008 exchange rate of 961.68 Colombian pesos for one Reais.
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November 2008. CTEEP holds 51.00% interest on this company. IEMadeira’s capital stock is
R$71.5 million, this company has not started commercial operation and therefore has no reserves
and has paid no dividends
Interligação Elétrica Pinheiros S. A. - IE Pinheiros
IE Pinheiros is a Brazilian Company with domicile in the city of São Paulo. It was incorporated on
July 22, 2008 and its main activity is the exploitation of concessions for transmission, provided
through the implementation, construction, operation and maintenance of facilities for electric power
transmission, lines, substation, control centers and the relevant infrastructure; in particular,
transmission lines and substations of lots E,H and K of Public Bid N° 004 – 2008 of ANEEL,
transmission line Interlagos-Piratininga II, substations Piratininga II, Mirassol II, Getulina, Araras
and Atibada II. We indirectly hold 99.99% through CTEEP. Its capital stock is R$86.2 million. This
company has not started commercial operation and therefore has no reserves and has paid no
dividends
Interligação Eletrica Serra Do Japi S.A.
Serra Do Japi is a Brazilian Company with domicile in the city of São Paulo. It was incorporated on
June 1st, 2009, its main activity is the exploitation of concession for transmission, provided through
the implementation, construction, operation and maintenance of facilities for electric power
transmission, lines, substation, control centers and the relevant infrastructure; in particular, the
construction of substations Jandira and Salto. We hold indirectly hold 99.99% through CTEEP. Its
capital stock is R$151,000. This company has not started commercial operation and therefore has
no reserves and has paid no dividends.
Internexa S.A. E.S.P.
Internexa is a public utility company, domiciled in the city of Medellín, incorporated on January 4,
2000, which purpose is the organization, management, trading and provision of telecommunication
services or activities. At present INTERNEXA is engaged in the development and promotion of the
national and international telecommunication transport business. We hold directly 99.27% of
Internexa’s capital stock and, in 2008 we received dividends on such shareholding amounting to
Col$18,122 million, which, divided by the book value of our share in Internexa equals 12.74%. In
2008 Internexa’s results were Col$5,583 million and its capital stock and reserves amounted to
Col$34.553 million and Col$4.828 million, respectively.
In November 2007, the merger of INTERNEXA and Flycom Comunicaciones S.A. E.S.P was
formalized, which operation was performed under the business strategy of the economic group to
reach leadership and acknowledgement as the largest energy and data carrier in Latin America.
Internexa S.A. E.S.P. holds a 99.99% of interest on Internexa S.A.’s capital stock and 99.98% in
Internexa Participações S.A., it has full control on these companies. In addition, Internexa S.A.
E.S.P. holds a 50.00% interest on Transnexa S.A. E.M.A.’s capital stock, on which company it
holds a shared control. Transnexa is an Ecuadorian company domicile in the city of Quito. It was
incorporated on November 29, 2002 and its corporate purpose is the organization, management,
trading and rendering of telecommunication services or activities, such as carrier, telematic, added
value services, supplementary activities and in general any telecommunication service or activity.
Internexa S.A.
Internexa S.A. is a Peruvian company with domicile in the city of Lima. It was incorporated on
October 12, 2006, and its corporate purpose is the organization, management and trading of
telecommunication services, such as: carrier, telematic, added value services. This company built
83
an optic fiber network to join the southern portion of Ecuador with Lima and improve the availability
and quality of services at such country. This company began rendering services on the first quarter
2008. We indirectly hold 99.99% through affiliate INTERNEXA S.A. E.S.P. In 2008 we received no
payment of dividends from Internexa S.A., its results were Col$(5.583)million, and the amount of its
capital stock and reserves was the amount of Col$34.553 million and Col$4.828 million,
respectively.
Internexa Participações S.A.
Internexa Participações is a Brazilian Company with domicile in the city of São Paulo. It was
incorporated in July 21 2008 and its main activity is the implementation and management of
investments on telecommunications and holding interests on other companies. We indirectly hold
99.979% of the capital stock through Internexa S.A. E.S.P. and 0.002% through Internexa S.A. Its
capital stock is R$517,310. This company has not started commercial operation and therefore has
no reserves and has paid no dividends to us.
XM Compañía de Expertos en Mercados S.A. E.S.P.
XM is a Colombian combined-capital public utility company, domiciled in the city of Medellín. It was
incorporated on September 1, 2005 and began operations on October 1, 2005. Its purpose is the
development of activities related with the planning and coordination of resources from the National
Interconnected System and the Management of the Commercial Trading System for electric power
at the wholesale market, as well as the settlement and management of charges for the use of the
National Interconnected System network and the development of connected activities and added
value to its corporate purpose. We directly hold 99.73% of XM’s capital stock. We received as
dividends for such interest concerning year 2008, the amount of Col$753 million, which, divided by
the book value of our share in XM is equal to 3.19%. In 2008, its results were Col$1,909 million,
and the amount of its capital stock and reserves was the amount of Col$14,829 million and
Col$6,938 million, respectively.
XM holds a 5.85% interest on the capital stock of the Camara de Riesgo Central de Contraparte de
Colombia S.A. -CRCC-, which purpose is managing the Settlement and Clearance System for
Operations, that is the set of activities, agreements, counterparties, agents, third parties, accounts,
standards, procedures, mechanisms and technological components for acceptance, settlement and
clearance of operations on activities, either acting or not as counterparty.
Proyectos de Infraestructura del Peru S.A.C. – PDI
PDI is a Peruvian company with domicile in the city of Lima. It was incorporated on November 15,
2007 and it is engaged in activities for the construction of transmission lines, electric projects and in
general any activity from the construction sector. It began operations in March 2008 and we directly
hold 99.97% and 0.03% indirectly through Transelca S.A. In 2008 we received no payment of
dividends from PDI, Its results were Col$1.770 million, and the amount of its capital stock was the
11
amount of Col$213 million .
Infra-Estruturas Do Brazil Ltda.
Infra-Estruturas is a Brazilian Company with domicile in the city of São Paulo. It was incorporated
on December 14, 2006 and its main activity is the rendering of civil engineering services and
holding interests on other companies. We directly hold 99.90% of the capital stock of Infra-
11
For convenience purposes, these figures were converted from nuevos soles by using the December 31st, 2008 exchange
rate of 711.24 Colombian pesos for one sol.
84
Estruturas. Its capital stock is R$1,000. This company has not started commercial operation and
therefore has no reserves and has paid no dividends to us.
In January 2007 registration of the control situation in connection with these companies was
recorded before the Chamber of Commerce of Medellín.
Other Investments
Interconexión Eléctrica Colombia – Panamá S.A. -ICP
ICP is a Panamanian company with domicile in the city of Panamá. It was incorporated on May 14
2007, its corporate purpose is the development of activities for electric power transmission,
operation and maintenance of electricity transmission networks and lines, infrastructures for
transformation of related voltage, telecommunications, data transmission, rendering of technical
services and consulting on such areas and on general engineering. We hold 50.00% of the capital
stock of this company, with shared control. The company has a branch office in Colombia. This
company has not started commercial operation and therefore has no reserves and has paid no
dividends to us.
Empresa Propietaria de la Red -EPR
EPR is a Panamanian company with domicile en the city of San José de Costa de Rica. It was
incorporated in 1998 and the company it is ruled by the private law, backed by the “Master Treaty
for Central American Electric Market” and its protocol, whereby each government grants the
relevant permit, authorization or concession for the construction and exploitation of the first electric
regional interconnection system that will join Honduras, Guatemala, El Salvador, Nicaragua, Costa
Rica and Panamá. We hold 5,625 common shares equal to an interest of 11.11% on such
company.
ISA Sucursal Peru
On September 4, 2002, ISA created a branch office in Peru in order to perform the contract for
operation and maintenance for 220-Kv transmission lines Oroya-Carhuamayo-Paragsha-Vizcarra
and 138kV Aguaytía-Pucallpa, entered into between ISA and ISA Peru S.A., in accordance with the
requirements of the Concession Contract signed with the Government of Peru. The term of the
branch is indefinite, it has no corporate capacity and does not develop activities independent from
ISA. It is an extension of the company in Peru.
ISA Sucursal Argentina
On January 24 2007, took place the establishment of a branch of ISA, in Argentina, to thus
commence penetration of the country’s electricity market. Formalities were completed before the
General Inspection of Justice, an official body responsible for the Public Registry of Commerce. The
branch was created in view of the requirement to set a domicile in Argentina, when the company is
willing to undertake entrepreneurial activities.
K.
LABOR RELATIONS
As of September 30 2009, we had 636 workers, 438 of which were professionals.
Labor relations are ruled by individual employment agreements, collective employment agreements,
the internal working rules, the Hygiene and Safety rules and the administrative guidelines and
instructions.
85
From the salary point of view, we have the Comprehensive Salary Regime for the directive level
and some professionals and the Fixed Common Regime for workers beneficiary of the collective
employment agreements.
Workers from the Fixed Common Regime may choose to become beneficiaries under the Collective
Bargaining Pact (Pacto Colectivo) or the Collective Bargaining Agreement (Convención Colectiva).
Workers benefited by the Collective Bargaining Pact are represented by the Performance
Management for the Collective Bargaining Pact.
Workers benefited by the Collective Bargaining Agreement are affiliated to ISA’S Workers Union SINTRAISA- and are represented by its Board of Directors.
As of September 30 there was a Comprehensive Salary Regime including 84 workers
encompassing executive officers and professionals. In the Fixed Common Regime there were 552
workers, 88.6% of which are beneficiaries of the Collective Bargaining Pact, 489 workers and
11.4% are beneficiaries of the Collective Bargaining Agreement, 63 workers.
The Collective Bargaining Pact is effective until December 31st, 2010 and the Collective Bargaining
st
Agreement until March 31 , 2011.
The company has 5 kinds of working hours: 1) from Monday to Friday from 7.45 to 16.45, with a 45minute lunch recess; 2 and 3), they consist in shifts and it is applicable to Substation Assistants
located at different substations of the Company throughout the country; 4) is non-interrupted
working time by personnel working at the Supervision and Maneuvers Center and it is made by
shifts and 5) is non-interrupted working time by personnel working at the Safety Control Center and
it is made by shifts.
As ISA provides an essential utility, under Colombian law, our employees are not permitted to strike
and management believes that relations with employees are generally good. In the past three years
we have not sustained any partial or total disruption of our activities resulting from labor disputes.
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CHAPTER III - ASPECTS CONCERNING OUR PRODUCTION ACTIVITY AND OPERATING
INCOME
A.
RELIANCE ON CORE SUPPLIERS AND CUSTOMERS, IN EXCESS OF 20%
As of September 30, 2009 we do not depend on any of our suppliers or our customers, at a level
exceeding 20%.
B.
OUR CORE PRODUCTIVE AND SALES ACTIVITIES
1.
ISA economic group’s Businesses
ISA is a Latin American business group present in Colombia, Peru, Bolivia, Brazil, and Central
America, which through its affiliates and subsidiaries has ventured into the design, construction,
management and operation of electricity linear infrastructure systems and telecommunications
connectivity. In addition, it expects on the medium term to develop business related with gas
transportation and roads.
Electric Power Transportation business consists of four companies: ISA and TRANSELCA, in
Colombia; ISA Peru, Red de Energía del Peru -REP-, Consorcio TransMantaro, in Peru; ISA
Bolivia, in Bolivia and in Brazil there are subsidiaries Companhia de Transmissão de Energia
Elétrica Paulista -CTEEP- (acquired through its investment vehicle, ISA Capital do Brazil), and
Interligação Elétrica Pinheiros and Serra do Japi.
At this latter country the company holds investments on companies Interligação Elétrica de Minas
Gerais –IEMG–, Interligação Elétrica Norte e Nordeste –IENNE–, Interligação Elétrica Sul –IESUL–
and Interligação Elétrica do Madeira –IEMadeira–.
At the Market Operation and Management business in Colombia, we have affiliate XM, Compañía
de Expertos en Mercados.
At the Telecommunication Carriage business, it is present in Colombia with INTERNEXA, affiliate
holding investments on TRANSNEXA (Ecuador), INTERNEXA (Peru) and INTERNEXA
PARTICIPAÇÕES (Brazil).
At the Infrastructure Project Construction Business, it is present in Perú with affiliate Proyectos de
Infraestructura del Peru -PDI-.
87
ISA’S PRESENCE IN LATIN-AMERICA
a.
Electric Power Transportation Business
ISA economic group holds a high-voltage transmission network of 38,444-km circuit, deployed in
Colombia, Peru, Bolivia and Brazil, and international interconnections between Venezuela and
Colombia, Colombia and Ecuador and Ecuador and Peru.
In Central America ISA holds a share interest of 11.11% on EPR (Empresa Propietaria de la RED)
which builds the electric interconnection system for Central American countries –SIEPAC-.
Likewise, ISA and Empresa de Transmisión Electrica S.A.-ETESA- are conducting technical and
environmental viability surveys for the development of electric interconnection between Colombia
and Panamá.
Its companies enjoy an outstanding participation by revenues in the electric power transportation
market at each country. In Colombia, this figure amounts to 81%, 77% in Peru, 35% in Bolivia and
17% in Brazil.
The business group is consolidated as one of the largest international electric power carriers in
Latin America, which is reflected in the infrastructure held under operation:
88
Infrastructure under Operation
Country
Colombia
Peru
Bolivia
Brazil
% Market
81%
77%
35%
17%
ISA-B
CTEEP IEMG
Company
Transformation
(MVA)
km of circuit
under operation
b.
TOTAL
ISA
Transelca
REP
ISA
CTM
Peru
12.672
2.817
1.878
235
300
370
43.148
0
61.420
10.000
1.532
5.837
393
1.227
588
18.687
173
38.437
Telecommunication Carriage Business
ISA economic group, through its affiliate INTERNEXA, is nowadays an important player in the
Andean Region Telecommunication Carriage business. INTERNEXA is the only telecommunication
connectivity infrastructure company exclusively engaged in the carrier of carrier business and the
electricity sector, by carrying telecommunication signals through national and international networks
that connect two or more points, thanks to the optic fiber support and the satellite and microwave
transmission.
It currently holds a 10,378-km. optic fiber network crossing 54 cities of Colombia, Venezuela,
Ecuador and Peru. This network, supported by over 100 regional operators, is connected to
submarine cables in Venezuela, Colombia and Peru; and it holds an Internet-access platform with
direct connection to primary suppliers in the US. It is also the first telecommunications company in
Colombia to obtain the ISO 9001:2000 international certification for its carrier service, with excellent
quality and the highest reliability and availability levels.
Telecommunications Infrastructure per country
Country
Colombia: INTERNEXA
Venezuela: INTERNEXA associated with CANTV
Ecuador: TRANSNEXA
Peru: INTERNEXA
Total
c.
Optic fiber under
operation (km)
6.182
1.977
926
1.293
10.378
Market Management and Operation Business
XM, Compañía de Expertos en Mercados, affiliate of ISA economic group, operates the National
Interconnected System -SIN- and manages in Colombia the Wholesale Energy Market -MEM-. In
addition, it manages the International Electricity Transactions -TIE- with Ecuador.
Under this business, it is worth mentioning two firm energy auctions made by XM, to which reliability
charges were assigned to the plants that are to provide energy required by Colombia between
89
December 2012 and November 2019. As a result of this process, nine generation projects will be
built and entered into operation that will increase the installed capacity in 3,420 MW: Amoyá,
Gecelca 3, Termocol, el Quimbo, Cucuana, Porce IV, Miel II, Pescadero - Ituango and Sogamoso.
This business also entails interesting challenges; for such reason XM signed a memorandum of
understanding with the Colombian Stock Exchange Bolsa de Valores de Colombia -BVC- to
analyze and search options leading to have in place a dealing system for standardized derivatives
with underlying on electric power, gas, fuel and other energy products.
Besides, it offers services for the operation of power systems and real-time systems, solutions for
electricity markets and associated products; it also has a portfolio of specialized services on
consulting and training for international and national electricity industry companies. It has provided
services in Bolivia, Brazil, Panamá, Chile, Costa Rica, Ecuador, El Salvador, Guatemala,
Dominican Republic and Peru.
To efficiently provide its services and reach the leadership to boost the growth of the Colombian
energy market, XM supports the integral development of human talent, the promotion of knowledge
and effective application of technology.
d.
Infrastructure Project Construction Business
ISA, through its Infrastructure Project Construction business, has developed initiatives at the
Andean Region, represented in the construction of electricity transportation networks and the
assembly of optic fiber cables.
This business encompasses an ample portfolio of services offered in the national and international
market, including the integral development of projects (engineering, acquisition, construction,
environmental, social, property and regulatory management), Engineering Procurement and
Construction –EPC- of projects (engineering, procurement and construction), project management
(engineering, procurement and construction management), project engineering (applied
engineering services), environmental and social management, property management (property and
easement management services) and supply management (negotiation, contracting and
procurement of goods and services).
To introduce into the Peruvian market for this activity, it created affiliate Proyectos de
Infraestructura del Peru –PDI- domiciled on Lima. Peru is a country showing excellent growth
indicators and offers diverse opportunities for the construction of important projects. The affiliate is
carrying out the execution of 300 km of transmission lines in this country, represented in the
connection of central Platanal and the design and construction of the project comprising the 220-kV
Chilca - La Planicie – Zapallal line, and 500-kV Chilca – Zapallal line.
Proyectos de Infraestructura del Peru - PDI, was incorporated on November 15, 2007 and began
operations on March 2008 and we directly hold 99.97% and indirectly 0.03% through Transelca
S.A.
2.
Revenues from the Group’s Businesses
a.
i.
Revenues from the Electric Power Transportation Business
Operations in Colombia
•
Revenues from Electricity Transmission
90
We participate in the Colombian electricity transmission sector directly and through our subsidiary
Transelca, the second-largest electricity transmission company in Colombia based on revenues.
Our Regulated Revenues arise from the usage fees paid by traders for electricity delivered to them
over the STN. At the end of each month, XM establishes the total amount of fees for electricity
transmission services to be paid by electricity traders. This amount, after collected, is then
reallocated among the electricity transmission companies that own STN networks in proportion to
their revenues, less the amount of any penalties for unavailability of transmission in excess of
certain prescribed limits.
Ending on December 2007, December 2008 and August 2009, ISA and Transelca had a share of
79.30%, 81.09% and 81.09%, respectively on all revenues collected from the STN.
ISA owns 130 transmission circuits totaling 10,000 Km of which 2,399 km correspond to electricity
transmission circuits of more than 230 kV; 7,476 correspond to electricity transmission circuits
between 220 kV and 230 kV and 124 km corresponding to electric transmission circuits of less than
220 kV. In turn, Transelca owns 1,539 km of circuit.
As of September 30, 2009, ISA had12,672 MVA of transformation capacity to 230 kV (including
reserve capacity) and a total of 4,177 MVAR of compensation (3,185 MVAR of inductive
compensation and 992 MVAR of capacitative compensation). The average availability of our
transmission network for year 2008, excluding unavailability resulting from terrorist attacks, was
99.82%. In turn, Transelca relies on a transformation capacity of 2,817 MVA and 79.5 MVAR of
inductive compensation.
•
Revenues from Connection Services
Our connection services business consists of providing generators, network operators (regional
transmission systems) and Unregulated Customers with a physical connection to the STN and
assigning to the connection point sufficient transmission capacity to meet such customer's
requirements.
In accordance with the regulation, the assets of the Connection to the STN are such assets
required by a generator, Network Operator, Final User or various of the above to physically connect
to the National Transmission System.
Connection services generally consist in the first instance of planning and constructing the required
connection assets. Thereafter, the service generally consists of the management, maintenance and
operation of the connection assets. However, ISA offers to its customers the option of selecting the
service required, where they can exclusively choose the planning and construction of the
connection infrastructure and then to contract with a separate entity to maintain and operate the
connection.
ii.
Operations in Brazil
Our operations in Brazil are consolidated through ISA Capital, a holding company we formed in
2006 to participate in the Privatization process of CTEEP. We conduct our operations in Brazil
through our related company CTEEP, a 37.50%-owned subsidiary of ISA Capital.
Through CTEEP, we operate 10% of the electricity networks comprising the BSIN, based on the
electricity transmission lines kilometers. CTEEP, a Brazilian publicly-traded company, is the largest
91
electricity transmission company in the State of São Paulo based on total assets and revenues, and
the second-largest electricity transmission company in Brazil based on revenues, according to data
compiled by ANEEL in 2008. CTEEP transmits approximately 30.00% of all electricity in Brazil and
60.00% of the electricity in Brazil's southeastern region. CTEEP operates an open-access electricity
transmission network that comprises 18,687 Km of electricity transmission circuits with a voltage
capacity equal to or greater than 69kV and 104 operated substations with a total of 516
transformers and an aggregate transformation capacity of 43,148 MVA, which, as of September 30,
2009, accounted for approximately 25.00% of the available transformation capacity in Brazil,
according to data compiled by the ONS. CTEEP's high voltage transmission network is part of the
BSIN operated by the ONS.
CTEEP has two long-term concessions for provision of electricity transmission services in the State
of São Paulo.
iii.
Operations in Peru
Our operations in Peru are consolidated through us and conducted through ISA Perú, REP and
Consorcio Transmantaro, with Grupo ISA has a market share of 77% in the country, measured by
revenues.
•
Red de Energía del Peru – REP
We incorporated REP after we were awarded, through an international public bidding, a concession
to own, operate and maintain, for a period of 30 years, the electric transmission assets of Etecen
and Etesur, two Peruvian state-owned electricity transmission companies.
REP started its operations on September 2002, when we assigned to it our rights under the
concession contract we had entered into with the Peruvian government.
REP is currently the main electricity transmission company in Peru accounting for 52.44% of the
assets comprising the national electricity transmission system and 5,837 km of electricity
transmission circuits of 220, 138 and 60kV and 46 substations. In 2009, REP's total transformation
capacity was 1,878 MVA.
REP's concession contract provides REP with regulated revenues secured by the original
concession and future enlargements agreed with the MINEM, to allow it to recover the investment
made on transmission assets throughout the concession period.
In addition to electricity transmission services, REP provides specialized technical services and
ancillary services such as the operation and maintenance of third-party-owned transmission
facilities to major mining and other electricity companies in Peru.
•
ISA Peru
ISA Perú was incorporated in February 2001 to own, operate and transfer a concession for the
construction and operation of the Pachachaca-Vizcarra line and the Aguaytia-Pucallpa line. We
were awarded this concession through an international bidding process conducted by the Peruvian
government. Both projects awarded were placed in operation on August and September 2002.
The ISA Perú concession contract establishes that the regulated revenues of ISA Perú should allow
it to recover the investment in the assets over a period of 32 years at a return rate of 12.00% for the
first 10 years of Concession over the replacement value of the concession assets, plus 3.00% to
cover operation and maintenance expenses. Under the terms of the concession contract, we are
92
required to remain as the operator of the concession for a period of at least 10 years during which
our equity participation in ISA Perú cannot be less than 25.00%.
ISA Perú's transmission network consists of six substations, 262 km of lines at 220kV, and 131 km
of transmission lines at 138 kV. Its transformation capacity is 235 MVA, and its reactive
compensation is 8 MVAr. Its infrastructure represents 3.55% of Peru's national interconnected
system.
•
Transmantaro
We acquired 60.00% of the stock of Transmantaro in December 2006 from Hydro Quebec and
Fonds de Travailleurs du Quebec in a private auction process conducted by Hydro Quebec in
May 2006 and from Etecen, a company owned by the Peruvian government, through a public
auction process. We paid US$ 70.8 million for our 60% equity interest in Transmantaro.
In 1997, the Peruvian government established an international public bidding for the concession of
the Mantaro-Socabaya line with the scope to join the Central-North Interconnected System SICN
and the Southern Interconnected System -SISUR systems and to build the National Interconnected
Electricity System –SEIN-. In 1998, Transmantaro executed a build, own, operate and transfer
(BOOT) contract for the construction and operation of the Mantaro-Socabaya transmission line and
a concession to render transmission services in Peru for a period of 33 years.
Transmantaro's concession was awarded in 1998 through an international bidding process
conducted by the government of Peru and will expire in February 2031. In accordance with the
terms of the concession contract, Transmantaro is entitled to regulated revenues that should allow it
to recover the investment in the transmission assets over a period of 30 years at a return rate of
12.00% of the replacement value of the concession assets plus 3.00% to cover operation and
maintenance expenses.
Transmantaro owns 3 substations and operates 1,227 km of 220kV transmission circuits and has
300 MVA of transformation capacity.
i.
Operations in Bolivia
We operate in Bolivia through our subsidiary ISA Bolivia S.A., formed in 2003 after we were
awarded by the Bolivian government with an International Public Bidding Process for the
construction, operation, maintenance and management of Santiváñez – Sucre, Sucre-Punutuma,
and Carrasco-Urubo lines.
By means of Resolution 114/2003 of July 31, 2003, the SDE granted the corresponding license in
favor of ISA Bolivia, thereby acquiring the right to enter into the relevant License Contract. On the
same date, ISA Bolivia entered into the Bolivian License Contract with the SDE, on behalf of the
Bolivian Government, which contract sets the rights and obligations of ISA Bolivia to act at the
electricity industry in the transmission activity. The Contract came into force on August 29, 2003
and expires in 2035, 30 years after the commencement of the commercial operation of the lines.
Thereafter, by Resolution 333/2007 of November 7 2007, the SDE granted in favor of ISA Bolivia
the license for the project of Substation Arboleda 230/115kV. On February 14, 2008 ISA Bolivia
entered into with SDE the License transmission Contract for the Arboleda 230/115kV Substation
project for a term of 30 years and 7 months computed after the notice date of Resolution 333/2007,
that is, as from November 8, 2007. On July 10, 2008, the CNDC issued commercial declaration of
the Arboleda Substation.
st
On July 31 , 2009 the AE, formerly SDE, entered into with ISA Bolivia the addendum to License
Contract for acting at the Electricity Industry on Transmission Activity, hereinafter the Bolivian
93
License Contract, which amends the Transmission License Contract for lines Santiváñez-Sucre;
Sucre-Punutuma and Carrasco-Urubó, by establishing the division of Carrasco-Urubó line in two
sections: Carrasco – Arboleda and Arboleda – Urubó and the allocation of costs associated to each
st
section, pursuant to Resolution SSDE N° 111/2009 of April 1 , 2009.
The Bolivian License Contract is subject to regulatory powers by the AE, its duration is limited TO
30 years computed from the commercial qualification of the lines; however, at ISA Bolivia’s request,
parties may agree on the extension of the term of the License for a maximum of forty (40) years as
provided in Article 7 of Supreme Decree N° 26703 of July 10 2002. Upon expiration or termination
of the License Contract, ISA Bolivia must transfer free of charge all assets affected by the License.
In accordance with the terms of the License Contract, ISA Bolivia is obliged to maintain certain
standards in connection with its electricity transmission assets. The AE may impose penalties and
restrictions to ISA Bolivia in case of default or breach of its legal or contractual obligations relating
those standards and, further to such penalties the AE may assume control on the operation of ISA
Bolivia or takeover its assets and operations to ensure continuity in the provision of electricity
transmission services, the adequate operation of our electricity transmission facilities and the
compliance with all applicable laws and regulations.
In 2008, ISA Bolivia’s Transmission System grew with the incorporation of Arboleda 230/115 kV 100 MVA substation, which project improved the reliability and quality of the energy supply to the
prosperous industrial zone located at the north of Santa Cruz de la Sierra. Its commercial
declaration made on July 10, 2008 reconfigured the transmission system with the creation of new
lines Carrasco – Arboleda and Arboleda – Urubó.
ISA Bolivia is the second-largest electricity transmission company in Bolivia accounting for 34.13%
of the 230 kV and higher voltage transmission system. ISA Bolivia owns 588 km of circuits and six
associated substations with 370-MVA transformation capacity.
3.
Revenues from the Telecommunication Carrier Business
ISA economic group, through its affiliate INTERNEXA, is nowadays an important player in the
Andean Region Telecommunication Carriage business. INTERNEXA is the only telecommunication
connectivity infrastructure company exclusively engaged in the carrier of carrier business
In November 2007, the merger of INTERNEXA and Flycom Comunicaciones S.A. E.S.P was
formalized, which operation was performed under the business strategy of the economic group to
reach leadership and acknowledgement as the largest energy and data carrier in Latin America.
Internexa is the shareholder of 50% on Transnexa S.A. in Ecuador, an operating telecommunication
company since 2002 with a 910-Km network for Pasto-Quito-Tumbes, providing optic fiber and
access to international optic telecommunications systems to Ecuador’s primary telecommunication
operators.
Likewise, Internexa is the majority shareholder of Internexa S.A. in Peru with 99.99%, operational
company since March 2008 owner of a 1,290-Km network from Lima to Tumbes, which provides
national and international signals connecting Peru with other region countries.
Internexa Participaçoes in Brazil with 99.98%, its main activity is the implementation and
management of telecommunication-related investments and participating on the capital of other
companies; this company has not yet started commercial operation.
4.
Revenues from the Operation and Management Business
94
a.
Revenues from Electricity Dispatch Services
The CND was originally created pursuant to Laws 142 and 143 as one of our divisions that would
be responsible, among other things, for the dispatch of electricity in Colombia and coordinating
network maintenance. ISA group through its affiliate XM, coordinates the dispatch of electricity and
it is responsible for monitoring the projected and real demand for electricity in Colombia and
identifying any risks which could prevent energy demand from being met in a reliable manner. XM
also coordinates network maintenance in order to prevent unnecessary impediments to dispatch.
In 2008, XM received revenues for Col$32,382 million regard electricity dispatch.
XM supervises and coordinates the operation of 18 hydroelectric and 31 thermal electricity
generating plants by instructing and coordinating each generator's hourly output and reporting
operating information to the participants. In addition, XM coordinates the maintenance and
emergency repairs of generation and transmission equipment and controls the frequency and
voltage of the SIN. As of December 31, 2008, XM's coverage included 24,114 km of electricity
transmission lines from 110 kV to 500 kV and 31,951 MVA of transformation capacity, excluding
transformers of the electricity generation units.
b.
Revenues from the Energy Exchange Payment and Settlement System
XM operates the payment and settlement system for the Energy Exchange. This consists of
collecting, billing and distributing among the market participants the revenues obtained for the use
of the STN and for the spot transactions entered into on the Energy Exchange.
XM, as Manager of the accounts for the Use of the National Interconnected System and the
moneys derived from the billing of the Energy Exchange Transactions, and in compliance with the
standing regulations, it administered for year 2008 the amount of Col$1,304,213 million for Energy
Exchange transactions, Col$1.133.209 million for National Transmission System usage fees,
Col$749.955 million for Regional Transmission System usage fees and Col$193.420 million for the
FAER, FAZNI, FOES and PRONE Funds.
Besides the national currency managed as Domestic Transactions, XM in compliance with the
International Electricity Transactions –TIE- in 2008 invoiced US$34,7 million for exports to Ecuador
and managed US$2,3 million for imports from Ecuador. It is worth noting that XM has entered into
hedge agreements to cover the exchange risk on these dollars transacted by XM. The net value of
this operation shows a net result from the beginning of the TIES until December 31st, 2008 for
Col$6,964.4 million, which value in case no financial coverage is not made, will involve shorter
revenues for the market.
5.
Regulatory Framework for Electric Power Transportation Business
a.
Colombia
i.
Overview
The Colombian electricity sector comprises 61 electricity generation companies, 11 national
transmission companies, of which only three are exclusively engaged in the electricity transmission
business (including us and our subsidiary Transelca), 57 local and regional distribution and
transmission companies, and 117 traders (which include all 57 local and regional distribution and
transmission companies, as well as many of the generation companies). Generation companies and
distributors also act as electricity traders; however, generators may not conduct electricity
distribution activities and vice versa. Except for certain electricity generators that were vertically-
95
integrated prior to 1994, electricity transmission companies may not conduct activities relating
electricity generation, distribution or sale. In our capacity as an electricity transmission company in
Colombia, we are not allowed to participate in electricity generation, sale and distribution.
Almost all the electricity used in Colombia is generated domestically; however, Colombia's national
transmission network is interconnected at three points to the Venezuelan grid and at two points to
the Ecuadorian grid. In 2008, 0.070% of Colombia's electricity consumption was provided through
these interconnections. Substantially, all electricity consumed in Colombia is initially purchased at
unregulated prices by electricity traders, which then resell the electricity to traders to free-negotiated
prices; to Non-regulated Users at free-negotiated prices; or to end-users at regulated prices.
Generally, electricity is delivered to end-users through the local distribution companies' networks,
although some large end-users have direct connections to regional transmission networks or the
national transmission network operated by us.
ii.
Functional Separation of the Electricity Sector.
Prior to the passage of Law 143, the Colombian electricity sector was extensively vertically
integrated. Under Law 143, and mostly based on creating an efficient market, the generation,
trading, transmission and distribution of electricity has been separated and is subject to distinct
regulatory regimes. Most companies which were vertically integrated at the time Law 143 became
effective may continue to engage in various sector activities but must maintain separate accounting
records for each business activity. We, however, as the dominant electricity transmission company
in Colombia, were prohibited from participating in the generation, trading or distribution of electricity
and were required to divest our electricity generation activities.
Companies that did not engage in both generation and distribution at the time the electricity sector
was restructured are currently prohibited from engaging in both activities simultaneously. In
addition, a generator may not own more than 25% of the total installed generating capacity in
Colombia. Individual distributors or traders may not account for over 25.00% of the sector's sales.
In principle, any company may enter the electricity transmission business. However, electricity
transmission companies cannot trade electricity, decide on the level of investments that are
necessary to expand the electricity transmission network or establish rights about the utilization of
the electricity transmission network. Transmission companies may neither construct new
transmission lines, unless in compliance with the procedures set forth in the regulation (see
“Electricity Transmission – Expansion of the STN.”
iii.
The Electricity Market.
Colombian law provides for open access to the Colombian National Interconnected System and
assures to any agent the right to connect its assets and network to and use the SIN, through the
payment of connection and usage charges. Open access to the Colombian National Interconnected
System is a means of ensuring competitiveness in the wholesale electricity market.
Substantially all the electricity generated in Colombia is initially purchased on a wholesale basis
through the MEM. These initial purchases, as well as any subsequent sales among electricity
traders to Unregulated Customers, are made at unregulated, market-driven prices. Purchases on
the MEM are made on a spot basis (immediate availability) through the Energy Exchange, even
though the actual cost to the purchaser of most such purchases is controlled through long-term
hedging contracts entered into among electricity traders and generators. Sales by electricity traders
to most end-users are made through local distributors at prices set by CREG.
Unregulated Customers which peak-demand is beyond 0.10 MW, or which monthly consumption
exceeds 55MWh, may purchase electricity sold at market-driven prices.
96
Access to the Energy Exchange is provided to electricity generators and traders, through the
facilities of XM. XM performs functions regarding the planning, supervision and control of the
operation of the resources of the SIN, and the administration of the SIC.
In order to have access to the MEM and execute commercial transactions in the Energy Exchange,
market participants must enter into a contract with XM, as administrator of the SIC and settler for
the charges for the use of the SIN. The contracts through which such transactions are entered into
have the features of powers of attorney, hereinafter referred to as the Mandates. Pursuant to these
Mandates, market participants authorize XM to represent such participants to enter into transactions
in the Energy Exchange and allow XM to collect and distribute revenues received from market
participants in consideration for the use of the SIN and for the spot transactions entered into on the
Energy Exchange. Such Mandates include:
•
Transmission Mandates: These are agreements between XM, as administrator of the SIC
and settler for the charges for using the SIN, and electricity transmission companies
pursuant to which XM is authorized to perform billing, collection, payment and settlement of
charges for the use of the transmission assets of the electricity transmission companies;
•
Distributor Mandates: These are agreements between XM, as administrator of the SIC and
settler for the charges for the use of the SIN, and electricity distribution companies pursuant
to which XM is authorized to perform billing, collection, payment and settlement of charges
for the use of the distribution lines of the electricity distribution companies;
•
Generation Mandates: These are agreements between XM, as administrator of the SIC and
settler for the charges for the use of the SIN, and electricity generation companies pursuant
to which XM agrees to carry out the clearing and settlement of electricity purchases and the
billing and collection of amounts due by purchasers to electricity generators for transactions
effected in the Energy Exchange; and
•
Trading Mandates: These are agreements between XM, as administrator of the SIC and
settler for the charges for the use of the SIN, and electricity traders pursuant to which XM
agrees to carry out the clearing and settlement of electricity purchases and the billing and
collection of amounts due for transactions executed by electricity traders in the spot market,
and the billing and collection of the charges for the use of the SIN.
Pursuant to the authority granted under the Mandates, XM, as the SIC administrator, records all the
hedging contracts entered into by electricity generators and traders, analyzes dispatch on an hourly
basis and calculates the amounts owed to or by generators and traders under the contracts and for
energy exchange spot transactions. XM only bills and collects the amounts owed with respect of
transactions executed on the Energy Exchange. XM nets out the amounts owed by electricity
generators and traders participating in transactions executed on the Energy Exchange on an hourly,
daily and monthly basis and bills the generators and traders monthly.
Unlike other MEM market participants, electricity transmission companies do not enter into any
agreements with other market participants – other than Connection Contracts, as defined herein
below. The only agreements entered into by electricity transmission companies are the Mandates
granted to XM, which govern the terms on which XM performs billing, collection, payment and
settlement services on behalf of electricity transmission companies for the use of their transmission
assets.
Colombian electricity transmission companies are remunerated based on the regulated revenues
calculated with the methodology set by CREG. Regulated revenues compensate electricity
transmission companies for making their electricity transmission assets available to users of the
SIN. Regulated revenues relating electricity transmission rates are independent from the volume of
electricity transmitted through assets from the transmission companies.
97
Regulated revenues are paid monthly by traders and received by transmission companies through
settlement credits on the MEM., for which XM calculates the amount that each trader is required to
pay for usage charges, and once collected, it distributes the same between the electricity
transmission companies in accordance with their share therein. See further below under "Revenues
from Transmission".
XM does not assume credit risks in connection with these activities as its functions are performed
as agent for the participants in the electricity market. Credit risk for these transactions is assumed
by the market itself and mitigated through the requirement that market participants provide
guarantees to access the MEM.
The chart below shows the operation of MEM:
Operation of MEM
iv.
Payment and distribution of Regulated Revenues.
According to CREG Resolution No. 103 of 2000, since January 1, 2002, regulated revenues from
transmission companies must be paid by electricity traders in proportion to their electricity demand,
through the charges for the use of the STN. For such effect, XM issues debit notes on monthly
basis to the electricity traders therein specifying the proportion of Regulated Revenues allocated for
payment by those agents and credit notes to the electricity transmission companies therein
specifying payments that each electricity trader should pay to such companies. The total amount of
such payments is equivalent to the amount of Regulated Revenues payable to electricity
transmission companies.
Each month, XM collects from electricity traders all payments resulting from Regulated Revenues
and distributes or allocates the same among electricity transmission companies to their relevant
proportion. According to Law 143, these monthly payments are received by electricity transmission
companies as Regulated Revenues.
Regarding connection services, in accordance with the connection contracts entered into among
electricity transmission companies and each user of the STN connection, hereinafter referred as
Connection Contracts, the electricity transmission companies bill (usually on a monthly basis) to
each user the amount agreed under the relevant contract. Revenues from Connection Contracts
are not part of the electricity transmission companies Regulated Revenues. See “Connection
Charges.”
98
v.
Guarantee System
Payments due to usage charges payable by electricity traders on the use of the STN must be
monthly secured by means of any of the instruments listed below: (i) letter of credit issued by a
banking institution; (ii) bank guarantee; (iii) in the case of electricity traders that are also electricity
distributors, assignment of XM’s accounts receivable on occasion of payments to such companies
for the use of their distribution network; (iv) monthly prepayments; or (v) weekly prepayments. The
amount secured under those instruments is calculated by XM based on the portion of Usage
Charges paid by each electricity trader with respect to the previous month and adjusted on weekly
basis to reflect the actual electricity demand in the relevant month.
If an electricity trader fails granting the guarantee instrument within twenty (20) days as specified by
XM, XM shall notify the SSPD and all market participants and XM, shall be bound to reduce the
electricity supply to the concerned trader by means of a regulated procedure named Supply
Limitation, thus leading to partial interruption of the service to the electricity end-users. If the
electricity trader fails to pay the tariff monthly payments charged to users on their due date, XM may
enforce its rights under the guarantee instrument (without need of resorting to judicial proceedings)
and shall distribute the proceeds from such rights among the electricity transmission companies that
comprise the STN.
Furthermore, once the electricity traders begin to trade energy through the SIC, they are bound to
provide XM with blank promissory notes and the relevant letters of instruction. In the event where
an electricity trader fails to pay any connection charges and, if the guarantees furnished are
insufficient, XM shall be empowered to enforce the above-mentioned promissory notes.
vi.
Demand
Since 1995 to 2008, the electricity demand changed from 41,774 GWh in 1995 to 53,870 GWh in
2008.
Accumulated demand in the first nine months of 2009 was 40,593 GWh with a 1.5% increase in
connection with the same period of the precedent year.
The graphic below illustrates the accumulated demand for electricity for each year and the growth
rate in the past 12 months, concluding in September of each year for the period from 1995 to 2009.
Source: XM
UPME, deems that electricity demand shall grow approximately 3.60% per year in the period 20092030. UPME projects electricity demand in year 2030, between 101,374 GWh and 133,812 GWh.
99
vii.
Supply
Electricity generation in Colombia has grown significantly over the past 29 years. In 1980, installed
generating capacity was 4,177 MW (approximately 70% hydroelectric and 30% thermal). By
September 2009, installed generating capacity had grown to 13,480.6 MW (approximately 63.2%
hydroelectric and 32.2% thermal, 4.6% minor plants and cogeneration). The following table
illustrates the total amount of electricity generated in Colombia for the period 1995-2008.
Year
1995…………………………………………………..
1996…………………………………………………..
1997…………………………………………………..
1998…………………………………………………..
1999…………………………………………………..
2000…………………………………………………..
2001…………………………………………………..
2002…………………………………………………..
2003…………………………………………………..
2004…………………………………………………..
2005…………………………………………………..
2006…………………………………………………..
2007…………………………………………………..
2008…………………………………………………..
Source XM
GWh/Year
40.674
40,481
41,949
42,520
40,563
41,355
43,136
44,743
46,803
48,618
50,467
52,340
53,624
54,395
Annual
Increase (%)
(0.47)
3.63
1.36
(4.60)
1.95
4.31
3.73
4.60
3.88
3.80
3.30
2.50
1.20
On May 6, 2008 the first auction on Firm Energy of Colombia, was carried out which assigned Firm
Energy Obligations -OEF- for the generator group existing between December 2012 and November
2013. As a result of this auction, Firm energy is secured for 65.87 TWh-year as from 2012. The new
generation projects allocated are shown in the table below:
Owner
ISAGEN
GECELCA
POLIOBRAS
(new investor)
Source XM
New projects assigned in auction
Name
Capacity (MW)
OEF
(GWh-year)
Amoyá
78
214
Gecelca 3
150
1,117
Termocol
201.6
1,678
Period
(years)
20
20
20
A second allocation was made on June 13, 2008: the auction for Generation Plants or Units with
Construction Periods above the Auction Planning Period -GPPS- that will enter progressively in
operation from December 2014 to 2019. With this allocation, installed capacity grows from 13,251
MW to 17,501 MW in 2019 and available energy will increase from 65,804 GWh-year to 90,419
GWh-year, respectively. The following table shows the allocated projects:
Allocations from OEF to GPPS (GWh-Year)
2017Effective
2014-2015 2015-2016 2016-2017
2018-2019
2018
Commence
Effective
End Date
100
ment Date
Porce IV
PescaderoItuango
Sogamoso
Miel II
Cucuana
El Quimbo
Source XM
viii.
0
321
641
962
0
400
183
49.5
400
0
802
185
50
852
0
1550
184
50
1350
0
2300
184
50
1650
962 2015-12-01
2035-11-30
2018-12-01
2038-11-30
2014-12-01
2014-12-01
2014-12-01
2014-12-01
2034-11-30
2034-11-30
2034-11-30
2034-11-30
1085
2350
184
50
1650
Electricity Transmission
In Colombia, electric power transmission is defined by the regulations as the activity consisting in
the electric power transportation through the transmission systems and the operation, maintenance
and enlargement of the National Transmission System (STN), defined as the electric power
transmission interconnected system composed by a set of lines, compensation equipment and
substations operating at voltages equal or above 220 kV, transformer with voltages equal or above
220 kV at the low side, and the corresponding connection modules.
Transmission in Colombia is an activity ruled independently from other components of the electric
sector, and has characteristics proper to a natural monopoly, derived from the nature of
transmission itself.
The STN is composed by two subsystems interconnected by 500-kV transmission lines, one at the
Atlantic Coast and the other in the Central region of Colombia that extends from the Southwestern
region of the country to the central region. The STN connects the transmission lines from network
operators into a single interconnected network (SIN).
As from September 30 2009, the STN comprised 11 500-kV substations, 85 substations 230-kV, 1
138 kV Substation, 2,399 km of 500kV lines, 11,694 km of 220/230kV lines and 10 km of 138 kV
lines, with a transformation capacity of 7,485 MVA.
Over 90% of electricity consumed in Colombia is transmitted through the STN, which is the
encounter point between the generation and the demand, represented by electricity traders. This
way, the vast majority of generating stations, grid supply points and end-users are directly or
indirectly connected by the STN, which enables the coordinated operation of generating stations,
and reduces the amount of back-up generating capacity needed for plant maintenance and the
amount of reserve needed on a daily basis.
Electricity transmission in Colombia is a regulated business, with the following characteristics:
•
electricity transmission is a regulated natural monopoly;
•
there is open access to the STN;
•
the STN is owned by multiple electricity transmission companies;
•
electricity transmission plays a passive role in the electricity sector's productive chain;
•
the service provided by electricity transmission companies must meet service quality criteria
(measured in terms of availability);
•
the expansion of the STN is controlled by the UPME; and
101
•
revenues for electricity transmission companies are regulated.
Electricity transmission is a natural monopoly.
The transmission of electricity nationwide is regarded as a natural monopoly, which in practice may
belong to different owners. This natural monopoly characteristic is derived from important scale
economies which could be achieved by having a single system in charge of the service, derived in
more efficient costs that would be obtained by having several entities with different systems
competing. In the case of Colombia, this single system corresponds to the National Transmission
System (STN).
In accordance with the above, some factors that make the electricity transmission to become a
natural monopoly are:
•
the topological dispersion of generation and demand promotes a unified transmission grid;
•
economies of scale are obtained by investing in the same transmission grid (STN);
•
Competitive pricing for electricity transmission is unsustainable because of the redundancy
and excess installed capacity that competition in the sector would entail.
Open access to the STN.
All the market participants in the electricity industry have free access to the STN, through the
payment of charges for connection and use of the system. Open access to the STN is a necessary
condition if competition is to be promoted in the energy market in Colombia. Pursuant to the
regulations, electricity transmission companies must allow indiscriminate access to their grids to any
user, network operator, large consumer or generator, subject to their satisfaction of legal and
technical regulations issued by CREG and the UPME.
Multiple ownership of the STN
Currently, the STN assets are represented by 9 companies, of which only we, our subsidiary
Transelca and EEB, are exclusively engaged in the transmission of electricity.
The following chart shows a summary of assets of electricity transmission companies in the STN as
of August 31, 2009, in terms of kilometers of circuit and number of substations.
Summary of Transmission Assets in the STN – as of August 2009
TRANSMISSION LINES
SUBSTATIONS
(kilometers of circuit)
(Number of Substations)
Company
500 kV
230 kV
138 kV
Total
500 kV
230 kV
138 kV
Total
ISA
2,399
7,408
10
9,817
11
38
1
50
TRANSELCA
0
1,532
0
1,532
0
12
0
12
EEB
0
1,445
0
1,445
0
11
0
11
EPM
0
798
0
798
0
13
0
13
EPSA
0
273
0
273
0
5
0
5
ESSA
0
207
0
207
0
3
0
3
DISTASA
0
30
0
30
0
1
0
1
CNS
0
0
0
0
0
1
0
1
EBSA
0
0
0
0
0
1
0
1
2,399
11,693
10
14,102
11
85
1
97
Source ISA. Information calculated based on support documents from LAC published in XM
webpage (http://www.xm.com.co/Pages/TransaccionesenelMercadoEnergiaMayorista.aspx)
102
With these assets, ISA has kept an average sharing of 70.9% on transmission revenues (2007 –
2009 average), while our subsidiary Transelca has a 9.4% sharing. The total sharing in the
transmission activity in Colombia (in terms of revenues) is 80.3%. The graphic below shows the
evolution of ISA’s and TRANSELCA’s revenues from the STN, between January 2007 and August
2009.
Information calculated based on support documents from LAC published in XM webpage
(http://www.xm.com.co/Pages/TransaccionesenelMercadoEnergiaMayorista.aspx)
Passive role of the electricity transmission companies
Transmission is the essential element for creating an energy market. Its significance underlies on
the encounter point between generation and demand (represented in electricity traders), through
which electric power physical exchange is achieved by optimizing the use of the generation
resources.
The role of the electricity transmission companies is to make available to the transmission network
energy market (STN) where it is possible conducting the physical exchange of energy between the
generation and demand, by complying with the quality and reliability levels established in the
regulation.
The passive role of electricity transmission companies in the energy market is shown in the
following characteristics:
•
Electricity transmission companies cannot purchase or sell electricity and any further
electricity required for the operation system is furnished by electricity generation
companies. The only exception is such vertically integrated companies before the
enactment of Law 143 of 1994, which, however, have the obligation to keep separate
accounting records for each activity performed.
103
•
Electricity transmission companies make no decisions regarding the expansion of the STN.
The definition of transmission projects is responsibility of the Ministry of Mines and Energy,
who has delegated on the UPME the planning function of the transmission system.
•
Electricity transmission companies do not establish any parameters for the utilization of the
STN; they guarantee free access to the transmission network provided they comply with the
technical requirements; and
•
Electricity transmission companies receive regulated revenues aimed at recouping their
investments in the STN, making replacements of infrastructure by the requirement proper to
the assets or by natural evolution of the system, as well as to cover the management,
operation and maintenance costs, required to keep the network availability and reliability.
Requirements for electricity transmission services
To describe the requirements of the service quality, we must differentiate between the current
scheme (in effect at the issuance date of this Prospectus) and the scheme approved through CREG
Resolution 011 of 2009, which in accordance with the information received from the regulator will
apply in the next months.
•
Current Scheme –CREG Resolution 061 of 2000
At present, the quality of the STN is measured in terms of the availability of each of the system's
assets, as compared with the regulatory goals set through CREG’s Resolutions Nos. 061 of 2000
and 011 of 2002, as indicated below:
Asset Type
Line Bays
Transformer Bays
Autotransformers
Compensation Bays
Compensation Modules
500-kV Circuits
220kV or 230kV Circuits > 100km
220kV or 230kV Circuits ≤ 100km
Annual Availability Index
Goal (%)
99.83%
99.83%
99.45%
99.83%
99.45%
99.18%
99.59%
99.73%
Annual Accumulated
Unavailability Hours
Goal
15
15
48
15
48
72
36
24
Non-compliance with these quality standards (availability lesser than the goal) results in the socalled compensations for unavailability (less value than revenue) calculated in function of
unavailability times, number of unavailability events and timing between events.
The methodology consists of weekly measuring the availability of each of the system's assets within
a 52-week (1 year) period and comparing it with the goal established by CREG. If the asset fails to
comply with CREG's goal, a decrease of the revenue equal to the weekly compensation percentage
of the asset (PCSA) is incurred by the electricity transmission company. Since revenues are
calculated monthly, the PCSA (4 or 5 within the month) are averaged at the end of each month to
determine the monthly compensation percentage (PCMA), which corresponds to the percentage by
which the revenue for that particular asset is reduced for that month where goals were failed.
•
New Scheme –CREG Resolution 011 of 2009
104
In accordance with information from the regulator, a new scheme for quality service will enter in
effect in the next months as defined in CREG Resolution 011 of 2009. Under this new scheme,
defaults on quality levels set in this Resolution are translated into compensations (or lesser
revenues).
While under the former scheme compensations exclusively depended on the compliance with asset
availability goals, under the new scheme they also depend on energy failed to supply and the nonoperation of other assets.
As regards to availability, the Resolution provides annual availability goals which are monthly
evaluated in 1-year periods. If the number of unavailability hours is exceeded due to facts not
excluded from the Resolution, the number of hours in excess causes a lesser revenue
proportionally to this number of hours. The following table shows the new availability goals per type
of constructive unit.
Assets
Line Bay
Transformation Bay
Compensation Bay
Barraje Module
Compensation Module
Autotransformer
220 or 230 kV Line
500 kV Line
VQC
Other Assets
Maximum Annual Hours for
Unavailability (MHAI)
15
15
16
15
15
28
20
37
5
10
Regarding the compensation for non-supplied energy, if the percentage of energy not supplied to
the National Interconnected System is above 2%, then the compensation is calculation with respect
to the extent of non-supplied energy and the operational cost of energy rationing, defined and
calculated by UPME.
The third type of compensation (which excludes the compensation for non-supplied energy, by
setting off the greatest between both) is the compensation for non-operative assets, corresponding
to a compensation calculated in similar way than the compensation for non-availability in function of
revenues from other assets which due to the non-availability of ISA’s assets are no longer
operative, provided that the asset that causes the same is not complying with the goal.
The herein-referred methodology is a description of such methodology set in CREG Resolution 011
of 2009. The full methodology is included in Chapter 4 of the general appendix of CREG Resolution
011 of 2009.
Expansion of the STN
Pursuant to Article 18 of Law 143, it is the role of the Ministry of Mines and Energy to oversee the
expansion plans of the interconnection network, rationalizing State and private efforts to meet
domestic electricity demand consistently with the National Development Plan and the National
Energy Plan.
In use of its powers, the Ministry of Mines and Energy, usually delegates the UPME to carry out the
administrative and technical activities required to prepare the STN Reference Expansion Plan and
the selection by public bidding of the investors willing to conduct the defined and approved projects.
105
To prepare the Reference Expansion Plan and in order to have consistent criteria, strategies and
methodologies for the STN expansion, an Advisory Committee for Transmission Planning –CAPTwas created, which encompasses agents, large consumers, traders, transmission, generating and
distributor companies and the National Dispatch Center –CND (XM dependence).
For the purposes of preparing the Preliminary and Reference Expansion Plan, the agents deliver to
UPME the standard planning information and the detailed planning information required by such
entity.
UPME prepares the Transmission Expansion Plan using as criteria for definition, the minimum
investment costs and operative costs and STN losses. Besides, it must comply with the standing
reliability standards.
Once a Preliminary Transmission Expansion Plan is prepared, UPME makes it publicly available,
and submits it to the CAPT for review and assessment. UPME then receives opinions, as well as
alternate expansion plans, proposed by agents and interested third parties.
Based on comments from CAPT and any other interested third parties, and taking once again into
account cost considerations, UPME defines the Reference Transmission Expansion Plan, which
once approved by the Ministry of Mines and Energy, will be disclosed to the National Transmitting
Companies and interested third parties.
The reference Transmission Expansion plan must be flexible in both the medium and the long term,
and be able to adapt to changes imposed by technical, economic, financial and environmental
conditions, while complying with quality, reliability and safety requirements defined in the Code of
Planning and the Code of Operation. The projects proposed in the Plan must be technically and
economically feasible, and must have the approval of the relevant environmental authorities.
Besides, the demand should be attended by complying with criteria on the efficient use of energy
resources.
The network expansion is secured with the introduction of competitors for the construction,
operation and maintenance of new transmission projects required by the (Resolutions CREG 004 of
1999, 022 of 2001 and 085 of 2002).
To guarantee the execution of the Reference Transmission Expansion Plan at a minimum cost, the
Ministry of Mines and Energy or the delegated entity prepares the Selection Documents for the
execution of projects for the Reference Transmission Expansion Plan.
Bidders submit Estimated Annual Revenues for the first twenty-five (25) years following the
commissioning of the project. Proposals are compared calculating the Present Value of the
Estimated Annual Revenue for each of the twenty-five (25) years, applying a discount rate
approved by CREG in a specific resolution for such effect.
Estimates submitted by bidders include costs related to pre-construction works (design, rights of
way, environmental studies and licenses); and construction works (including independent auditing
and any works required for the project's environmental viability), the opportunity cost of capital
invested and the relevant administration, operation, and maintenance expenses. Additionally, it is
understood that the Estimated Annual Revenue proposed by bidder will cover all the other costs
and expenses incurred by the selected National Transmission Company, in furtherance of its
activity and the laws and regulations in effect.
Under this network expansion scheme, UPME has conducted until this date 10 bidding processes,
of which ISA has been awarded in 6 of them, representing 89% in terms of present value of the
offers. The projects awarded to ISA are the following:
106
–
–
–
–
–
–
UPME 01 of 1999
UPME 02 of 1999
UPME 01 of 2003
UPME 02 of 2003
UPME 01 of 2007
UPME 02 of 2008
ix.
Primavera – Guatiguará – Tasajero
Sabanalarga – Termocartagena 230 kV
Primavera – Bacatá
Primavera – Bolívar
Conexión Porce
Conexión El Bosque
230 kV (under operation)
(under operation)
500 kV (under operation)
500 kV (under operation)
500 kV (en construction)
230 kV (en construction)
Regulated Revenues
Pursuant to Law 143, the CREG sets out both, methodology to calculate Regulated Revenues
received each month by transmission companies and the usage charges payable by agents for
collection thereof.
Law 143 requires that Regulated Revenues be set at a level sufficient to cover the costs of
investment made by electricity transmission companies on their electricity transmission assets
including the opportunity cost of capital undertaken by such companies and maintenance, operation
and administration of the STN. The general remuneration scheme provided in Law 143 is aimed to
ensure that the Colombian transmission business as a whole is financially and operationally viable.
In general terms, the remuneration methodology for transmission in Colombia corresponds to a
Regulated Revenue scheme (Revenue Cap”), wherein the transmission company holds revenues
not affected by variations in the system’s energy demand.
The remuneration methodology of transmission companies is periodically revised by the regulator,
since the electricity transmission was defined as independent activity in 1994, when the electricity
generation, transmission, distribution and trading activities were separated.
The standing
methodology to calculate Regulated Revenues for national transmission companies is in effect
since 2000 (year regarded by regulator as a year of transmission) and it was kept for the standing
period (2001 – 2009).
To determine revenues for national transmission companies under the new scheme it is necessary
to apply four resolutions: CREG Resolution 022 of 2001, containing remuneration methodology;
CREG Resolution 026 of 1999, defining constructive units and the relevant unit costs (New
Replacement Value of each asset); CREG Resolution 061 of 2000, providing quality standards; and
finally CREG Resolution 103 of 2000 containing the methodology for calculation of usage charges
applicable to traders for collection of revenues pertaining national transmission companies.
It should be noted that the herein-referred revision only corresponds to revenues from national
transmission assets not being subject to public bidding processes made by UPME, which for the
first 25 years of operation are remunerated based on the annual income offered by bidder for each
of these years. Only by year 26, these assets are remunerated based on the methodology of
assets not subject to bidding process.
After a review process that began on 2005, CREG issued in Resolution 011 of 2009, “Whereby
methodology and charge formula are established or the remuneration of the electric power
transmission activity under the National Transmission System”.
According to information from the regulator, this new methodology will start application in the next
months. In accordance with the preliminary assessments made by the Company, it is expected that
the revenues will be kept in the current levels. However, the final result will be known once CREG
issues the specific resolution for ISA upon approval of the basis of assets to be remunerated, and
based on which the Settler and Administrator of Accounts of the National Transmission System will
settle and invoice revenues corresponding to ISA with the methodology defined under CREG
107
Resolution 011 of 2009 and in application of the compensations for service quality that might take
place pursuant to the same Resolution. A relevant change under the new scheme is the fact that a
single Resolution comprises all parameters required to define the revenues for national
transmission companies, except for the remuneration fee, which calculation methodology and value
for the new period was set under CREG Resolution 083 of 2008 (“Whereby the methodology for
calculation of the return rate applicable to the remuneration of the electric power transmission
activity is defined and such rate is fixed”)
As a result of the above, following we will describe the standing remuneration methodology for
transmission concerning assets not subject to bidding process, as well as the new methodology,
and additionally the remuneration methodology for assets subject to bidding process.
Regulated Revenues for assets subject to bidding process
As of the date of this Information Prospectus, these assets represent nearly 20% of all our electricity
transmission assets in the STN (share based on the replacement-to-new value for Assets). There
are basically 4 bidding process projects, under commercial operation since 2001 in the case of
projects UPME 01 and 02 of 1999, and between December 2006 and May 2007, for projects UPME
01 and 02 of 2003:
–
–
–
–
UPME 01 of 1999
UPME 02 of 1999
UPME 01 of 2003
UPME 02 of 2003
Primavera – Guatiguará – Tasajero
Sabanalarga – Termocartagena 230 kV
Primavera – Bacatá
Primavera – Bolívar
230 kV (under operation)
(under operation)
500 kV (under operation)
500 kV (under operation)
In addition, ISA was awarded with other two projects, which will start receiving revenues once they
start commercial operation between 2010 and 2011.
–
–
UPME 01 of 2007 Conexión Porce
UPME 02 of 2008 Conexión El Bosque
500 kV (under construction)
230 kV (under construction)
As mentioned under the “Expansion” section, the awarded bidder under the process will be in
charge of the construction, operation and maintenance of the new electricity transmission assets
and it is responsible for the execution of investments required for the development, commissioning,
maintenance and operation of such assets for the whole twenty-five (25) year period and in turn it
will receive the Regulated Revenues included in bidder’s tender. Once the twenty-five (25) year
period has expired, as from year twenty-six (26) the Regulated Revenues related with electricity
transmission assets will be calculated by using the methodology applicable for the calculation of
Regulated Revenues for assets not subject to bidding process. “Regulated revenues for assets not
subject to bidding process”.
Regulated revenues awarded from bidding processes is annually adjusted as of December of the
immediately preceding year based on the PPI index (Producer Price Index – Series
WPSSOP3200). Revenues are monthly payable, for which reason the monthly revenues
correspond to the twelfth portion (1/12) of the annual revenue offered each year.
Regulated revenues for assets not subject to bidding process
st
In general these assets comprise the transmission network under operation as of December 31 ,
1999, and additionally certain projects under development by that time and that started operation on
further date. At the date of this Information Prospectus (October 2009), these assets account for
80% of all ISA’s electricity transmission assets on the STN (share based on the Assets’ New
Replacement Value).
108
Current methodology in effect– Resolutions CREG 022 of 2001
Our Regulated Revenues relating assets not subject to bidding processes (in general assets in
operation before January, 2000) are calculated annually based on a formula that considers:
(i) Replacement value for new transmission assets (electricity assets) set by CREG Resolution
026 of 1999, which are monthly updated in pesos based on the producer’s price index
(PPI). These unit costs and the constructive units are reviewed by the regulator at the
aforementioned periodical reviews.
(ii) Remuneration rate of our investments on our electricity transmission assets, presently in
9.00%;
(iii) specified useful life of such assets, currently, 25 years;
(iv) A percentage of the replacement value to new of our assets for recognition of our
administration, operational and maintenance expenses.
(v) Remuneration of our investments on non-electric assets (percentage for that recognized as
electric asset); and
(vi) revenue decreases due to non compliance of availability targets set by the regulation for the
STN’s assets.
These Regulated Revenues are calculated using the formula described below:
 IRR × (1 + IRR )n 
IA = VRN × 
 × (1 + ANE ) + VRN × AOM
n
 (1 + IRR ) − 1 
IA
IM =
−C
12
Where:
IA
IM
VRN
IRR
N
NEA
AOM
C
Is the Annual Regulated Revenue
Is the Monthly Regulated Revenue
Is the replacement value of each constructive unit, established by CREG Resolution
026 of 1999. The VRN is expressed in US dollars of December 1997, converted into
Colombian pesos at the exchange rate in effect in December 1999 and adjusted in
the relevant month to take into account changes in the IPP.
Is the return rate set by CREG. The current rate is currently 9.00%.
Is the useful life of the electricity transmission assets, as set by CREG, which is
currently 25 years, under the current methodology.
Is the percentage at which electricity transmission companies are compensated for
their investments in non-electric assets, currently set by CREG at 5.00%.
Is the percentage on the VRN at which electricity transmission companies are
compensated for expenses incurred by them in the administration and operation and
maintenance of their electricity transmission assets, currently set by CREG at 2.50%
for assets that are not located in areas with saline contamination and 3.00% for
assets located in areas affected by saline contamination (i.e., assets located in
coastal areas near the ocean), to compensate for the additional maintenance costs
that these assets require.
Is the decrease on revenues for non compliance with availability targets set by
CREG, according to such methodology provided in CREG Resolution 061 of 2000.
For substations, an additional 8.50% on the cadastral value of the typical area on which the
substation is built is recognized as additional revenue for lands. This land is remunerated based on
109
the typical areas defined by CREG and the cadastral value of each Substation reported by each
transmission company.
Regarding the allocation of payments for transmission revenues, CREG Resolution 103 of 2000
provided that since January 01 2002, generators will make no payments for usage charges and
usage charges would be exclusively allocated to energy traders.
New Methodology– CREG Resolution 011 of 2009
Pursuant to CREG Resolution 007 of 2005, the electric transmission companies, their end users
and all interested parties were informed of the commencement of the process for CREG revision of
revenues to determine the new criteria for remuneration of electric transmission services for a new
5-year period, specifically regarding assets not subject to bidding process. In addition, this review
includes the review of the quality scheme applicable to all assets pertaining to the National
Transmission system.
In accordance with the review grounds set under CREG Resolution 007 of 2005, the regulator
focused this review in all parameters involved in the remuneration of assets: constructive units,
remuneration rate, non-electricity assets, remuneration for land, management, operation and
maintenance percentage and service quality scheme.
Between 2005 and 2009, the regulator interacted with transmitters, agents from the sector and
interested third parties requesting information, developing technical analyses on different
parameters involved in the calculation of remuneration and submitting and receiving comments on
each analysis. As a result of this review, the regulator initially issued CREG Resolution 110 of 2007,
for which it ordered “publicizing a project for resolution the CREG intends to adopt to establish
formulae for remuneration of electric power transmission”, which was presented by CREG and
analyzed by transmission companies, agents and interested third parties.
Thereafter, and once the comments received were analyzed, CREG issued CREG Resolution 011
of 2009, “whereby the methodology and fee formulae are established for the remuneration of
electric power transmission within the National Transmission System”, and which will be applicable
within the next months in accordance with regulator’s information. Once approved by CREG
through Resolution, the bases for assets to be remunerated to each TN; for such effect, each
company reported to CREG its inventory of assets under operation, classified by Constructive Unit.
Based on the assets defined by CREG, the Settler and Administrator of Accounts of the National
Transmission System will settle and invoice the revenues corresponding to TN, with methodology
defined by CREG Resolution 011 of 2009 and in application of the Compensations arising pursuant
to such Resolution.
In general, the remuneration methodology remained (“Regulated Revenue” methodology) but
different parameters involved in connection therewith were revised. The primary changes are as
follows:
•
The administration, operation and maintenance percentage will be annually revised based
on the actual AOM expense of the Company for the immediately preceding year.
•
The quality scheme provides more stringent availability goals and incorporates the nonsupplied energy signal for calculation of compensations for non-availability. Besides, it
provides express responsibilities for the carrier regarding the power quality.
110
•
The rights of way for transmission lines, remunerated under the current scheme within the
electric asset component, will be now independently remunerated based on actual
investments made by the company on this regard.
•
Unit costs were revised; new constructive units were defined, as well as the value of the
remuneration rate and the useful life of the transmission assets.
Following is the general formula to calculate revenues for assets not subject to bidding process.
The detail of the methodology is contained under CREG Resolution 011 of 2009.
These Regulated Revenues are calculated based on the following formula:
 IRR × (1 + IRR )n 
IA = VRN × 
 × (1 + ANE ) + VRN × AOM
n
(
)
1
+
−
1
IRR


IA
IM =
−C
12
Where:
IA
IM
VRN
IRR
N
NEA
AOM
C
Is the Annual Regulated Revenue.
Is the Monthly Regulated Revenue
Is the replacement value of each construction unit, established by CREG Resolution
026 of 1999. The VRN is expressed in pesos of December 2008 and after adjusted to
the month for calculating the revenue based on the IPP.
The new remuneration rate is 11.50%, set under CREG Resolution 083 of 2008
Is the useful life of the electricity transmission assets, as set by CREG, in 30 years for
substations, 40 years for transmission lines (CREG Resolution 011 of 2009).
Percentage for remuneration of non-electric assets fixed by CREG in 5.00% (CREG
Resolution 011 of 2009).
Is the percentage on the VRN at which electricity transmission companies are
compensated for expenses incurred by them in the administration and operation and
maintenance of their electricity transmission assets. For the first year of application of
the scheme, it will apply the reference percentage based on the actual 2001 – 2007
expenditure, and the AOM 2008 revenue. This reference percentage estimated by
ISA, and still subject to approval from CREG, is in 3.13%.
For the second year, and thereafter, the percentage will be revised based on the
actual expense of the immediately preceding year, within the range based on the
reference AOM percentage (between 1% and 3.53%). The cap is the reference AOM
plus 0.4%
Is the decrease on revenues for non compliance with availability targets set by
CREG, and non-supplied energy in accordance with the methodology defined
through CREG Resolution 011 of 2009.
For substations, an additional 5.69% on the cadastral value of the typical area on which the
substation is built is recognized as additional revenue for lands. This land is remunerated based on
the typical areas defined by CREG and the cadastral value of each Substation reported by each
transmission company.
The rights of way for transmission lines will be independently remunerated based on the annual
value of right of way reported by each national transmitter based on the actual investments made in
this regard. The annualization is made based on the remuneration rate and the useful life of
transmission lines set under CREG Resolution 011 of 2009.
111
As regards to the allocation of the payment for transmission revenues, CREG Resolution 011 of
2009, keeps the allocation of payment for revenues from electricity transmission companies to
energy trader, based on monomial hourly charges.
x.
Connection Revenue
Connection charges are contractually agreed among the parties of the relevant connection contract.
In general there are three kinds of clients for this service: network operators (15 clients), generators
(4 clients) and large consumers (3 clients).
In the particular case of network operators, charges are fixed for each connection point using as
reference such methodology set by CREG under Resolution 082 of 2002, taking into account the
investments on connection assets from the relevant company for such connection point and the
maintenance, administration and operation expenses for such assets. This Resolution, approving
the general principles and methodology to establish the charges for the use of Regional
Transmission and Local Distribution Systems, was revised in a similar process used for
transmission and that finally resulted in the publication of CREG Resolution 097 of 2008. For this
reason, it is necessary adjusting our connection contracts with network operators.
The connection charge is generally adjusted monthly to reflect the previous month's change in IPP.
Connection charges are not adjusted to compensate for extraordinary maintenance costs. In the
event that equipment must be replaced prior to the end of its projected life, the connection provider
may negotiate with its connection client an adjustment to the connection tariff to take account of the
investment in the new equipment.
b.
Brazil
i.
Overview of the Sector
Electricity transmission systems in Brazil are subject to federal regulation. ANEEL is the
governmental agency vested with authority to grant concessions and regulate the provision of
electric transmission services in Brazil. States do not have jurisdiction over electricity transmission
concessions but regulate the development of electricity transmission assets and the provision of
services through state environmental licensing regulations and the enforcement of such regulations.
The BSIN is a large-scale electricity generation and transmission system formed by companies in
the southern, southeastern, central-western, northeastern regions, and certain areas in the northern
regions of Brazil. The BSIN is responsible for supplying electricity to approximately 98% of the
Brazilian market, according to the ONS. Only the states of Amazonas, Roraima, Acre, Amapá,
Rondônia, and certain cities in Pará, which are states located in the northern region of Brazil, are
not yet part of the BSIN. In these states, the supply is provided by small thermoelectric power
stations or by hydroelectric power stations that are part of isolated systems located close to the
main consumption centers.
In 2008, the installed capacity of the BSIN had a total power of 89,075 MW (Não Inclui sistemas
isolados e autoprodutores), of which 74,370 MW corresponded to hydroelectric stations (including
7,000 MW related with 50% installed capacity of Itaipu addressed to Brazilian market) and 14,277
MW corresponding to thermo-electric and nuclear stations. Taking into account the addition of new
generation and the deactivation of emergency thermal power stations, the total installed capacity of
the BSIN increased by 2,4% from 2007 to 2008. Total production was 447.9 TW/h in 2008.
The electricity transmission installations of the National Main Grid are also part of the BSIN. The
National Main Grid, which is utilized for transporting large amounts of energy from the production
centers to the consumption centers, is a combination of (i) transmission lines, barricades, power
112
transformers and substation equipment at voltages equal to or greater than 230 kV (ii) power
transformers with a primary voltage equal to or greater than 230 kV and secondary and tertiary
voltages with less than 230 kV.
The Sub-Transmission Systems consist of (i) transmission lines, barricades, power transformers
and substation equipment, of any voltage, when used by generating centers on an exclusive or
shared basis or by Independent Consumers, on an exclusive basis; (ii) international connections
and associated equipment, at any voltage, when used exclusively for imports and/or exports of
electricity; and (iii) transmission lines, barricades, power transformers and substation equipment, at
voltages less than 230 kV, which may or may not be located at substations that are part of the
National Main Grid. Sub-Transmission Systems serve certain users such as distribution
concessionaires and Independent Consumers.
In 2008, the National Main Grid reached a length of 90,316.4 Km, encompassing 731 transmission
circuits and a transformer capacity of 210,112.4 MVA. These figures include an increase of 3,030.5
Km in new transmission lines and 7,142.3 MVA in new transformers, corresponding to a growth of
3.5% and 3.5%, respectively, compared to 2007.
The table below indicates the evolution of the lengths, in Km, of the transmission lines in the
National Main Grid between 2004 and 2008:
Extensão das Linhas de Transmissão do SIN em km
Tensão kV
2004
2005
2006
2007
2008
Var % 08/07
230
35.073,8
35.736,5
36.342,5
37.155,5
37.709,9
1,49
345
9.047,0
9.579,1
9.579,1
9.772,1
9.772,1
-
440
6.667,5
6.667,5
6.671,2
6.671,2
6.671,2
-
500
24.924,4
26.771,1
29.341,2
29.392,2
31.868,3
8,42
600 CC
1.612,0
1.612,0
1.612,0
1.612,0
1.612,0
-
750
2.683,0
2.683,0
2.683,0
2.683,0
2.683,0
-
80.007,7
83.049,2
86.228,9
87.285,9
90.316,4
3,47
SIN
st
As of December 31st, 2008, 52 concessionaires operated within the BSIN. As of December 31 ,
2008, the Brazilian Federal Government, through companies controlled by Eletrobrás, owned and
operated approximately 30% of all transmission lines (in Km). The remaining transmission lines are
mostly owned and operated by private companies that acquired such lines under public auctions
and privatization of state-owned companies.
The map below shows the Brazilian electricity transmission system:
113
Source ONS
Expansion of the BSIN
The planned expansion of the BSIN is based on the ONS’s Program for Transmission Expansion
(Programa de Expansão da Transmissão de Energia Elétrica) or PET, which is determined based
on information provided by the Energy Research Company (Empresa de Pesquisa Energética—
EPE) for a five-year period. The PET is revised by the ONS every year and contemplates
investments to be made during a three-year period. The PET establishes the transmission lines
and substations which are to be constructed or reinforced during the relevant period.
These plans are submitted for approval by the BMME and, once approved, ANEEL is entrusted with
operating concessions for the construction and operation of new transmission lines through public
bidding or granting direct authorizations to the electricity transmission companies that own the
installations to be reinforced.
114
According to the BMME's 10-year expansion plan for the electricity sector, by 2017 the ability to
produce electricity will increase by means of exploitation of hydroelectric potential, since only
28.20% of this potential is currently exploited in Brazil. The BMME expects large investments in
hydroelectric generation projects, thereby increasing the country's present installed capacity by
28,805 MW. Increasing the ability to generate electricity will require expansion of the electricity
transmission networks and reinforcement of the existing networks. The BMME estimates that it will
be necessary to construct approximately 36,387 Km of electricity transmission lines between 2008
and 2017.
The expansion of the Brazilian electricity transmission system is being implemented mainly by
means of public biddings conducted by ANEEL for the granting of concessions. Any person
interested in being granted an electricity transmission concession is allowed to participate in a
bidding process, including those not currently operating in the electricity sector. These participants
must have a commitment or contract with a company having technical capacity for operating and
maintaining its portion of the electricity transmission system.
Participants must obtain
prequalification under the terms of the bidding documents, and if awarded a concession, must
incorporate a special-purpose entity to hold and operate such concession.
ii.
Laws and Regulations
The New Industry Model Law
The New Industry Model Law introduced material changes to the regulation of the electricity
industry purported for (i) providing incentives to private and public entities to build and maintain
generation capacity and (ii) assuring the supply of electricity in Brazil through public auctions. The
key changes introduced by the New Industry Model Law include:
The creation of a parallel environment for the trading of electricity with (1) a more stable market in
terms of electricity supply, so as to provide additional security in the supply to active consumers,
called the Regulated Market (Ambiente de Contratação Regular), or the ACR, and (2) a market
specifically addressed to certain participants (i.e., independent generators, Independent Consumers
and electricity trading companies), which should permit a certain degree of competition vis-à-vis the
Regulated Market, called the Free Market (Ambiente de Contratação Livre);
Restrictions on certain activities by distribution companies, including participation in electricity
generation and transmission, so as to ensure that they focus only on their core business in order to
guarantee more efficient and reliable services to the ACR; and
Elimination of self-dealing, in order to provide an incentive for distributors to purchase electricity at
the lowest available prices instead of buying electricity from related parties.
The New Industry Model Law did not significantly alter the regulation on electricity transmission
activities, which continues to take place through concessions granted by ANEEL in public auctions
or by means of authorizations. In order to ensure legal security to the operations in the industry, the
New Industry Model Law requires that the concession contracts executed prior to its ratification
remain unchanged.
Concessions
Concessions for electricity transmission are generally formalized under agreements executed
between the granting authority, represented by ANEEL, and the electricity transmission
concessionaires. The concession contracts grant rights to exploit certain electricity transmission
115
assets during, generally, 20 or 30 years. An existing concession may be renewed at the granting
authority's discretion, upon request of the concessionaire, made at least 36 months prior to the
expiration date of the concession. ANEEL is not required to respond to a request for extension until
18 months prior to the expiration of the concession contract. Confirmation of renewals and
conditions thereof require a specific law, which is also required in the case of new auction and
reversion of assets. If a concession contract is renewed, the economic terms of the agreement,
including the related Permitted Annual Revenue may be adjusted.
The 059/2001 Concession Contract has a term of 20 years and expires on July 7, 2015, and the
143/2001 Concession Contract has a term of 30 years and expires on December 31, 2031. Both
Concession Contracts may be renewed in accordance with the terms described above.
Pursuant to the provisions of the Concessions Law, electricity transmission concession contracts
contain provisions which permit under certain circumstances to change the rates or fees charged by
electricity transmission concessionaires in order to maintain the economic and financial conditions
(equilíbrio econômico-financeiro) prevailing on the date of execution of the relevant concession
contracts. They even include the provision for additional revenues for new investments made by
concessionaires at electricity transmission facilities after such date. Under the Concession
Contracts, CTEEP may be entitled to an increase in its Permitted Annual Revenue based on this
principle, although CTEEP has not had any past experience regarding the application of this
principle as regards to the Concession Contracts.
The Concessions Law establishes, among other things, the requirements a concessionaire must
comply with when providing electricity services, the rights of consumers, and the obligations of the
concessionaire and the granting authority. The Concessions Law provides, among other things:
Adequate Service. The concessionaire must render adequate services with respect to regularity,
continuity, efficiency, safety and accessibility.
Use of Land. The concessionaire may use public land or request the granting authority to
expropriate necessary private land for the benefit of the concessionaire. In the latter case, the
concessionaire must compensate the affected private landowners.
Strict Liability. The concessionaire is strictly liable for all damages arising from the provision of its
services.
Changes in Controlling Interest. The granting authority must approve any direct change in the
concessionaire's controlling interest.
Intervention by the Granting Authority. With the approval of the President of Brazil, evidenced by a
presidential decree, the granting authority may intervene in the concession to ensure the adequate
performance of services as well as full compliance with applicable contractual and regulatory
provisions. Within 30 days of the decree date, the granting authority's representative is required to
begin an administrative proceeding in which the concessionaire is entitled to contest the
intervention. During the term of the administrative proceeding, a person appointed by the granting
authority's decree becomes responsible for operating the concession. If the administrative
proceeding is not completed within 180 days from the decree date, the intervention ceases and the
concession is returned to the concessionaire. The concession is also returned to the concessionaire
if the granting authority's representative decides not to terminate the concession and the
concession term has not yet expired.
Early Termination of the Concession. The termination of a concession contract may be accelerated
by means of expropriation and/or forfeiture. Expropriation is the early termination of a concession
for reasons related to the public interest that must be expressly declared by law. Forfeiture must be
declared by the granting authority after ANEEL or the BMME issue a final administrative ruling that
116
the concessionaire, among others, (i) has failed to render adequate service or to comply with
applicable laws or regulations; (ii) no longer has the technical, financial or economic capacity to
provide adequate service; or (iii) has not complied with penalties assessed by the granting
authority. The concessionaire may contest the expropriation or forfeiture of a concession before the
courts. The concessionaire is entitled to compensation for its investments in expropriated or
forfeited assets that have not been fully depreciated, after deduction of any amounts for fines and
damages payable by the concessionaire.
Expiration. When the concession expires, all assets, rights and privileges that are primarily related
to the rendering of the electricity services revert to the Brazilian Federal Government. Following the
expiration, the concessionaire is entitled to compensation for its investments in assets that have not
been fully recovered as of the expiration date.
Remuneration. Transmission concessionaires source of revenue is the Permitted Annual Revenue,
which is set by ANEEL under the relevant concession contract.
Penalties
The regulations issued by ANEEL govern the imposition of sanctions against the participants of the
energy sector and classifies the appropriate penalties based on the nature and importance of the
breach (including warnings, fines, temporary suspension from the right to participate in public
auctions for new concessions, licenses or authorizations and forfeiture). For each breach, the fines
can be up to 2% of the concessionaire revenues (net of value-added tax and services tax) in the 12month period preceding any assessment notice. Some actions that may result in fines relate to the
failure of the concessionaire to request approval from ANEEL, including the following:
•
execution of contracts with related parties in the events foreseen in the regulation;
•
sale or assignment of the assets related to service provision, as well as the imposition of
any encumbrance (including any security, bond, guarantee, pledge and mortgage) on such
assets or other assets relating to the concession or to the revenues of the electricity
services; or
•
changes in controlling interest of the concession or authorization holder.
In addition, electricity generation, distribution and transmission concessionaires are strictly liable for
any direct or consequential damages caused to third parties as a result of inappropriate provision of
electricity services at their facilities. If the ONS is incapable of assigning liability for the damages to
a particular concessionaire, or if the damages are caused by the ONS, liability is proportionately
allocated at the rates of 35.7%, 35.7% and 28.6% to the transmission, distribution and generation
concessionaires, respectively.
Access to the electricity transmission system
The Concessions Law and the Concessions Law for the Electricity Industry provide for open access
to the BSIN and assure to any participant or Independent Consumer the right to interconnect with,
and use the system in consideration of compensation for costs incurred, irrespective of whether or
not electricity is traded. Open access to the BSIN is a means to ensure competitive electricity
generation and trading.
The ONS provides access to the BSIN by means of agreements with the participants of the BSIN
and the users of the electricity transmission system. Electricity distribution companies holding
concessions or permissions, electricity generation companies directly connected to the National
Main Grid or connected to centrally dispatched hydro generators, and electricity import and export
117
companies directly connected to the National Main Grid are all users of the BSIN. The agreements
for access to the BSIN include:
CPST. An agreement between the ONS and an electricity transmission concessionaire with
National Main Grid transmission facilities, such as CTEEP, which provides for the terms and
technical and financial conditions governing the use of electricity transmission services.
CUST. An agreement between the ONS, acting for its own account and as representative of
electricity transmission concessionaires, and a system user, which provides for the terms and
conditions for use by the system user of the National Main Grid, including collection and payment
mechanisms, and regulates the services provided by the ONS concerning coordination and
operating control of the Brazilian Interconnected System.
CCG. An agreement between the ONS, acting for its own account and as representative of
electricity transmission concessionaires and as manager of banking accounts, and a system user,
which provides the ONS with access to funds available in user-designated banking accounts, in the
event a system user fails to make the payments owed to the electricity transmission
concessionaires and to the ONS, including payments of portion of the Permitted Annual Revenue of
the concessionaire that is allocated to such user pursuant to the applicable CUST.
CCT. An agreement between electricity transmission concessionaires and a system user, which
provides for the terms and technical conditions for connection to the National Main Grid through
facilities and connection points.
CCI. An agreement between electricity transmission concessionaires providing for the shared use
of facilities of the electricity transmission system.
iii.
Institutional Framework
Main regulating authorities
Ministry of Mines and Energy—BMME. The BMME is the Brazilian Federal Government's primary
regulator of the electricity industry acting as the granting authority on behalf of the Brazilian Federal
Government, and empowered with policymaking, regulatory and supervisory capacities. Following
the adoption of the New Industry Model Law, the BMME undertook certain functions previously
performed by ANEEL, including drafting guidelines, granting of concessions, and issuing directives
governing auction processes for concessions relating to electricity services and facilities.
Subsequently, the exercise of these practices was delegated by the BMME to ANEEL by a
presidential decree.
National Electric Energy Authority—ANEEL. The Brazilian electricity industry is regulated by
ANEEL, an independent federal regulatory agency. Following the ratification of the New Industry
Model Law, the primary responsibility of ANEEL is to regulate and supervise the electricity industry
in line with the policy set by the BMME and to respond to matters which are delegated to it by the
Brazilian Federal Government and the BMME. The current responsibilities of ANEEL include (i)
administering concessions for electricity generation, transmission and distribution, including the
approval of electricity fees; (ii) issuing regulations for the electricity industry, (iii) implementing and
regulating the use of energy sources, including the use of hydroelectric energy; (iv) promoting
public auctions for new concessions, (v) settling administrative disputes among electricity
generation entities and electricity purchasers; and (vi) defining the criteria and methodology for the
determination of electricity transmission fees.
118
National Energy Policy Council—CNPE. The National Energy Policy Council (Conselho Nacional de
Política Energética) of Brazil, or the CNPE, is presided over by the BMME, and the majority of its
members are ministers of the Brazilian Federal Government. The CNPE was created to optimize
the use of Brazilian energy resources and to assure the supply of electricity within Brazil.
National System Operator—The ONS. The ONS is a non-profit private entity created in 1998
formed by consumers and energy utility companies engaged in the generation, transmission and
distribution of electricity, in addition to other private participants, such as importers and exporters.
The New Industry Model Law granted the Brazilian Federal Government the power to appoint three
members of the board of executive officers of the ONS. The primary role of the ONS is to
coordinate and control the electricity generation and transmission operations in the BSIN, subject to
the regulations issued by ANEEL and to ANEEL's supervision. The objectives and principal
responsibilities of the ONS include: (i) operational planning for the generation and transmission
industry; (ii) organizing the use of the BSIN and international interconnections, ensuring that all
parties in the industry have access to the electricity transmission network in a non-discriminatory
manner; (iii) assisting in the expansion of the energy system; (iv) proposing plans to the BMME for
expansions of the National Main Grid (which proposal shall be taken into account in planning the
expansion of the transmission system) and preparing the PET; and (v) submitting rules for the
operation of the electricity transmission system, the so-called network procedures, for approval by
ANEEL. Generators must declare their availability to the ONS, which then attempts to establish an
optimal electricity dispatch program.
Energy Research Company—EPE. On August 16, 2004, the Brazilian Federal Government ratified
a decree creating the Energy Research Company (Empresa de Pesquisa Energética), or EPE, a
state-owned company which is responsible for conducting strategic research on the electricity
industry, including electricity, oil, gas, coal and renewable energy sources. The research carried
out by EPE will inform the planning and actions of the BMME in its policymaking role in the
electricity industry.
Energy Industry Monitoring Committee—CMSE. The New Industry Model Law authorized the
creation of the CMSE, which operates under the direction of the BMME. The CMSE is responsible
for monitoring the supply conditions of the system and for indicating steps to be taken to correct
problems uncovered by such monitoring, including in connection with reserves to cover electricity
demand.
iv.
Regulated Revenues
Remuneration of Concessionaires; Permitted Annual Revenue
Electricity transmission concessionaires are remunerated based on the Permitted Annual Revenue
set by ANEEL. The Permitted Annual Revenue compensates such concessionaires for making
their electricity transmission assets available to users of the National Main Grid and in the SubTransmission Systems. Rather than relating to the volume of electricity transmitted, the Permitted
Annual Revenue takes into account the investments made by each concessionaire in its electricity
transmission assets, the costs of operating and maintaining such assets and a specified rate of
return on the capital invested by such concessionaire. The Permitted Annual Revenue is received
by each concessionaire from the user of its electricity transmission system through the TUST, which
is paid in twelve monthly installments. See "TUST" below. The ONS calculates the amount that
each user of the electricity transmission assets of such concessionaire is required to pay to the
electricity transmission concessionaires. The payment of such amount is secured through the
guarantee system contemplated under the CCGs. See "Guarantee System."
119
The Permitted Annual Revenue consists of: (i) the Permitted Annual Revenue related to the
National Main Grid (Receita Permitida de Rede Básica), or the RPB; (ii) the Permitted Annual
Revenue related to the Sub-Transmission Systems (Receita Permitida das Demais Instalações de
Transmissão e Conexão), or the RPC; and (iii) the Adjustable Portion.
In the case of electricity transmission concessions granted prior to December 31, 1999, the RPB
compensates electricity transmission concessionaires for making their electricity transmission
facilities connected to the National Main Grid available to participants in that system, for: (i)
availability of electricity transmission assets that commenced commercial operation prior to
December 31, 1999; (ii) availability of electricity transmission assets that commenced commercial
operation between December 31, 1999 and the most recent annual adjustment, or the RBNI; and
(iii) availability of electricity transmission assets that commenced commercial operation after
st
December 31 , 1999 or the RBNI. The RPB and RBNI related to the Permitted Annual Revenue
that CTEEP receives pursuant to the 059/2001 Concession Contract are calculated as described
above.
In the case of electricity transmission concessions granted after December 31, 1999 in connection
with competitive bidding process conducted by ANEEL, the RPB is determined based on the tariff
offered by the person to whom the concession is awarded and the RPC is based on an adjustment
to such concessionaire’s Permitted Annual Revenue related to the new electricity transmission
assets that commence commercial operations after the concession is initially awarded to such
concessionaire.
For purposes of calculating the RBNI, ANEEL established a rate of return based on an assumed
debt-to-equity ratio of 50.4:49.6. The assumed cost of capital of the debt portion is 10.87% per
annum, and the assumed cost of capital of the equity portion is 12.11% per annum, in each case
prior to adjustments for inflation.
The RPC compensates electricity transmission concessionaires for the availability of their electricity
transmission facilities connected to the Sub-Transmission System. The methodology ANEEL
applies in order to calculate the RPC follows the same criteria used for the calculation of the RBNI.
The Adjustable Portion is a mechanism designed to offset decreases and increases in the
Permitted Annual Revenue of an electricity transmission concessionaire relating to delays in the
commencement of commercial operation of new electricity transmission assets of the
concessionaire.
The table below sets forth the Permitted Annual Revenue received by CTEEP for the Tariff Periods
indicated.
2007
2008
2009
REDE BÁSICA - RB
Ativos existentes
Novos investimentos
Licitada
Parcela de ajuste
Subtotal
940.541.624,94
174.618.334,30
12.047.271
47.914.556,48
1.175.121.786
1.048.943.575,99
301.005.515,91
13.435.776
155.843.810,07
1.519.228.678
1.087.132.207,33
337.655.521,49
13.924.929
20.759.105,53
1.459.471.764
Demais instalações de Transmissão - DIT
Ativos existentes
Novos investimentos
Parcela de ajuste
Subtotal
270.584.246,85
20.060.260,59
12.690.163,15
303.334.671
301.770.384,18
41.909.579,95
4.233.684,68
347.913.649
312.756.863,60
56.483.473,93
1.039.664,04
370.280.002
1.478.456.457
1.867.142.327
1.829.751.765
Total
Source ANEEL.
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The table below provides a summary of the historical and projected evolution of the Permitted
Annual Revenue received by all Brazilian electricity transmission concessionaires for making their
electricity transmission assets available to the National Main Grid over the period from 1999 to
2008. The information summarized in the table below reflects: (i) revenues of all electricity
transmission companies related to electricity transmission assets made available to the National
Main Grid; (ii) revenues from new investments by such companies, i.e., related to improvements
(melhorias) and reinforcements that were made available to the National Main Grid after the
execution of such concession contracts; and (iii) revenues included in the ONS's budget approved
by ANEEL for improvements and reinforcements that have not yet been made available to the
National Main Grid:
Evolution of Permitted Annual Revenue in the Brazilian Electricity Transmission Sector (National
Main Grid)
(in thousands of reais, except percentages)
Period
1999/2000
2000/2001
2001/2002
2002/2003
2003/2004
2004/2005
2005/2006
2006/2007
2007/2008
Source ANEEL.
Transmission
Companies (assets
contemplated in
concession
contracts)
1,558,434
1,844,784
2,122,059
2,865,734
4,384,593
5,098,116
6,526,962
7,040,219
6,987,237
New
Investments
(each period)
84,974
177,490
190,173
364,641
362,218
316,966
171,845
347,034
211,068
The ONS
Budget
92,474
92,919
129,955
141,993
195,817
278,603
321,285
311,481
280,904
TOTAL
1,735,882
2,115,192
2,442,187
3,372,369
4,942,628
5,693,685
7,020,092
7,698,734
7,479,209
CTEEP
(total
percentage)
21.30%
20.00%
18.60%
15.10%
13.30%
13.70%
14.70%
13.30%
18.96%
Adjustments, increases, reductions and periodic review
An electricity transmission concessionaire's Permitted Annual Revenue is subject to the following
adjustments, increases, reductions and periodic reviews:
Adjustments. Under the concession agreements, the Permitted Annual Revenue is subject to an
annual adjustment for past inflation, which adjustment takes place on July of each year. The
adjustment is based on the variation of the IGP-M during the relevant period.
Increases. Under the Concessions Law and the concession agreements, the Permitted Annual
Revenue may be increased, with the approval of ANEEL, to take into consideration new
investments by the concessionaire in electricity transmission assets made during the relevant Tariff
Period and previously approved by ANEEL.
Reductions. Under the CPST and the concession agreements the following reductions of the
Permitted Annual Revenue may apply:
•
The Permitted Annual Revenue under concession contracts entered into as a result of
competitive bidding processes conducted by ANEEL is subject to the Variable Deduction,
of up to 12.5% of the amount of the concessionaire’s Permitted Annual Revenue under
121
each such concession agreement, based on the unavailability of the concessionaire's
electricity transmission assets during the relevant period. The amount of the Variable
Deduction is calculated by multiplying the percentage representing the portion of time
during which the assets were unavailable during the relevant period, based on information
gathered monthly by the ONS, by the applicable revenues of such assets. If the period of
unavailability would correspond to a Variable Deduction of more than 12.5% of the
Permitted Annual Revenue for the preceding 12-month period, ANEEL may apply an
additional penalty of up to 2% per additional event of unavailability. This penalty applies
to events of unavailability without regard to the duration of such event of unavailability and
is not subject to a maximum amount. The Variable Deduction and the additional penalty
do not apply to any events of unavailability of the concessionaire's electricity transmission
assets resulting from force majeure, interruptions authorized or requested by ANEEL or
events of unavailability attributable to the ONS or to another electricity transmission
concessionaire. The methodology for calculating the Variable Deduction is provided in
ANEEL Resolution No. 270 June 26 2007, or Resolution 270, and applies to Concession
Contract 143/2001 and 059/2001. Resolution 270 provided certain maximum terms where
transmission assets may remain inoperative and limited the total amount that may be
deducted in a given month, to 12.5% of the Permitted Annual Revenue. Furthermore,
electricity interruptions beyond the concessionaire’s control or those requested by the
ONS, or the period necessary to operate a replacing equipment according with ordinary
procedures, among others, do not give rise to deduction on the Permitted Annual
Revenue. Likewise, Resolution 270 grants an incentive or bonus when the transmission
line performs, in operative basis, better than the regulatory standard. For the period
ending on June 3,/2008, when the Variable Deduction only applied to Concession
Contract 143/2001, CTEEP did not record any amounts on accumulated Variable
Deduction applicable to its Permitted Annual Revenue relating unavailability. For the 12month period ending on June 3, 2009 when the Variable Deduction was applied to
Concession Contracts 143/2001 and 059/2001, CTEEP recorded amounts in connection
with the accumulated Variable Deduction applicable to its Permitted Annual Revenue for
R$1,801,450.39 of the order of 0,13% of the total, when the mean for all Companies was
0,5%. There was also a bonus for R$2,816,231.81, corresponding to 36% of all bonus
received by 52 transmitters of the country.
•
If the period of unavailability of the concessionaire's electricity transmission assets is
longer than 30 consecutive days, ANEEL may initiate legal proceedings seeking to
terminate the relevant concession.
•
ANEEL may also reduce the Permitted Annual Revenue at any time if the electricity
transmission concessionaire obtains revenues from other activities.
Extraordinary Review. The Permitted Annual Revenue may be reviewed and adjusted upward or
downward by ANEEL under extraordinary circumstances such as changes in the tax regime,
regulatory tariffs, compensation for certain investments by the concessionaire for which prior
approval by ANEEL was not required, or other unforeseen circumstances, in order to maintain the
economic and financial conditions (equilíbrio econômico-financeiro) prevailing on the date of
execution of the relevant concession contract. Depending on the nature of the intervening event or
circumstance, ANEEL may increase or decrease the concessionaire's Permitted Annual Revenue
by its own initiative or at request of the concessionaire.
Periodic Review of Permitted Annual Revenue. Under the CPST and the concession agreements
that an electricity transmission concessionaire enters into with ANEEL. The Permitted Annual
Revenue is subject to review in the following cases:
122
•
Under all electricity transmission concession contracts the Permitted Annual Revenue is
reviewed by ANEEL every four years. The first review of transmission companies in Brazil
took place in July 2007 and reviewed the revenues relating assets that commenced to
operate in January, 2000 until June 2005; however, assets that were in operation prior to
January, 2000 shall not be reviewed at any time. Any new concessions granted by ANEEL
in connection with new electricity transmission lines will also provide for the Periodic
Review of the Permitted Annual Revenue. The purpose of the Periodic Review of the
Permitted Annual Revenue is to reassess the Permitted Annual Revenue payable to an
electricity transmission concessionaire in light of variations in the cost of third party capital
to set it at levels that allow CTEEP to render electricity transmission services efficiently
and at moderate tariffs.
•
In the case of CTEEP, the 059/2001 Concession Contract provides for the Periodic
Review of the Permitted Annual Revenue, which takes place every four years. The first
Periodic Review of the Permitted Annual Revenue was scheduled to have occurred in
June 2005, but it was postponed by ANEEL because at that time ANEEL had not yet
adopted the methodology and criteria to conduct such review. ANEEL rescheduled the
first Review of the Permitted Annual Revenue for completion by July 2007, which was
applied retroactively as if the adjustment resulting from the Periodic Review of the
Permitted Annual Revenue had become effective in June 2005. The final decision of
ANEEL regarding the Review of the Permitted Annual Revenue may result in additional
upward or downward adjustments to CTEEP's Permitted Annual Revenue under the
059/2001 Concession Contract. Considering only CTEEP's current Permitted Annual
Revenue, the Periodic Review of the Permitted Annual Revenue affects 21.8% of its
revenues under such contract. The remaining 78.2% of CTEEP's current Permitted
Annual Revenue under such contract is not subject to the Periodic Review of the
Permitted Annual Revenue by ANEEL.
•
Concession Contract 143/2001 does not provide a Periodical Review of CTEEP’S Annual
Revenues.
•
Pursuant to Resolution 158, if the ONS requests that CTEEP implement certain
reinforcements with respect to its electricity transmission facilities for the purpose of
expanding transmission capacity or improving the reliability of the Brazilian Interconnected
System, CTEEP shall implement such reinforcements without a need for ANEEL’s prior
authorization. However, Resolution 158 does not establish a procedure to determine how
CTEEP's Permitted Annual Revenue will be increased to compensate CTEEP for the
investments made in connection with such reinforcements.
Reinforcements and Improvements
Pursuant to the concession contract entered into between an electricity transmission
concessionaire and ANEEL, the concessionaire is required to implement any reinforcements or
improvements required by the ONS, in accordance with the schedule provided by the ONS. Every
three years the ONS promulgates an Expansion and Reinforcement Plan (Plano de Ampliações e
Reforços) setting forth all the reinforcements and improvements required to be implemented by
electricity transmission concessionaires. Because electricity transmission concessionaires are
entitled to maintain the economic and financial conditions prevailing on the date of execution of their
concession contracts, upon a request by the ONS for a reinforcement or improvement, electricity
transmission concessionaires are entitled to receive an increase in their Permitted Annual Revenue
to recover the investments made in the implementation of such reinforcements or improvements.
Until May 2005, an electricity transmission concessionaire's obligation to implement reinforcements
was subject to specific prior authorization from ANEEL, which would then set the corresponding
123
additional revenues. Improvements would not require prior authorization or additional revenues.
The then existing regulation, however, failed to define clearly the meaning of "reinforcement" and
"improvement." Resolution 158 distinguished between projects and installations that would be
considered reinforcements and those that would be considered improvements, as well as the
manner in which such concepts apply to concession contracts.
Pursuant to Resolution 158, improvements consist of the installation, replacement or remodeling of
equipment in order to ensure regular, continued, safe and updated electricity transmission services,
pursuant to the relevant concession contract and network procedures. In order for the costs
incurred in connection with for improvements to be taken into account in subsequent Periodic
Reviews of the Permitted Annual Revenue, these costs should be recorded in accordance with the
Electric Energy Utility Accounting Manual (Manual de Contabilidade do Serviço Público de Energia
Elétrica). However, Resolution 158 does guarantee that the investments made by a concessionaire
in connection with improvements mandated by the ONS will be compensated through increases in
such concessionaire’s Permitted Annual Revenue upon completion of the subsequent Periodic
Review of the Permitted Annual Revenue.
Pursuant to Resolution 158, reinforcements consist of the implementation of new electricity
transmission facilities, or the replacement or adjustment of existing facilities, in either case as
mandated by the ONS for the expansion of a concessionaire’s electricity transmission system or to
improve the reliability of the Brazilian Interconnected System. The reinforcements mandated by the
ONS are included in the Annual Expansion and Reinforcement Proposal, or the Annual Expansion
and Reinforcement Proposal, approved by the ONS and require ANEEL’s prior approval. When
ANEEL approves the ONS's Annual Expansion and Reinforcement Proposal, it also determines in
advance how much each concessionaire's Permitted Annual Revenue will be increased to
compensate it for the reinforcements mandated by the ONS. Through Resolution 158, electricity
transmission concessionaires are required to implement reinforcements mandated by the ONS for
the purpose of expanding the transmission capacity of such concessionaire’s electricity
transmission system or improving the reliability of the Brazilian Interconnected System, without the
need for ANEEL’s prior approval. As a result, because ANEEL does not have to approve such
reinforcements in advance, the increase in the Permitted Annual Revenue to which the electricity
transmission concessionaire is entitled in connection with such reinforcements will not determined
by ANEEL prior to the completion of the reinforcement by the concessionaire. The increase in the
Permitted Annual Revenue associated with such investments will be calculated pursuant to the
Periodic Review of the Permitted Annual Revenue carried out by ANEEL. In addition, Resolution
158 does not guarantee electricity transmission concessionaires that all the investments made by
an electricity transmission concessionaire in connection with such mandated reinforcements will be
compensated through increases in their Permitted Annual Revenue.
CTEEP has commenced an administrative proceeding before ANEEL challenging the
constitutionality of Resolution 158 on the ground that it violates rights that were vested in the
electricity transmission concessionaires prior to the issuance of such resolution. ANEEL then
amended certain aspects of Resolution 158 by issuing Resolution No. 242 of December 15, 2006,
or Resolution 242. As the electricity transmission companies were not satisfied with the changes
made by ANEEL following the decision of the administrative proceeding, ABRATE commenced a
new administrative proceeding before ANEEL challenging the constitutionality of Resolution 158
and Resolution 242 on similar grounds of the former claim. On 13 February 13, 2007, ANEEL
issued a decision relating the new process under Resolution 158 which confirms compliance of both
resolutions with the Federal Brazilian Constitution. On August 1, 2007 ABATE instituted a judicial
action against Resolution 158 and Resolution 242.
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Guarantee System
The monthly payments that the users of a concessionaire’s electricity transmission system are
required to make to such concessionaire for the availability of its electricity transmission system are
guaranteed pursuant to the CCG entered into between the ONS, acting as agent for the
concessionaire, and each system user. The guarantee mechanism contemplated in the CCG
requires system users to grant to the ONS access to bank accounts that they maintain with banks
designated in the corresponding CCG, which banks act as agents for the ONS. Each customer of
each system user pays directly into these bank accounts amounts it owes to the system user for
transmission services provided to its customers. The balance of funds in these accounts must
equal at least 110% of the average amount of the last three invoices paid by such user to the
electricity transmission concessionaire. If a system user fails to satisfy the monthly payment within
two days of its due date, the ONS will instruct the bank to block the account of the defaulting user
and transfer the Owed Amount, plus interest and penalties, to a special account, and subsequently
remit these funds to the concessionaire. In addition, if a system user fails to make the required
monthly payment for three consecutive months, or for more than five non-consecutive months within
any given 12-month period, the CCG requires the user to deliver to the ONS a letter of credit with a
six-month term for an amount equal to two monthly invoices for electricity transmission services. If
the letter of credit is not delivered, the relevant CCT will be suspended for a maximum of 30 days.
Upon the expiration of such suspension, if the letter of credit still has not been delivered, the CCT
with such user may be terminated.
Tariffs and charges for use of the distribution and transmission systems
ANEEL oversees the tariff regulations that govern usage of the distribution and transmission
systems and sets the corresponding network usage tariffs and charges. The principal network
usage tariff set by ANEEL is known as the TUST. Additionally, distribution companies of the
South/South-East interconnected system pay specific charges for the transmission of electricity
generated at Itaipu and for the use of the transmission system. The following is a summary of these
tariffs or charges.
TUST. The TUST is charged to distribution companies, generators and Independent Consumers for
use of the National Main Grid and the Sub-Transmission Systems. According to criteria established
by ANEEL, and pursuant to CPST agreements, owners of the different parts of the National Main
Grid have transferred the coordination of their facilities to the ONS in return for receiving regulated
payments (Permitted Annual Revenues) from users of the electricity transmission system. Users of
the National Main Grid, including generation companies, distribution companies and Independent
Consumers, have signed CUST contracts with the ONS entitling them to use the electricity
transmission grid in return for the payment of the TUST.
The TUST consists of a portion representing the cost incurred by all users, irrespective of whether
their usage of the system has positive or negative effects, and another portion that represents the
cost incurred in the transmission of electricity generated or consumed, and relates to the
investments of electricity transmission concessionaires for building the network. This is known as
the TUSTFIO.
The TUSTFIO is made up of the TUSTRB, which applies to all users of the Brazilian Interconnected
System and relates to the facilities that participate in the National Main Grid, and the TUSTFR,
which applies to the facilities located near the borders of Brazil that participate in the National Main
Grid, as well as to the distribution grid (voltage less than 230 kV) and to the Sub-Transmission
Systems shared by distribution concessionaires or allowed parties (permissionários).
The TUSTRB calculation uses a methodology called nodal that takes into account the Permitted
Annual Revenue of each concessionaire for each portion of the transmission facilities that together
125
constitute the National Main Grid. This methodology takes into account for each electricity
transmission concessionaire an estimate of the cost that users impose on the network during
periods of highest demand, which costs are in turn calculated based on investment and operating
costs incurred by electricity transmission concessionaries to maintain a minimum grid capable of
transmitting most of the electricity on these opportunities. The TUSTFR is calculated based on the
division of Permitted Annual Revenues relating to border facilities and shared Sub-Transmission
Systems by the amount of usage purchased by the distribution companies that utilize them.
st
The TUST, which is effective from July 1 of a given year to June 30 of the following year, is revised
annually according to an inflation index and the annual revenues of electricity transmission
companies.
The ONS is responsible for the monthly determination and recording of the TUST, as well as for
directing them to electricity transmission companies for invoicing and to system users for payment.
Each system users receives monthly invoices from the concessionaire which are paid in three
installments due within the corresponding month.
Connection charges
Certain distribution companies gain access to the National Main Grid through an intermediary
connection system (Sub-Transmission Systems for exclusive usage) located between their
respective distribution lines and the National Main Grid. Access to this connection is formalized
under CCTs with electricity transmission concessionaires that own the facilities, for a contractually
agreed compensation that is usually included as a component of their Permitted Annual Revenue.
Charges and tariffs owed by electricity transmission concessionaires
Electricity Services Inspection Fee. The TFSEE was created by Law No. 9,427 of December 26,
1996, and regulated by Decree No. 2,410 of November 28, 1997. TFSEE is an annual fee payable
directly to ANEEL in 12 monthly payments, and is calculated based on the type of service rendered
and in proportion to the size of the concession. It is equivalent to 0.5% of the annual economic
benefit earned by the concessionaire.
Contribution to research and development
Electricity transmission concessionaires must invest each year a minimum of 1% of their net
operating revenues in electricity research and development. See "Business—Research and
Development."
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RGR Fund
Under certain circumstances, companies in the energy sector are compensated if the underlying
concession contract is cancelled or revoked. In 1971, the Brazilian Federal Government created
the RGR Fund to fund this kind of compensation. In February 1999, ANEEL established that each
electricity service provider must make a monthly contribution to the RGR Fund at an annual rate of
2.5% of the operating company's fixed assets, but not exceeding 3.0% of its total operating
revenues in any fiscal year. Recently, the RGR Fund has been used primarily to finance the
construction of electricity distribution and generation projects. The RGR Fund is scheduled to
expire in 2010. See "Management’s Discussion and Analysis of Financial Condition and Results of
Operation—Description of Principal Line Items— Deductions from Operating Revenues—Global
Reserve for Reversion Quota (RGR Fund)".
b.
Peru
i.
Overview of the Sector
The electricity generation sector in Peru is currently formed by 15 private and state-owned
companies, all members of COES, which freely compete for customers in the market. Electroperú,
Edegel, Enersur, and Egenor are the four major generation companies operating in the industry.
Only Electroperú remains a state-owned enterprise. Some mining operations and industrial
complexes also generate electricity they consumed in their generation.
The wholesale electricity market in Peru is rather competitive since generation companies compete
to supply distribution companies and they also compete with distribution companies to supply large
industrial consumers in the deregulated market (i.e. with a demand of 1 MW or more).
The Peruvian interconnected transmission system is an open access electricity transmission
network comprised of 5 interconnected transmission networks that link the electricity generation and
consumption centers located in the 19 regions of the country. All transmission companies operating
the interconnected system are privately owned. Transmission activities are regulated as a natural
monopoly.
Electricity distribution is also regulated as a natural monopoly since each company enjoys an
exclusive right to supply all the local consumers located at its service area (regulated customers
with electricity loads of less than 1 MW). Distribution companies can freely compete with electricity
generators to supply electricity to Unregulated Customers.
ii.
Laws and Regulations
The main regulatory framework for the electricity industry in Peru is comprised of the following laws
and regulations:
•
Electric Concessions Law (ECL) Decree Law No. 25844 and its implementing
regulation Supreme Decree No. 009-93-EM;
•
Law for the Creation of OSINERGMIN (previously OSINERG) and amendment of the ECL
(Law No. 26,734) and its regulation Supreme Decree No. 54-2001-PCM; later
supplemented by Law No. 27,699 giving additional capacities to OSINERGMIN;
•
Anti-trust and anti-oligopoly Law for the Electric Sector (Law No. 26,876), specific for the
Electricity Sector and its regulation under Supreme Decree No. 017-98-ITINCI;
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•
Efficient Generation Law or LGE, (Law No. 28832), recently enacted substantial
amendment of the ECL (June 23, 2006) that is in process of further regulatory
implementation; and
•
Technical Regulation on the Quality of the Electricity utilities (Supreme Decree No. 020-97
EM).
iii.
Institutional Framework
The principal characteristics of the regulatory framework for the electricity industry in Peru are:
(i) de-verticalization of the industry, through the creation of companies that can only conduct
operations in one type of activity, i.e., generation, transmission or distribution; (ii) the promotion of
competition in generation to supply distribution companies and unregulated customers; (iii) private
planning and operation of the country's transmission systems, subject to the principles of efficiency
and quality of service, including compliance with the technical requirements established by
regulations affecting the sector; (iv) full distribution monopoly and partial retail commercialization
monopoly; (v) competition between generators and distributors in the supply to unregulated
consumers through the use of electricity purchase agreements (PPA); (vi) open access to
transmission and distribution networks at regulated tariffs by OSINERGMIN; and (vii) tariff
regulation by OSINERGMIN based on efficient investment operation for regulated customers.
The electricity sector in Peru consists of one interconnected system, the SEIN, plus several isolated
regional and smaller systems which provide electricity to rural areas. In Peru, the MINEM defines
energy sector policies, and regulates matters relating to the environment, and the granting,
supervision, maturity and termination of licenses and concessions for generation, transmission, and
distribution activities, among others. OSINERGMIN is an autonomous public regulatory entity
established in 1996 to control the compliance with legal and technical regulations related to
electrical, hydrocarbon and mining activities, as well as the preservation of the environment in
connection with the development of these activities. One of OSINERGMIN's functions is the
publication of the Regulated Revenues applicable in the relevant tariff period. The COES, an entity
formed by generation, transmission companies, and unregulated consumers, coordinates the
dispatch of electricity of the SEIN and prepares the technical and financial study that serves as a
basis for the semi-annual node tariff calculations.
As a result of Law 28832, the law enacted to secure efficient development of electricity generation,
COES’ Board of Directors is amended to include five members, four in representation of
Generators, Distributors, Transmitters and Free-Customer Committees, and, the fifth, designated by
COES’ Assembly, acting as Chairman of the Directory.
In October 1997, technical norms were developed to permit the establishment of standards against
which to compare the quality and conditions of the service provided by electricity companies.
Beginning in 1999, those companies that did not meet the minimum quality standards were subject
to fines and penalties imposed by OSINERGMIN, as well as to compensatory mechanisms for
those customers who received substandard service. In addition, since antitrust laws became
applicable to the electricity sector in 1997, companies are allowed to re-integrate vertically or
horizontally, if they obtain the prior consent of the Peruvian competition authority.
Recent legislation (Law No. 28832) has been implemented to promote investment in power
generation and to modify certain aspects of the LCE. The most important changes introduced by
this legislation are:
•
The introduction of a bidding process for PPAs with distribution companies to supply
regulated customers, which can take place three years or more before the effective date of
the PPA, at dollar-denominated tariffs, indexed to international adjustment variables.
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•
The new classification of all new electricity transmission facilities as "guarantied" or
"complimentary". Guarantied transmission facilities are those qualified as a general interest
matter in a transmission plan proposed by the COES and approved by the MINEM. A
bidding process is introduced to implement these facilities. Complimentary transmission
facilities are those that could be implemented by any private initiative and without the need
of a bidding process.
The COES is charged with both the technical operation of the system and the administration of the
spot market. In addition, the COES will be formed by generation, transmission and distribution
companies, as well as by unregulated consumers.
Environmental Regulation
In Peru, electricity companies are subject to the general environmental and criminal laws which
govern environmental matters and to the Regulation of Environmental Protection for Electric
Activities (Reglamento de Protección Ambiental de las Actividades Eléctricas), a regulation which
specifically governs the protection of the environment by electricity companies and maximizes the
emission standards set from time to time by the governmental authority. This regulation establishes
a number of requirements that need to be satisfied by electricity companies, including reporting
requirements, environmental audits and record-keeping of emissions. Electricity companies that do
not comply with the regulation are subject to penalties. The authority governing environmental
matters is the OSINERGMIN. The DGAAE (Dirección General de Asuntos Ambientales
Energéticos), which is part of MINEM, is in charge of proposing environment preservation and
protection policies for the sustainable development of energy-related activities, formulating,
proposing and approving, as it corresponds, those legal technical standards related with
environmental preservation and protection, among others functions.
iv.
Regulated Revenues
Regulated Revenues of our three Peruvian subsidiaries are subject to a special regime provided in
their relevant concession contracts. Annual revenues for electricity transmission companies in Peru
are usage charges set by the regulating body OSINERGMIN and are charged to electricity
generators and distributors and to unregulated customers for the use of the SEIN’s Principal
Transmission Systems (SPT) and Secondary Transmission Systems (SST), hereinafter referred to
as Peruvian Usage Charges. These charges for usage of the SPT and SST are charged through
generators comprising the COES, who collect them from distributors and unregulated customers.
REP
As to REP, there is a Guaranteed Annual Remuneration (RAG) provided in the Concession
Contract, and annually updated by OSINERGMIN through the US index on Finished Goods Less
Food and Energy (Series: WPSSOP3500). Currently, REP has expanded its concession
transmission system to allow increasing its annual revenues, which are also guaranteed revenues
named Annual Remuneration on Expansions (RAA), which added to the RAG comprise the REP’s
Annual Remuneration (RA). Invoicing by REP is made effective on monthly basis in local currency
(Nuevos Soles) as determined by OSINERGMIN, and an annual liquidation is available to adjust
any receipts to their equivalent in US dollars with the annual guaranteed remuneration.
ISA Peru
Annual revenues for ISA Peru for electricity transmission services are calculated based on the New
Replacement Value (VRN) of electricity transmission assets built and operated under the
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Concession Contract as established by ISA Peru under its original bid. This value is adjusted each
four (4) years to reflect the PPI changes. The annual revenue is set in consideration of the updating
rate which for the first ten (10) years is 12.00%, and thereafter it will be fixed by the LCE.
Revenues for administration, operation and maintenance expenses are fixed in 3.00% of the VRN.
Transmantaro
The contract whereby Consorcio TRANSMANTARO charges transmission services to the
generation companies comprising the COES, is a BOOT Contract providing that its annual
revenues are calculated on the basis of an updated Replacement Value (VNR) for transmission
facilities. This updating is made on annual basis through the US index of Finished Goods Less
Food and Energy (Series: WPSSOP3500). Likewise, TRANSMANTARO AOM costs are covered by
recognizing a fixes amount that is updated through the same index as the VNR.
Invoicing of revenues is made on monthly basis in Nuevos Soles, by applying the results from
monthly liquidations made by the COES.
d.
Bolivia
i.
Overview of the Sector.
There are currently 24 companies that participate in the Bolivian wholesale electricity market,
including ten generation companies, three transmission companies, six distribution companies and
five non-regulated large consumers. Also as a result of the sector's deregulation, new agencies, like
the SDE and the CNDC, were created to regulate and oversee the operation of the Bolivian
electricity system.
Of the total gross electricity generation in Bolivia, 64.28% percent is controlled by three companies:
Compañía Boliviana de Energía Electrica BPC, or COBEE, Empresa Eléctrica Guarachi S.A., or
EGSA and Empresa Eléctrica Corani S.A., or CORANI. The wholesale electricity market in Bolivia
is an integrated wholesale market for distributors, generators and unregulated customers. Such
market is based on yearly electricity supply contracts which have not yet been fully implemented,
and primarily on a spot market conducted by the CNDC and supervised by the AE. Maximum
prices for each node are calculated by the CNDC based on the generation costs of the most
efficient energy generators for a specific energy demand including the transmission costs to such
node, and then submitted for approval to the AE.
Electricity is transmitted in Bolivia through the SINB that forms the grid connecting the departments
of La Paz, Oruro, Cochabamba, Santa Cruz, Sucre and Potosí. A few small independent systems
remain in the departments of Beni, Tarija and Pando which are not part of the SINB. In 2005, SINB
accounted for 83.38% of Bolivia's installed capacity, 85.36% of the country's generated electricity
and 86.70% of all the electricity consumed in the nation. The SINB serves six of Bolivia's nine
regions and connects the major Bolivian cities. As of September 2007 its trunking interconnection
system (SIB) consisted of 1,722.6 km of 230 kV lines, SINCE October 4, 773.83km of 115 kV lines,
and 186.8 km of 69 kV lines. In 2002 TDE was privatized and sold to a subsidiary of Red Eléctrica
de España and it currently owns and operates the vast majority of the national medium-voltage and
high-voltage electricity transmission network that occupies the SINB. 23.46% of the remaining
transmission networks owned by the SIB are operated by ISA Bolivia.
ii.
Institutional Framework
On December 21, 1994, the Bolivian Government passed Electricity Law 1,604, hereinafter referred
to as the Bolivian Electricity Law, which unbundled the state-owned electricity businesses and
assets into separate generation, distribution, and transmission components. It also set limits on
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market share for electric generators so that no generation company connected to the Bolivian
Interconnected System could control more than 35.00% of the country's total installed capacity. The
Bolivian Electricity Law separated the activities of generation, transmission and distribution in such
a way that no company could operate in more than one of the sectors. These cross owners
limitations and restrictions have enabled the development of a competitive market in the electricity
generation sector in Bolivia. These restrictions, however, do not apply to companies which are
outside of the SINB and that do not operate in a competitive environment. The Bolivian Electricity
Law attributed to the SDE the duty to supervise the electricity generation market and, also, a crucial
role in the determination of the rates charged by electricity transmission companies and the prices
to be charged to regulated end users.
Electricity transmission within the SINB must be operated on an open access basis. As a result, the
companies that own and operate transmission lines connected to the SINB must allow all
generation, distribution or transmission companies in Bolivia to connect and use their facilities to
transmit electricity on their network at the approved maximum transmission price.
In 1999 the Ley Corazón, or Ley Corazon, was enacted in order to promote the development of
projects related to electricity exportations and construction of interconnections with neighbor
countries, to take advantage of the significant energy demand from markets outside of Bolivia.
Such law, combined with a bill drafted to create tax-exempt areas for energy export projects, was
intended to encourage companies to build gas-powered electricity generation capacity for export
markets.
In virtue of the State Political Constitution –CPE, enacted on February 7, 2009- and Supreme
Decree N° 0071 providing in its Article 3°.- (CREATION OF FISCALIZATION AND SOCIAL
CONTROL) the creation of public institutions, Fiscalization and Control Authorities, to rule activities
performed by private, community, public, combined-capital and cooperator corporate entities and
individuals in the Transport and Telecommunications sectors; Consumable Water and Basic Sanity,
Electricity, Forest and Land, Pensions and Companies, the Electricity Fiscalization and Social
Control Authority –AE is created.
On April 9, 2009 by Decree N° 0071, the Constitutional President of the Plurinational State of
Bolivia created the Social Control and Fiscalization Authorities, including the Electricity Fiscalization
and Social Control Authority –AE; this same Decree provided the extinction proceeding of the
superintendencies, including the SDE. On May 7, 2009 Constitutional President of the Plurinational
State of Bolivia appointed the executive position of Director of the Electricity Fiscalization and Social
Control Authority –AE, on which date this institution begins to operate as supervising entity.
iii.
Regulated Revenues
The SDE, hereinafter AE, sets the tariffs charged on monthly basis by electricity transmission
companies to electricity generators for their use of the SINB, hereinafter referred to as Usage
Tariffs, and the Aggregate Amount of revenues that electricity transmission companies which assets
comprise the SINB are entitled to receive in any year, hereinafter referred to as Annual Revenues.
Pursuant to the Pricing and Tariffs on, hereinafter referred to as the RPT, Annual Revenues
provided in each license contract must be sufficient to cover the costs relating investment made by
electricity transmission companies on their electricity transmission assets, including the capital cost
for such companies and costs incurred to maintain, operate and administer such assets, assuming
full usage of network.
Annual revenues for electricity transmission companies in Bolivia are computed by using the
formula described below:
AR= INV x {(IRR x (1+IRR)n)/((1+IRR)n-1)} + (INV x AOM)
Where:
131
AR
INV
IRR
N
AOM
Is the annual revenue.
Is the investment value of electricity transmission assets under the license contract. The
investment value is that established under the tenders filed by electricity transmission
companies during the bid process arranged by the AE to award the relevant license
contracts, plus all costs relating easements, compliance with environmental regulations
and interconnection to the SINB. 60.00% of such value is adjusted semiannually to reflect
changes on the exchange rate of US Dollars and Bolivian pesos; the remaining 40% is
adjusted semiannually to reflect changes on the IPCB.
Is the internal rate of return provided in the relevant license contract for the electricity
transmission assets’ useful life. The internal rate of return for electricity transmission
assets owned by ISA Bolivia is 10.00%.
Is the electricity transmission assets’ useful life as determined by AE, that is, thirty (30)
years for electricity transmission assets owned by ISA Bolivia.
Is the percentage rate at which electricity transmission companies are compensated for
expenses incurred by them in the administration and operation and maintenance of their
electricity transmission assets, currently set by AE at 3.00% over the investment value.
35% of such value is adjusted semiannually to reflect changes on the exchange rate of
US Dollars and Bolivian pesos and the remaining 65% is adjusted semiannually to reflect
changes on the IPCB.
Given that Usage Tariffs paid by electricity generators for utilization of the SINB are calculated
semiannually by the AE assuming full usage of network, the AE provides additional transmission
charges that the electricity generators must pay on monthly basis to compensate electricity
transmission companies when the utilization level of the network is below 100%, thus segregating
Annual Revenues from any reduction resulting from decreases in electricity demand.
As per the terms of the Bolivian License Contract, ISA Bolivia is entitled to receive during the term
of the Contract (30 years), remuneration for each line equal to the annual transmission cost, by
monthly payments made by the wholesale electricity market agents. For the first period of fifteen
(15) years the annual transmission cost corresponds to annual costs for investment, maintenance,
operation and administration, and for the following fifteen (15) years the annual transmission cost
will be equal to the annual costs for investment, maintenance, operation.
Pursuant to the RPT, every (4) years the AE reviews the formulae used to adjust the value or
investment on electricity transmission assets and the AOM expenses recognized to electricity
transmission companies, based on the historic analysis and data that transmission companies are
bound to submit to the AE for such purposes.
By Resolution SSDE N° 123/2009 of April 22, 2009, the AE approved for the May 2009 – April 2013
period, the Annual Costs for Investment and the Annual Costs for Operation, Maintenance and
Administration of STEA, for facilities belonging to ISA Bolivia, the Interconnection Trunking system
and its corresponding indexation formulae.
6.
Regulatory Framework for Market Management and Operation Business
On September 1, 2005 we formed and transferred to XM our former functions and operations
related to (i) administration of the electricity dispatch in the STN through the CND; (ii) administration
of the MEM, including the operation of the MEM's spot energy market settlement and clearance
functions; and (iii) settlement and clearance of charges for the use of the STN.
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XM started its operations on October 1, 2005 thereby assuming the functions formerly carried out
by us through the CND regarding the operation, planning and coordination of the SIN, the
administration of the Commercial Settlement System - in the MEM and the settlement and clearing
of charges for use of the SIN.
In 2008, XM accounted for 0.24% of our consolidated operational profit. XM paid dividends to us
for Col$753 million.
Past October 3, 2007 XM Compañía de Expertos en Mercados S.A. E.S.P. – XM S.A.
E.S.P., granted the public deed to incorporate the company named Cámara de Riesgo Central de
Contraparte de Colombia S.A. -CRCC-, pursuant to the authorization granted under Resolution
number 1586 of September 5, 2007 issued by the Colombian Financial Superintendency
(Superintendencia Financiera de Colombia); XM S.A. E.S.P., holds an interest of 5,85% in the
company’s total capital, represented in 1,695,764,172 shares. The core and exclusive purpose of
such company is the provision of clearance services as the core counterparty of operations, in order
to reduce or eliminate risks derived from the non-compliance of obligations resulting from such
operations. Implementation of Cámara Central de Contraparte is a key step towards development of
the Colombian electricity market, given that CRCC becomes crucial to consolidate financial markets
and to develop derivative markets on commodities such as electricity, gas and other forms of
energy.
In addition, in May 2008 the Bolsa de Valores de Colombia S.A. and XM S.A. E.S.P formalized an
alliance purported to develop an energy derivative market in Colombia as a joint entrepreneurial
initiative. Based on this alliance it was deemed convenient to create Derivex S.A., market for
energy commodity derivatives (Derivex) that will administer the new energy derivative market and
which is under incorporation in accordance with Decree 1120 of 2008. It is expected that this
company will begin operations in Colombia by the end of 2009, once the authorizations required for
incorporation and operation are obtained from the Financial Superintendency and upon approval of
the entities corresponding to the products being traded under the new market. The products traded
at Derivex are settled and offset by the Cámara de Riesgo Central de Contraparte de Colombia –
CRCC-, which will act as counterparty of all operations made in Derivex, eliminating the credit risk
involved in these transactions. Derivex will offer to the market a product portfolio gradually covering
a range of needs from customers, while it undertakes to go on with the development of products to
meet the demand for coverage and investment instruments, facilitating the market liquidity and
offering competitive tariffs. As from 2010, electricity futures contracts may be traded at Derivex.
Remuneration of services for XM S.A. E.S.P –CREG Resolutions 081 of 2007, 048 of 2008 and 071
of 2009, provide XM’s regulated revenues for the next 5 years (from June 2008 to June 2013),
which take into account the following components:
133
In addition, the Financial Transaction rate is compensated for the ASIC and LAC, that enables
recovering the costs incurred for this concept at market operations, plus a factor corresponding to
the Income tax effect.
In addition, XM provides Unregulated services in the following lines:
•
Consulting sales on power and market systems.
•
Sales on Training and preparation.
CHAPTER IV. FINANCIAL INFORMATION
A.
AUTHORIZED, SUBSCRIBED AND PAID-IN CAPITAL OF THE ISSUER, INDICATING
THE NUMBER OF OUTSTANDING SHARES AND RESERVES
Our authorized capital stock is the amount of Forty-five Thousand million pesos
(Col$45,000’000,000), divided into one thousand three hundred seventy-one million nine hundred
fifty-one thousand two hundred nineteen (1,371’951,219) shares, in turn divided into Common
Shares that are either preferred (preferred dividend and no voting rights) and privileged. Nominal
value of our shares is THIRTY-TWO PESOS POINT EIGHT ZERO ZERO ZERO ZERO ZERO
ZERO ZERO FIVE THREE FIVE TWO ZERO ZERO CENTS (Col$32.80000000535200) each.
Our subscribed and paid-in capital stock as of September 30, 2009 was one thousand ninety-three
million four hundred and eighty one thousand four hundred ninety six (1,093’481,496) Common
Shares.
The total number of shares pending of subscription was two hundred and seventy eight million four
hundred sixty nine thousand seven hundred and twenty three (278.469.723).
We have no outstanding privileged or preferential shares. All our privileged shares were converted
into common shares on December 31 2002.
Our capital structure is summarized in the chart below:
AUTHORIZED CAPITAL
SUBSCRIBED AND PAID-IN CAPITAL
CAPITAL
PENDING
FOR
SUBSCRIPTION
VALUE
45.000.000.000
35.866.193.075
#SHARES
1.371.951.219
1.093.481.496
9.133.806.925
278.469.723
Our subscribed and paid-in capital and the number of treasury shares will vary according to the
outcomes from this offering.
B.
PUBLIC OFFERINGS CARRIED OUT IN THE PAST YEAR TO ACQUIRE SHARES IN
THE ISSUER
No public offering for acquisition of our shares has been carried out in the past year.
134
C.
PROVISIONS AND RESERVES FOR SHARE REACQUISITION
On March 22, 2001 we approved a special reserve for acquisition of our own shares owned by
EEPPM, for the amount of Thirty-Eight Thousand One Hundred millions pesos
(Col$38.100’000.000)
D.
INFORMATION ON DIVIDENDS
1.
Corporate dividend policy
Our dividend policy follows the principles set forth in the Colombian Commercial Code, the
Company’s Bylaws, the Good Governance Code and the Declaration by the Colombian
Government in its capacity as controlling shareholder.
Our shareholders may approve dividend distributions, including interim distributions based on our
annual, semiannual or quarterly financial statements. The amount A to be distributed as dividend
depends upon several factors, such as our operating results, the mandatory minimum dividends,
our financial condition or funding needs, our growth perspectives and other factors that our
shareholders may find appropriate.
The Commercial Code and our Bylaws require payment of mandatory minimum dividends to our
shareholders, corresponding to 50% of our adjusted net profits, calculated in accordance with the
Commercial Code, or 70% of such adjusted net profits in the event that our accumulated reserves
exceed 100% of our subscribed capital, unless the Assembly of Shareholders resolves, through the
affirmative vote of at least 78% of the Common Shares holders of represented at the Assembly, that
the profits distribution should be made in lesser percentage or none at all. The Colombian
Government, our principal shareholder, has declarared that it shall not promote or vote in favor of
any resolution by the General Assembly that proposes dividends distribution for less than 50% of
our adjusted net profits, calculated in conformity with the Commercial Code.
Pursuant to the foregoing, every shareholder is entitled to receive dividends equivalent to a portion
of the company’s profits, in cash, in proportion to the shares held. For the purposes of profits
distribution, as contemplated in articles 155 and 454 of the Commercial Code, those resulting from
applying the procedure below should be held as net profits:
•
Profits accrued by the company according to each year’s true and actual Financial
Statements are solely deducted with items corresponding to: (i) discharge of losses from
previous years (if any), (ii) legal reserve, and (iii) allocations for payment of taxes;
•
The balance so determined is applied with the percentages to be distributed in conformity
with the above-mentioned articles of the Commercial Code. The resulting value will be the
minimum amount to be distributed as dividend on each period.
•
Any remainders after the distribution of minimum dividends will remain available to the
Assembly in order to make any statutory or voluntary reserves or to be distributed as
dividends in addition to minimum dividends set forth in subparagraph b)
Payment of dividends in shares requires approval of 80% of the shareholders represented at the
General Assembly. If no such majority is achieved, dividends in shares shall solely be distributed to
those who voted affirmatively the proposal of such dividend distribution in shares.
135
It is worth to remark that from the time when we resolved registrating our shares in the Registro
Nacional de Valores e Intermediarios, presently, the National Registry of Securities and Issuers
(RNVE), we have distributed dividends with an upward trend, as shown below.
2.
Net profits and dividends decreed in the past three (3) years
From issuer:
Figures in million pesos
Net year profits
Dividends decreed
2008
236.593
163.501
2007
226.021
150.593
2006
150.469
130.466
2008
236.593
2007
226.021
2006
150.469
From the group:
Figures in million pesos
Net year profits
3.
Related information
a.
Net income per share
Net profits per share is calculated using the weighted average of the outstanding shares of our
capital stock during a given year. In 2008 such average corresponded to 1,075,661,374, in 2007
was 1,023,129,780 and in 2006 was 961,956,080. Net profits per share in each of the last three
years is as follows:
From issuer:
Figures in pesos
Net income per share
2008
2007
220
2006
221
156
From the group:
Figures in pesos
Net income per share
b.
2008
2007
220
2006
221
156
Dividends per share and form of payment.
2006 period:
Our General Meeting of Shareholders held on March 30, 2007 approved the proposal on allocation
and distribution for year 2006, consisting of the distribution of profits and reserves for
Col$130,466.2 million, corresponding to 97.76% of the net profits in year 2006. Our General
Assembly decreed dividends in the amount of Col$128 per share, for 1.019.267.163 outstanding
Common Shares outstanding. Payment was agreed to be made in cash, in four (4) quarterly equal
installments, at a ratio of Col$32 per share: on April 18, July 18 and October 18, 2007; and January
18, 2008.
At the cited meeting our General Meeting of Shareholders approved to create an occasional
reserve for the amount of Col$2,993.52 million destinated to pay dividends per share in the amount
of Col$96 to those who subscribe and pay shares issued on occasion of this Public Offering, which
dividend shall be payable in cash in three (3) installments of Col$32 each, on the following dates:
136
July 18, 2007, October 18, 2007 and January 18, 2008. Our General Assembly resolved that in the
event where the subscription and payment of shares under the Public Offering are not completed
prior to July 18, 2007, the date provided for paying the first installment of dividends, only the second
and third installments shall be paid.
Likewise, if the subscription and payment of shares under the Public Offering are not completed
prior to October 18, 2007, the date provided for paying the second installment of dividends, only the
third installment shall be paid.
In any of the following cases, amounts destinated for payment of dividends in favor of those who
subscribe and pay shares issued on occasion of this Public Offering, shall remain in the occasional
reserve herein created: (i) failing the Public Offering; (ii) partial placement of shares issued under
the Public Offering; (iii) partial subscription and payment of shares placed under the Public Offering
and; (iv) subscription and payment of shares subsequent to the dates provided for the payment of
dividend installments.
2007 period:
Our General Meeting of Shareholders held on March 31, 2008 approved: (a) creating reserves for
Col$24,066 million, of which Col$925 million are for the legal reserve in accordance with article 452
of the Code of Commerce and Col$23.141 million for the tax-related reserve as provided in article
130 of the Tax Code; (b) decree a dividend over the net profit value equal to Col$150.593 million,
corresponding to 74.6% of 2007 net profit. Dividend per share will be $140 corresponding to a
9.38% increase regarding the 2006 dividend per share for the 1,075,661,374 outstanding Common
Shares. Payment will be made in four equal quarterly installments for Col$35 per share: April 16
2008, July 16 2008, October 16 2008 and January 27 2009.
2008 Period:
Our General Meeting of Shareholders held on March 30, 2009 approved: (a) creating legal reserves
for Col$25,487 million, for the tax-related reserve as provided in article 130 of the Tax Code (b)
decree a dividend over the net profit value equal to Col$163,501 million, corresponding to 77.45%
of 2008 net profit. The dividend per share will be Col$152 corresponding to 8.6% increase
compared with the 2007 dividend per share, for the 1,075,661,374 outstanding Common Shares.
Payment will be made in four equal quarterly installments of Col$38 per share: April 16 2009, July
16 2009, October 16 2009 and January 27 2010; and (c) The period profits are to be used to create
an occasional reserve for equity strengthening for Col$47,605 million, to contribute with ISA’S
growth strategy and keep its financial soundness.
Our upward dividend policy is proven on the foregoing figures which show 9.4% increases on the
dividends decreed for years 2006 and 2007, and 8.67% among those corresponding to years 2007
and 2008.
c.
Share equity value
Figures in pesos
Share equity value
d.
2008
4,470.98
2007
3,563.69
2006
3,444.09
Share average price and upon the stock exchange annual closing.
Figures in pesos
Average price
Annual closing price
2008
7,277
7,100
2007
6,560
7,100
2006
5,474
5,910
137
e.
Price after stock exchange closing/profit per share
Figures in pesos
2008
By the issuer
32.27
By the group
32.27
f.
Figures in pesos
2007
2006
46.71
50.71
46.17
2008
20.32
20.32
2007
16.95
16.95
2006
22.08
22.08
2008
29.41
2007
26.76
2006
26.91
2007
2006
1.72
Equity value/dividend per share.
Figures in pesos
Equity value/dividend per share
i.
Price after stock exchange closing/equity value.
Figures in pesos
Price after stock exchange closing/equity value
E.
2008
Equity value/profit per share
By the issuer
By the group
h.
2006
37.88
37.88
Price after stock exchange closing/dividend per share
Figures in pesos
Price after stock exchange closing/dividend per
share
g.
2007
32.13
32.13
2008
1.59
1.90
INFORMATION RELATING EBITDA IN THE PAST THREE (3) YEARS AND AFTER
SEPTEMBER CLOSING
From issuer:
Our EBIDTA has performed as follows:
EBITDA (Col$ million)
EBITDA Margin (%)
As of
September 30
2009
485,079
68.6%
As of
September 30
2008
445,670
67.0%
2008
2007
2006
602,845
65.9%
537,301
70.5%
500,109
70.0%
For 2008 EBITDA increased 12.2% resulting in Col$602,845 million, given that revenue increase
was above expenses. EBITDA margin changed from 70.5% to 65.9%, the 4.6 percentage decrease
was due to the fact that the 2008 calculation included the contribution to the Programa de
Normalización de Networks Eléctricas – PRONE, which affects the company’s revenues and costs.
From the group:
As of
September 30
2009
EBITDA (Col$
million)
1,842,756
As of
September 30
2008
1,680,326
2008
2,274,051
2007
1,954,514
2006
1,113,138
138
EBITDA Margin
(%)
73.47%
72.42%
71.85%
69.27%
55.21%
An operational strengthening for the Group is evidenced with EBITDA’s significant increase by
changing from Col$1,113,138 million in 2006 to Col$1,954,514 million in 2007; as a result of the
performance of revenues and operational expenses a significant improvement was achieved on
EBITDA margins from 55.2% to 69.3%.
Consolidated EBITDA increased to Col$2.274.051 million, with a 16.3% growth with respect to
2007. 58.1% of this result was generated in Brazil, 32.8% in Colombia, 7.6% in Peru, 1.3% in
Bolivia and the remaining 0.2% in Ecuador.
These excellent results led the economic group’s operational profit increasing to Col$1,716,148
million, 33.4% more than 2007 and that EBITDA and Operational margins changed from 69.3% to
71.8% and from 45.6% to 54.2%, respectively.
F.
CAPITAL STOCK EVOLUTION IN THE PAST THREE (3) YEARS
Authorized capital:
Up to the date of perfection and registry of the partial amendment to the Bylaws approved by our
Ordinary General Meeting of Shareholders on April 29, 2008, our authorized capital stock amounted
to Forty Five Million Pesos (Col$45.000’000.000), divided into ONE THOUSAND THREE
HUNDRED SEVENTY-ONE MILLION NINE HUNDRED FIFTY-ONE THOUSAND TWO HUNDRED
NINETEEN (1,371’951,219) shares with nominal value of THIRTY-TWO PESOS POINT EIGHT
ZERO ZERO ZERO ZERO ZERO ZERO ZERO FIVE THREE FIVE TWO ZERO ZERO CENTS
(Col$32,80000000535200) each.
Subscribed and paid-in capital:
The evolution of the subscribed and paid-in capital in the last three years is evidenced below:
Years
Figures in million pesos
Number of shares
G.
2008
35,866
1,093,481,496
2007
35,866
1,093,481,496
2006
34,016
1,037,087,285
CONVERTIBLE LIABILITIES
Our company has no share-convertible liabilities.
H. MAIN ASSETS OF THE ISSUER.
1. Main assets and investments.
The following charts show our main assets and the main assets of our group (securities
denominated in millions of Colombian pesos):
Main Assets of the Group
Property plant and
equipment
Permanent investments
Deferred charges
Sep-09
%
3,449,341
253,347
22%
2%
44%
2008
3,539,150
72,990
6,229,753
%
2007
%
24%
1%
43%
3,438,172
54,110
6,758,378
25%
0%
49%
2006
3,252,320
289,792
5,890,867
139
%
25%
2%
46%
6,675,760
Other assets
2,470,257
16%
2,155,788
15%
2,166,949
16%
1,963,652
15%
Appreciation
2,441,701
16%
2,442,009
17%
1,469,880
10%
1,464,568
12%
15,290,406
100%
TOTAL ASSETS
14,439,690 100%
13,887,489 100%
12,861,199 100%
Main Assets of the Parent Company
Sep-09
Property plant and
equipment
2,423,838
%
2008
%
2007
%
32%
2,442,825
33%
2,487,376
39%
2,475,152
42%
Permanent investments
2,141,089
28%
1,735,050
24%
1,691,651
27%
1,354,130
23%
Deferred charges
414,258
5%
428,804
6%
403,321
6%
423,920
7%
Other Assets
473,691
6%
535,712
7%
466,721
7%
323,628
6%
Appreciation
2,185,306
29%
2,185,306
30%
1,301,520
21%
1,299,003
22%
TOTAL ASSETS
7,638,182
100%
7,327,697 100%
6,350,589 100%
2006
5,875,833 100%
MAIN ASSET ITEMS
(a) As of September 30, 2009, the following are items representing the main assets of our group
(figures expressed in million pesos):
Property, Plant and Equipment, Net
The balance of Property, Plant and Equipment, Net, comprised:
September 2009
Property, Plant and Equipment
Networks, lines and cables
Plants and ducts
Buildings
Machinery and equipment
Communication and computer equipment
Equipment, material and goods on warehouse
Transport, traction and lifting equipment
Office furniture, chattels and equipment
Driveways
Land
Subtotal Property, Plant and Equipment
Less – accumulated depreciation
Less – provisions
Total Property, plant and equipment under
operation
Ongoing constructions
%
September 2008
2,773,746
2,106.570
76,168
74,918
44,424
118
10,825
15,937
265
26,448
5,129,420
(1,855,920)
(9,978)
2,773,334
2,077,255
69,658
71,607
37,202
129
11,281
15,287
265
29,605
5,085,624
(1,713,069)
(36,436)
3,263,522
155,718
3,336,119
95,594
140
Machinery, plant and equipment under assembly
On-transit machinery and equipment
Total Property, Plant and Equipment, Net
21,770
8,331
3,449,341
41,884
5,216
3,478,812
Assets are not subject to any restrictions, pledges or deliveries to secure obligations.
Deferred and other Assets
The balance of deferred and other assets, among which we remark intangible, comprised:
Short-term deferred and other assets
Expenses paid in advance
Deferred tax
Other Deferred Charges
(1)
Total Short-term deferred and other assets
(1)
Goods surrendered under datio in payment
Discounts for Note issuance
SEPTEMBER
2009
2008
31,676
19,953
88,725
102,250
897
470
121,298
122,673
2009
Long-term deferred and other assets
Deferred charges
Deferred tax
SEPTEMBER
(2)
2008
104,694
128,606
18,447
15,171
13,824
-
Surveys and researches
34
264
Other Deferred charges
22,929
23,252
Total Deferred charges
159,928
167,293
Software
64,255
60,950
Licenses
59,547
56,135
Rights of Way
63,272
59,461
Intangibles
Fees
(3)
8,837,493
9,508,939
Commercial Credit and Brands
(4)
1,142,041
1,347,481
(3,784,162)
(3,987,415)
6,382,446
7,045,551
484
9,700
11,604
13,478
6,554,462
7,236,022
Less – Amortization of intangibles
Total Intangibles
Actuarial financial reserve
Miscellaneous
Total Long-term deferred and other assets
(5)
(1) Includes Deferred tax for Col$89,203 million from CTEEP, Col$78,936 million from the parent
company and Col$20,071 from Transelca.
(2) Corresponds to discount for placement of notes by ISA ON December 2008.
141
(3) Includes CTEEP’s interest for the amount of Col$8,003,057 million pursuant to the concession
contract with the Brazilian Government entered into through ANEEL on June 20, 2001,
extended for twenty (20) years as from July 8, 1995, for exploitation of electric power
transmission public services, including basic network and transmission facilities. According to
articles 63 and 64 of Brazilian Decree N° 41019 issued on February 26, 1957, all assets and
facilities used in transmission activities are engaged to these services and may not be
withdrawn, sold, assigned or given as mortgage, without the prior and express authorization
from the Regulating Body. ANEEL Resolution N° 20/99 regulates the issue concerning
disengagement of assets from the concessions for elecricity public services, thus granting prior
authorization to disengage improductive assets from the concession.
(4) Includes the commercial credit of CTEEP for R$143,920 obtained for fiscal optimization of ISA
Capital’s commercial credit, through the corporate reorganization of ISA Participaçoes with
CTEEP and ISA Capital for R$709,023, obtained upon the purchase of CTEEP and increased
with greater interest for the procurement through OPA in January 2007, and on ISA, at the
commercial credit for R$103,631, obtained upon the purchase of 60% of company
TransMantaro S.A., and the credit for R$130,464 for the purchase of 34% of TRANSELCA S.A.
E.S.P. through a share exchange operation with Ecopetrol; the latter is not amortized in
accordance with the changes of the CGN as TRANSELCA is an undefinite-term company.
Permanent Investments, Net
Net permanent investments, as of September 30 are detailed below:
SEPTEMBER
2009
Investment in Shares
FEN S.A.
EPR S.A.
2
10,811
SEPTEMBER
2008
6
11,417
(1)
62
Internexa Peru
(1)
Camara de Riesgos Central de Contraparte
de Colombia S.A.
Electricaribe
(2)
Interligaçao Elétrica de Minas IEMG
(3)
Interligação Elétrica Norte Nordeste S. A. IENNE(3)
Interligação Elétrica Pinheiros S. A. - IEPIN
(3)
Interligação Elétrica Sul S. A. – IESUL (3)
Interligação Elétrica DO MADEIRA S.A. IEMADEIRA (3)
Interligação Elétrica SERRA DO JAPI
(3)
Interconexión Colombia Panamá
12,136
Transnexa
1,710
1,586
9,538
8,991
45,048
22,848
43,182
30,603
93,144
284
7,388
227
39,735
0
163
951
0
142
EPIE
Others
Provision for investment protection
Total Investment in Shares
Other long-term investments
Variable rent investments
Total Other long-term investments
Total Permanent Investments
0
3149
100
6,827
(3,604)
251,218
(3,130)
91,957
2,129
2,129
253,347
958
958
92,915
(1) As of December 31st, 2008 they are part of the consolidated report.
(2) Corresponds to shares received under datio in payment. These companies merged as of
December 31st, 2007.
(3) Increase corresponds to contributions made by CTEEP in 2008.
(b) The following are items representing our main assets as of December 31, 2006, (unconsolidated
figures expressed in million pesos):
Property, Plant and Equipment - Net
st
The net balance of property, plant and equipment, as of December 31 , comprised:
2008
Property, plant and equipment under operation
2007
(1)
Networks, lines and cables
2,070,898
2,064,013
Plants and ducts
1,416,409
1,405,102
Buildings
57,390
53,980
Machinery and equipment
30,239
28,622
Communication and computer equipment
21,915
22,227
Transport, traction and lifting equipment
1,824
1,824
Office furniture, chattels and equipment
12,733
13,139
19,697
19,697
3,631,105
3,608,604
1,265,754
1,167,283
444
444
2,364,907
2,440,877
Land
Subtotal Property, Plant and Equipment in
operation
Less – Accumulated depreciation
Less – Provisions
Total Property, plant and equipment under
operation
(2)
143
Investment properties
(3)
Buildings
Less – Accumulated depreciation
Total investment properties
Non-exploited assets
Buildings
Constructions received in payment
Subtotal Non-exploited properties
Ongoing constructions
Machinery, plant and equipment under assembly
Total Property, Plant and Equipment, Net
3,532
1,310
2,222
1,235
2,297
71
71
-
18
8,895
8,966
8,895
8,984
8,748
218
8,748
236
51,956
35,716
23,522
2,442,825
8,250
2,487,376
(4)
Land
Less – Provisions
Total Non-exploited assets
3,532
(5)
Assets are not subject to restrictions, pledges or deliveries to secure obligations.
(1) In January 2008, the Caño Limón Substation enlargement project was activated, for the amount
of Col$17,474; likewise, the Anillos Comcel Optic Fiber project was capitalized, for the amount of
Col$19,452 and the Sabanalarga – Nogales Optic Fiber for the amount of Col$1,617.
Withdrawals and sales of property, plant and equipment for the year resulted in a net loss for
Col$2,773 (2007: Col$3,727 loss). The movement of the accumulated depreciation for year 2008
comprised the accrual of expenditure due to depreciation for the amount of Col$105,319 (2007:
Col$98,088), which were charged to the period’s results. In addition, depreciation withdrawals were
made for Col$6,774 (2007: Col$4,856).
(2) Includes deferred depreciation for Col$338,977 (2007: Col$306,053).
(3) Corresponds to blocks II and V of ISA’s head office, under lease in favor of subsidiaries XM and
INTERNEXA, respectively.
(4) They correspond to land Pailitas and constructions received as datio in payment from Global
Crossing, which assets are in process of sale. KLM building, located in the city of Bogotá was sold
in 2008.
(5) It corresponds to provision for constructions received as datio in payment from Global Crossing.
Each year, ISA obtains insurance for Combined Substantive Damages, Terrorism and
Consequential Losses to cover any sort of risks for damages on the company’s fixed assets. The
insured value in this report corresponds to the replacement value of insured assets, which is set
based on information of assets from ISA’s National Transmission System classified in Constructive
144
Units, in connection with its relevant value to obtain a new one in accordance with the regulatory
framework and the relevant depuration and adjustment for insurance purposes.
On 2 July 2008 by means of public bidding process, the Mining and Energy Planning Unti -UPMEawarded to Interconexión Eléctrica S.A. E.S.P. -ISA-, the construction of electric interconnection
works for project Porce III. ISA will be responsible for the construction, assembly, commissioning,
administration, operation and maintenance, for 25 years of 500-Kv Porce Substation and two 500kV line circuits bearing a 22-km length each, which will interconnect Porce III generation project to
the National Transmission System. The estimate date for this project to enter into operation is July
2010.
DEFERRED AND OTHER ASSETS
As of December 31 the balance of deferred and other assets, comprised:
2008
2007
Short-term deferred and other assets
Expenses paid in advance
4,754
3,308
92,476
97,230
5,250
8,558
-
88,959
34
4,930
25,302
25,336
2,183
96,072
30,743
30,743
11,170
11,170
57,124
56,858
43,244
29,137
238,247
238,245
Total Intangibles
(78,021)
302,507
(70,715)
295,438
Miscellaneous
Total Long-term deferred and other assets
TOTAL DEFERRED AND OTHER ASSETS
3,731
331,574
428,804
3,253
394,763
403,321
Deferred tax
Total Short-term deferred and other assets
Long-term deferred and other assets
Deferred charges
Deferred tax
(1)
Surveys and researches
Other Deferred charges
(2)
Total Deferred charges
Intangibles
Software
Licenses
Rights of Way
Rights
Commercial Credit
Less – Amortization of intangibles
(3)
(1) Long-to-short term Classification for Deferred Tax.
145
(2) It mainly corresponds to the deduction of Col$14,449 in the placement of notes made on
December 2008 and the premium under the legal stability contract signed with the Ministry of Mines
and Energy for Col$6,427.
(3) It mainly corresponds to the commercial credit for Col$103,631, resulting upon the purchase of
60% of company Consorcio TransMantaro S.A., and $130,464 from the purchase 34% of
TRANSELCA S.A. E.S.P. through a share exchange operation with Ecopetrol; the latter is not
amortized, in accordance with the public accounting regime as TRANSELCA has an indefinite term.
PERMANENT INVESTMENTS - NET
Net permanent investments as of December 31, are detailed below:
2008
Investment in Shares
TRANSELCA S.A. E.S.P.
2007
(1)
603,420
490,137
(2)
701,933
820,724
118,534
97,405
Consorcio TransMantaro S.A.
74,479
56,939
ISA Bolivia S.A.
XM, Compañía de Expertos en Mercados S.A.
E.S.P.
30,730
26,242
23,622
22,461
ISA Peru S.A.
15,106
13,906
2,372
-
142,204
121,679
12,620
10,074
ISA Capital Do Brazil
REP S.A.
Proyectos de Infraestructura del Peru S.A.C.
(3)
INTERNEXA S.A. E.S.P.
EPR S.A.
Interligaçao Elétrica de Minas IEMG
(4)
-
14,432
FEN S.A.
(5)
3
7,147
Electricaribe
(6)
12,114
9,766
Electrocosta
(6)
-
2,348
1,737,136
1,693,260
977
3,778
1,738,113
1,697,038
Total Investment in Shares
Other investments
In trust rights
(7)
Total Permanent Investments
Provision for Permanent Investments
(8)
146
Total Permanent Investments
(3,063)
(5,387)
1,735,050
1,691,651
(1) The increase corresponds to the best results reached and the surplus result upon the
appreciation of fixed assets.
(2) Investment variation especially because of the revaluation effect of the Colombian peso with
respect to Reais.
(3) Proyectos de Infraestructura del Peru -PDI- began operations
(4) Stock sale to subsidiary CTEEP.
(5) Stock sale and decrease of the subscribed and paid-in capital with actual reimbursement of
contributions to shareholders, as approved by the General Assembly of Shareholders of FEN dated
March 13 and November 7, 2008 respectively.
(6) It corresponds to shares received as datio in payment. These companies were merged by
December 31st, 2007.
(7) Decrease resulting upon the cancelation in 2008 of the trust property created to secure the
payment of the audit for 2003 UPME 1 project, which began operation in December 2006.
(8) Provision on investments from Electricaribe and FEN for cost appraisal.
2. Investment management policy
Scope of the investment policy
Investment decisions by companies of the ISA Group shall take account of ethical, allignment of
the corporate and entrepreneurial strategy vis-à-vis regulations and risk management.
Transparency shall be secured throughout the various stages relating investment analysis and
evaluation, decision and follow-up.
Each company in the ISA Group shall make investments that allow profitable growth.
In the pursuance of such goals, mechanisms shall be set for the purposes of analysis and
evaluation assuring universality and entirety criterion in investment decisions.
In monitoring management and results, there shall be a mechanism that allows ensuring
continuity on the investments follow-up, throughout their useful life.
I. INVESTMENTS IN EXCESS OF 10% OVER THE ISSUER’S TOTAL ASSETS
II.
Taking into account that our main investments are in the form of interest acquisitions in the capital of
other companies, following is a chart shoing the value of such investments as of December 31, 2008,
and the percentage these represent in our asset:
2008
Investment in Shares ISA Matríz
TRANSELCA S.A. E.S.P.
XM, Compañía de Expertos en Mercados S.A. E.S.P.
603,420
ISA Total
Assets %
8.23%
0.32%
2007
ISA Total
Assets %
490,137
7.72%
0.35%
147
23,622
INTERNEXA S.A. E.S.P.
22,461
142,204
1.94%
121,679
1.92%
12,114
0.17%
9,766
0.15%
980
0.01%
13,273
0.21%
Total Domestic Investments
782,340
10.68%
657,316
10.35%
ISA Capital Do Brazil
701,933
9.58%
820,724
12.92%
REP S.A.
118,534
1.62%
97,405
1.53%
Consorcio TransMantaro S.A.
74,479
1.02%
56,939
0.90%
ISA Bolivia S.A.
30,730
0.42%
26,242
0.41%
ISA Peru S.A.
15,106
0.21%
13,906
0.22%
2,371
0.03%
-
0.00%
12,620
0.17%
10,074
0.16%
-
0.00%
14,432
0.23%
955,773
1,738,113
13.04%
23.72%
1,039,722
1,697,038
16.37%
26.72%
Electricaribe
Other minor investments
Proyectos de Infraestructura del Peru S.A.C.
EPR S.A.
Interligaçao Elétrica de Minas IEMG
Total Foreign Investment
Total Investments
TOTAL ASSETS ISA MATRIZ
J.
7,327,697
6,350,589
RESTRICTIONS AGREED WITH SUBSIDIARIES FOR THE TRANSFER OF RESOURCES TO
THE COMPANY.
Following are the restrictions we have for the sale of assets composing our investment portfolio, its
terms and conditions:
1.
Restrictions under the bylaws
Pursuant to our corporate Bylaws, an attribution of the General Meeting of Shareholders, validly held
and complying with the deciding majority provided in the Bylaws in conformity with the law is “The sale,
liquidation, transfer on any basis or disposition or lease of ISA assets, in one or more related
transactions, the amount of which exceeds fifteen point zero percent (15.0%) of ISA’s Market
Capitalization, or the sale or transfer in whole or in part of ISA’s commercial establishment, whether
in one single transaction or series of related operations, within the term of twelve (12) calendar
months”.
Our Bylaws also provide that a function of the Board of Directors duly held with attendance of the
majority of members required under the corporate Bylaws in conformity with the law, is to “Deliberate
and resolve on the following issues: a) The sale, liquidation, transfer on any basis or disposition or
lease of ISA assets or properties, in one or more related transactions, the amount of which exceeds
five point zero percent (5.0%) and up to fifteen percent (15%) of ISA’s Market Capitalization, or the
148
sale or transfer in whole or in part of ISA’s commercial establishment, whether in one single
transaction or series of related operations, within the term of twelve (12) calendar months (…)”.
Every other sale, disposition, liquidation or transfer of assets not exceeding the stated amounts, may
be entered by the Chief Executive Officer within the scope of his attributions.
These Bylaws which require special authorization from the cited corporate bodies in connection to the
sale of assets comprising our portfolio, shall remain unmodified while our General Assembly decides to
amend or delete the same.
K.
MAIN INVESTMENTS UNDER IMPLEMENTATION
Investments directly made by ISA Parent Company for 2009 are estimated in US$65 million. Most
of them are focused on the transmission activity including strengthening of existing assets,
investments on new substations, and replacement of existing assets and optic fiber network on
lesser proportion.
Such investments enable us to comply with the quality indexes required, minimizing costs for
network maintenance and operation, and preserving personnel’s safety, thereby adding value to the
company. These investments will be and have been covered in certain cases with the company’s
cash flow and in other cases with financing and the use of ISA’s public debt notes program.
L.
FIRM COMMITMENTS FOR ACQUISITION OF FUTURE INVESTMENTS
In furtherance of the implementation of the growth strategy, the Economic Group permanently
conducts the assessment of business opportunities by participating in international bidding
processes as well as the assessment of eventual acquisitions and private projects.
The Economic Group is currently carrying out the assessment of several investment options for the
region for which we have submitted firm bids for eventual businesses and/or acquisitions that could
involve an investment around US$250 million. The terms and conditions of the bids are confidential
at this date and they will become real depending on the evolution of the ongoing processes. If such
bids are accepted, the Economic Group will timely deliver the relevant information to the market.
ISA was awarded in Lima with an international public bidding promoted by Proinversión to develop
a transmission line that will connect the city of Trujillo with the district of Zapallal. The project will be
developed by a company owned by ISA and its partner for the electric transmission business in
Peru, Empresa de Energía de Bogotá.
The work, included within the project Reforzamiento del Sistema de Transmisión Centro-Norte
Medio (Reinforcement of the Central-Medium North Transmission System), will allow the timely and
reliable supply of energy available in the National Interconnected System –SEIN- into such
departments located in the country’s Northern region.
The concession contract derived from this bidding process will allow to design, finance, build,
operate and maintain a 543-km. long energy transmission line and its associated substations, works
bearing 500 thousand volts. The contract will have a 30-year term from the date the project starts
operation, which is estimated in 30 months after the closing of the process.
Once it starts operation, the project will generate annual revenues for approximately US$26 million.
ISA will consolidate such revenues in the future.
149
ISA’s Board of Directors will assess the possibility that this new work is actually conducted through
Consorcio Transmantaro, company which share capital belongs to Colombian companies
Interconexión Eléctrica S.A. –ISA– (60%) and Empresa de Energía de Bogotá –EEB–(40%). In
case ISA’s Board of Directors so approves, the decision must be confirmed by Transmantaro’s
General Board.
M.
DESCRIPTION OF FIXED ASSETS
Our fixed assets as of December 31, 2008 are the following (unconsolidated figures in million
pesos):
Permanent investments
Long-term debtors
Inventories
Property, Plant and Equipment, Net
Deferred and other Assets
Appreciation
Total non-current assets
2008
1,735,050
29,017
60,891
2,442,825
331,574
2,185,306
6,784,663
2007
1,691,651
34,690
56,586
2,487,376
394,763
1,301,520
5,966,586
Fixed assets include the item “Property, plant and equipment, net”, which as of December 31, 2008
reported the following figures (unconsolidated figures in million pesos):
2008
2007
Networks, lines and cables
2,070,898
2,064,013
Plants and ducts
Buildings
Machinery and equipment
Communication and computer equipment
Transport, traction and lifting equipment
Office furniture, chattels and equipment
Land
1,416,409
57,390
30,239
21,915
1,824
12,733
19,697
1,405,102
53,980
28,622
22,227
1,824
13,139
19,697
Subtotal Property, Plant and Equipment
3,631,105
3,608,604
Less accumulated depreciation
Less provisions
1,265,754
444
1,167,283
444
2,364,907
2,440,877
3,532
1,310
2,222
3,532
1,235
2,297
71
-
71
18
Property, Plant and Equipment
Total Property, Plant and Equipment in operation
Investment properties
Buildings
Less accumulated depreciation
Total Investment properties
Non-exploited assets
Land
Buildings
150
Constructions received in payment
Subtotal Non-exploited properties
Less Provisions
Total Non-exploited assets
Ongoing constructions
Machinery, plant and equipment under assembly
Total Property, Plant and Equipment - Net
8,895
8,966
8,748
218
51,956
23,522
8,895
8,984
8,748
236
35,716
8,250
2,442,825
2,487,376
Our transmission network, our substations and transformers that form part of the company’s fixed
assets are highly crucial for the development of our electricity transmission activities. In Colombia,
we participate in the electricity transmission sector both directly and through our subsidiary
Transelca, operating electricity transmission networks representing 81.09% of STN revenues
(including ISA and TRANSELCA), and that extend throughout the country, connecting the primary
generation centers with the demand.
As of September 30, 2009, 43.16% of our consolidated assets are located in Colombia. For further
information relating our group and major fixed assets in the remaining countries where we operate,
we suggest consulting web page www.isa.com.co for our consolidated financial statements and
“Chapter 3 – Aspects concerning our production activities and operating income – B. Core
productive and sales activities”
Following is a description of our main fixed assets in Colombia:
Transmission Network
We own 130 transmission circuits totaling 10,000 Km of which 2,399 km correspond to electricity
transmission circuits of more than 230 kV; 7,476 correspond to transmission lines of between 220
kV and 230 kV and 124 km corresponding to transmission circuits of less than 220 kV. Together
with Transelca, our transmission network comprises 80.5% of the STN's transmission lines of 220
kV or more. As of September 30, 2009, our network had 12,672 MVA of transformation capacity
(including reserve capacity) and a total of 4,177 MVAR of compensation (3,185 MVAR of inductive
compensation and 992 MVAR of capacitative compensation). The average availability of our
transmission network for year 2008, excluding unavailability resulting from terrorist attacks, was
99.82%. Our transmission network is administered through four electricity transmission centers,
located in the north, northwest, central, east and southeast regions of the country.
We have invested approximately Col$912,585 million over the period between 2005 and 2009 to
expand our electricity transmission network and we expect to spend an additional Col$107,867 by
2009. See “Chapter V - Comments and Analysis by the Management on the Results of Operations
and Financial Condition of the Issuer".
Substations and Transformers
Substations are used to transform high voltage electricity into low voltage electricity and vice versa,
using step-down or step-up transformers. Substations generally contain one or more transformers
which are electrical devices used to lower or raise the voltage of electricity. In addition, substations
contain switching, protection and control equipment. In a large substation circuit breakers are used
to interrupt any short circuits or overload currents that may affect the network.
We currently own and operate 57 substations located in Colombia.
151
The table below shows information about substations and transformers belonging to us, Transelca
and both, and their transformation capacity as of September 30, 2009:
Our equipment
Voltage
(kV)
500
230
<115
Total
Number of
Substations
11
38
8
57
Percentage
of total
19%
67%
14%
100.0%
Transformer
capacity (MVA)
8,593
3,980
98
12,671
Percentage
of total
68%
31%
1%
100.0 %
Compensation
capacity (MVA)
2,502
807
868
4,177
Percentage
of total
60%
19%
21%
100.0%
Transelca’s equipment
Voltage
(kV)
Number of
Substations
500
Percentage
of total
12
230
32
<115
44
Total
Transformer
capacity (MVA)
0%
Percentage
of total
Compensation
capacity (MVA)
Percentage
of total
0%
27%
2,524
91%
73%
264
9%
100%
2,788
100%
0%
80
100%
0%
80
100%
Our equipment together with Transelca’s equipment
Voltage
(kV)
500
230
<115
TOTAL
Number of
Substations
11
50
40
101
Percentage
of total
11%
49.5%
39.5%
100%
Transformer
capacity (MVA)
8,593
6,504
362
15,459
Percentage
of total
55%
42%
2%
100%
Compensation
capacity (MVA)
2,502
887
868
4,257
Percentag
e of total
59%
21%
20%
100%
Source ISA
N.
PATENTS, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS OF THE
ISSUER CURRENTLY BEING USED UNDER THIRD-PARTY AGREEMENTS, STATING
ROYALTIES EARNED AND PAID
To date no intellectual property right is being used under agreements with third parties, other than
our subsidiaries. At this date, ISA has license agreements for ISA brand with its subsidiaries:
Transmantaro, REP, ISA Peru, CTEEP, Transelca, Internexa and Internexa S.A.
O.
INFORMATION
ON
GOVERNMENTAL
INVESTMENTS AFFECTING THE ISSUER
PROTECTION
AND
PROMOTION
There is no governmental protection or promotion investment affecting our business.
P.
TRANSACTIONS WITH RELATED PARTIES, ENTERED DURING THE PRECEDENT
YEAR
152
1.
General information
In the ordinary course of our business we take part in transactions with our subsidiaries and our
main shareholders. These transactions are entered under terms and conditions similar to those
agreed with unrelated parties.
Presently we earn revenues relating (i) administrative services provided to Transelca, Internexa and
XM; (ii) technologic information services provided to Transelca, ISA Bolivia and REP; (iii)
consultancy services relating the operation and maintenance of assets necessary for electricity
transmission; these services are provided to REP, ISA Bolivia and ISA Peru; (iv) making our optic
fiber facilities available to Internexa (v) services concerning project management and construction
services provided to PDI, REP and Transelca. The aggregate amount of revenues earned from
these operations as of December 31 2006, 20007 and 2008 was Col$24,757 million, Col$28,474
million, and Col$32,547 million, respectively.
In addition, we earn revenues from operations with shareholders for: connection services provided
to ECOPETROL and EPM, construction services to EPM, energy transmission to EPM,
administration, operation and maintenance to EEB and EPM and assessment and sale of notes
issued by the Ministry of Finance and Public Credit. The aggregate amount of revenues earned
from these operations as of December 31 2006, 2007 and 2008, was Col$92.600 million,
Col$113.047 million, and Col$146.581 million, respectively.
In 2008 we entered into inter-administrative agreement FAER No. 033 – ISA 4000744-2008,
between the Colombian Government through the Ministry of Mines and Energy and us, for the
management of the “Fondo de Apoyo financiero para la Energización de Zonas Rurales
interconectadas” – FAER (Fund for financial support to provide Electricity to interconnected Rural
Zones) by ISA S.A. ESP, allocated to the rural provision of electricity “Construction of electricity
distribution networks in medium and low voltage at the rural zones of the municipalities of Majagual,
San Marcos, Caimito, Sucre and Guaranda of the department of Sucre” by the FAER Administration
Committee. The Agregate Amount of revenues we will receive for this contract are in the amount of
Col$2,724 million, within a 20-month period.
Our corporate Bylaws and practices provide that all transactions with related parties must be
entered at market prices, subject to any provisions governing transfer pricing, in case of
international transactions, thus avoiding any adverse effects on our profits.
2.
Main transactions with economically-related parties
The following were the main balances and transactions with economically-related parties (as of
December 31) (figures in million pesos):
Balance-sheet balances:
2008
Equity investments
TRANSELCA S.A. E.S.P.
ISA Capital Do Brazil
REP S.A.
INTERNEXA S.A. E.S.P.
Consorcio TransMantaro S.A.
ISA Peru S.A.
ISA Bolivia S.A.
603,420
701,933
118,534
142,204
74,479
15,106
30,730
2007
490137
820724
97405
121679
56939
13906
26242
153
XM, Compañía de Expertos en Mercados S.A. E.S.P.
Proyectos de Infraestructura del Peru S.A.C
Debtors
TRANSELCA S.A. E.S.P.
INTERNEXA S.A. E.S.P.
ISA Peru S.A.
REP S.A.
ISA Bolivia S.A.
XM, Compañía de Expertos en Mercados S.A. E.S.P.
Proyectos de Infraestructura del Peru S.A.C
TRANSNEXA S.A E.M.A.
Accounts payable
TRANSELCA S.A. E.S.P.
ISA Capital Do Brazil
INTERNEXA S.A. E.S.P.
REP S.A.
XM, Compañía de Expertos en Mercados S.A. E.S.P.
Proyectos de Infraestructura del Peru S.A.C
INTERNEXA Peru
Equity transactions
Dividends decreed in favor of ISA
TRANSELCA S.A. E.S.P.
REP S.A.
INTERNEXA S.A. E.S.P.
ISA Peru S.A.
Consorcio TransMantaro S.A.
XM, Compañía de Expertos en Mercados S.A. E.S.P.
23,622
2,372
22461
0
149
4,970
111
1,892
1,735
396
1,103
29
254
7,179
159
2,481
719
262
-
231,005
61,324
4,375
68
814
279
247
222,938
62,339
17,036
143
793
-
18,297
18,122
2,089
753
23,945
9,433
1,936
8,406
-
Transactions vis-à-vis results:
2008
Revenues
TRANSELCA S.A. E.S.P.
INTERNEXA S.A. E.S.P.
ISA Peru S.A.
ISA Bolivia S.A.
REP S.A.
XM, Compañía de Expertos en Mercados S.A. E.S.P.
Consorcio TransMantaro S.A.
Proyectos de Infraestructura del Peru S.A.C
INTERNEXA Peru ( Operating income)
INTERNEXA Peru ( Non-operating income –
Reimbursement revenues from former periods)
TRANSNEXA S.A E.M.A.
Expenses
2007
1,243
19,841
1,819
1,914
3,548
2,753
205
1,410
146
857
13,739
1,785
1,026
9,086
1,981
-
(894)
562
-
154
TRANSELCA S.A. E.S.P.
INTERNEXA S.A. E.S.P.
XM, Compañía de Expertos en Mercados S.A. E.S.P.
REP S.A.
Consorcio TransMantaro S.A.
ISA Capital Do Brazil
Proyectos de Infraestructura del Peru S.A.C
Administrators (1)
Board of Directors Fees
Salaries and fringe benefits to executive officers
Bonuses to executive officers
Allowances to executive officers
Credits payable by executive officers
21,907
7,508
6,411
1,868
3,616
297
13,164
960
5,527
1,098
6
3,985
-
353
5,351
1,066
406
1,623
303
4,943
1,173
653
2,704
(1) Detail of items received by the company’s executive officers are:
Concept
Comprehensive Salary
Allowances (Education and health)
Bonuses (Temporary transfer, by results and by
direction)
Vacations
Others (Incapacities and non-variable travel expenses)
Total earned
Loan balance
Directors (*)
3,141
194
CEOs (**)
1,900
57
Total
5,041
251
585
180
88
4,188
848
481
130
67
2,635
775
1,066
310
155
6,823
1,623
* The “Directors” concept includes 28 executive officers of the company, which positions are
detailed below:
Supply Director
Commercial Director
Northwestern CTE Director
Central CTE Director
Organizational Development Director
Road Project Director
Maintenance Management Director
IT Director
Legal Director
New Business Director
Financial and Tax Planning Director
Corporate Projection Director
Social and Environmental Manager
Panama Interconnection Director
Corporate Audit Director
Accounting and Costs Director
Southwestern CTE Director
East CTE Director
Project Execution Director
Affiliate Management Director
Human Talent Management Director
Project Engineering Director
Logistics Director
Corporate Planning Director
Planning and Regulation Director
Financial Resources Manager
Operation Management Director
Technical Sub-management
** the “Managers” concept includes 8 executive officers of the Company, which positions are
detailed as follows: Chief Executive Officer, General Secretary, Corporate Auditor, Corporate
Finance Manager, Corporate Strategy Manager, Infrastructure Project Manager, Energy
Transportation Manager and Administrative Manager.
155
Agreements with subsidiaries for procurement of goods and services take into account the terms
and conditions and costs that ISA usually uses with non-related third parties, that is, the market
conditions.
Application of transfer pricing introduced under Law 788 of December 2002 commenced on
January 1, 2004. These prices assume that all transactions with economically-related parties or
related parties from abroad should be considered at prices that third parties or independent parties
would have used.
Accounts payable to economically-related parties:
As of December 31, 2008, “accounts payable” to economically-related parties include Col$259,768
million (2007: Col$258,355 million) corresponding to loans received from TRANSELCA S.A. E.S.P.
and ISA Capital Do Brazil, with the following conditions:
Credits
granted
by
Maturity date
Affiliates
Credits granted by local
affiliates
TRANSELCA S.A. E.S.P.
30-Dec-12
TRANSELCA S.A. E.S.P.
26-Dec-09
TRANSELCA S.A. E.S.P.
07-Dec-12
TRANSELCA S.A. E.S.P.
27-Dec-12
TRANSELCA S.A. E.S.P.
07-Nov-12
Capital Interest
balance balance
Type of interest
DTF E.A. of December
31st of the precedent year
DTF E.A. of December
31st of the precedent year
DTF E.A. of December
31st of the precedent year
DTF E.A. of December
31st of the precedent year
DTF E.A. of December
31st of the precedent year
Total credits with local
affiliates
Credits
granted
by
foreign affiliates
ISA Capital do Brazil
28,500
-
31,908
5,191
72,642
11,073
12,537
1,870
60,798
5,742
206,385 23,876
28-Dec-14
Libor 6M + 3%
Total credits with foreing
affiliates
Total
credits
with
affiliates
53,383
8,171
53,383
8,171
259,768 32,047
Q.
CREDITS OR CONTINGENCIES REPRESENTING FIVE PERCENT (5%) OR MORE OF
THE TOTAL LIABILITIES IN THE LAST YEAR CONSOLIDATED FINANCIAL STATEMENTS
The following are included among credits representing five percent (5%) or more of the total liabilities in
last year consolidated financial statements, therein describing the relevant particulars as of December
31, 2008:
Company
Credit Facility
CTEEP
ISA Capital
do Brazil
BNDES
Notes
Currency
BRL
US$
Interest rate %
TJLP + 2.3%
7.88%
2006 (million
pesos)
582.130
449.489
Date of latest
payment
19-Nov-2015
19-Jan-2012
156
ISA Capital
do Brazil
Notes
US$
8.80%
795.591
19-Jan-2017
Likewise we hereby inform that as of December 31, 2008 there are no events that individually
considered may entail contingencies in excess of 5% of the total liabilities recorded on our consolidated
financial statements.
R.
FINANCIAL LIABILITIES OF THE ISSUER AS OF THE END OF THE IMMEDIATELY
PRECEDENT CALENDAR QUARTER
A summary of the characteristics of our financial liabilities as of September 30, 2008 is shown in the
chart below:
Credit Facilities
(Millions of Col$)
Domestic Financial liabilities
BBVA
BANCOLOMBIA
DAVIVIENDA
BBVA
BAN-AGRARIO_1
Total domestic financial
liabilities
Foreign financial liabilities
Medio Crédito Centrale
Currency
Col$
Col$
Col$
Col$
Col$
Interest Rate
30–September
2009
DTF TA + 3.4% TA
DTF TA + 2,6% TA
DTF TA + 3.88% TA
DTF TA + 3.89% TA
DTF EA + 4.50% EA
66.667
70.000
25.000
75.000
21.000
Date of
latest
payment
27-Sep-10
29-Nov-10
18-Jul-13
18-Jul-13
30-Dec-18
257.667
Euro
BIRF-3954-CO
US$
BIRF-3955-CO
BNP Paribas
US$
US$
Fixed rate 1.75%
Fixed rate Tranches
(6.32%)
Libor 6 M + 0.28%
Libor 6 M + 0.345%
3,409
19-Jun-10
351
15-Feb-11
97,003
58,295
15-Oct-12
15-May-17
Total foreign financial
liabilities
159,058
Total financial liabilities
416,725
Rates used for conversion into Colombian pesos of liabilities agreed in foreign currency, are the
following:
- TRM 30/09/2009: Col$1.922,00
- Euro 30/09/2009: US$1,4619
S.
RELEVANT PROCEEDINGS AGAINST THE ISSUER
See Appendix “Proceedings under Which the Issuer Company Is a Party”
T.
SECURITIES REGISTERED WITH THE NATIONAL REGISTRY OF SECURITIES AND
ISSUERS
The following table shows such securities we have registered up to this date with the National Registry
of Securities and Issuers (RNVE):
157
Type of Securities
Common Shares
Internal Public
Debt Notes
Internal Public
Debt Notes
Supervalores Code
No.
Issuance
B.V.C.
Registration
Date
RNVE Registration.
Resolution - Date
COAISAO0000
UNICA 615 28/08/2002 13/11/2002
8
COVISAP0000
200107 403 12/07/2001 13/07/2001
2
COVISAP0001
200402 205 18/02/2004 18/02/2004
0
Authorized Amount
Currency
Latest
Rating
N/A
N/A
N/A
130,000,000,000 Col$
AAA
1,200,000,000,000 Col$
AAA
U.
OUTSTANDING DEBT NOTES PUBLICLY OFFERED AND NOT YET REDEEMED
1.
Domestic offerings
Characteristics of the notes outstanding and balances as of September 30, as well as their term,
interest rate and maturity date, are shown below (figures in million pesos):
Issuance
Serie
s
Term
Interest Rate
%
2009-III
2008
2007
Maturity Date
Second
C
Second
D
Third
A
Tranche 1 Program
Tranche 2 Program
Tranche 3 Program
Tranche 4 Lot 1 Program
Schedule Tranche 5
10
10
10
7
12
15
20
7
DTF + 2.5%
IPC + 10%
IPC + 8.10%
IPC + 7.0%
IPC + 7.3%
IPC + 7.19%
IPC + 4.58%
IPC + 4.84%
130,000
100,000
150,000
108,865
118,500
110,000
59,700
30,879
130,000
100,000
150,000
108,865
118,500
110,000
59,700
30,879
130,000
100,000
150,000
108,865
118,500
110,000
13-Apr-09
13-Apr-09
16-Jul-11
20-Feb-11
20-Feb-16
07-Dec-19
07-Apr-26
21-Sep-13
Tranche 4 Lot 2 Program
Tranche 6
A
Tranche 6
B
Capitalized interest
17
6
9
IPC + 4.58%
IPC + 4.99%
IPC + 5.90%
104,500
150,000
59,500
-
104,500
12,359
9,938
07-Apr-26
02-Apr-15
02-Apr-18
Total outstanding notes
1,031,365
924,803
817,882
Total long-term outstanding notes
1,031,365
821,865
817,882
Total short-term outstanding notes
-
102,938
-
In 2008 notes accrued interest for Col$106,601 (2007: Col$96,738) million, which were recorded as
financial expense.
Following is the detail of maturity per years for notes outstanding as of December 31st, 2008
(Figures in million pesos):
158
Years
2009
2011
thereafter
Capital
and
Interest
Total
90.579
12.359
102.938
821,865
912,444
12,359
821,865
924,803
Other characteristics of each issuance of notes of our company made before December 31st, 2008,
are as follows:
First Issuance of Notes
In 1998 we launched our first issuance of notes for the amount of Col$130,000 million, authorized
through resolutions Nos. 2400 and 2401 of October 14, 1998 of the Ministry of Finance and Public
Credit, relying on the favorable opinion from the National Planning Department number UIP DCEI
05-20-98 of September 3, and authorization from the Superintendency of Securities through
resolution number 690 of October 14, 1998, rated AAA (Triple A) by Duff & Phelps de Colombia
S.A. We registered such notes with the Bogotá, Medellín and Occidente stock exchanges. To date,
the mentioned issuance is fully settled.
Second Issuance of Notes
In 1999 we launched our second issuance of notes for the amount of Col$180,000 million, series A,
B, C and D, authorized through resolution number 0817 of April 8, 1999 of the Ministry of Finance
and Public Credit, relying on the favorable opinion from the National Planning Department number
UIP DCEI 05-004-99 dated March 26, 1999, and authorized through resolution number 0285 of
April 9, 1999 from the Superintendency of Securities, rated AAA (Triple A) by Dufff & Phelps de
Colombia S.A. The notes were registered with the Bogotá, Medellín and Occidente stock
exchanges.
At the end of 2008 the balance was Col$102,938 million; A and B series matured and were paid for
the amount of Col$107,432 million. The balance increases by reason of the capitalization of series
issued, at the IPC rate.
Third Issuance of Notes
In 2001 we launched our third issuance of internal public debt notes for the amount of Col$130,000
million, with the authorization from Ministry of Finance and Public Credit through resolution number
370 of July 10, 2001, relying on the favorable opinion from the National Planning Department
number DIFP-SC-02-00004-2001 dated May 21 2001. Both the public offering and its advanced
registration with the National Registry of Securities and Issuers were authorized by the
Superintendency of Securities through resolution number 0403 of July 12 2001. Duff & Phelps de
Colombia S.A. rated the notes AAA (Triple A).
Schedule for the Issuance of Notes
Our schedule for the issuance of notes was authorized by the Board of Directors in its meeting held
on July 25, 2003, by the Ministry of Finance and Public Credit through resolution number 343 of
February 11, 2004, subsequenly amended and supplementes by resolution number 427 of
February 17, 2004, and relying on the favorable opinion from the Departamento Nacional de
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Planeación, number SC-04-063-2003 dated December 4, 2003, and the Superintendency of
Securities authorization through resolution number 205 of February 18, 2004. Global quota of the
notes schedule was increased from Col$450,000 million to Col$850,000 million by means of an
authorization from the Board of Directors adopted at its meeting held on March 29, 2005, as
evidenced in Minutes No. 621, thereby authorizing to Col$400,000 million increase on the
Schedule. On May 30, 2008 the Board of Directors authorized the second extension of the
Schedule for Notes as evidenced in Minutes 665, for additional Col$350,000 million, to obtain a
total amount of Col$1,200,000 million.
At the end of 2008, the total value issued, corresponding to six tranches issued and shown below,
correspond to the amount of Col$901.365 million.
February 20, 2004
February 20, 2004
December 7, 2004
April 7, 2006
September 21, 2006
December 4, 2008
April 2, 2009
April 2, 2009
Col$100,000 million
Col$150,000 million
Col$108,865 million
Col$118,500 million
Col$110,000 million
Col$104,500 million
Col$150,000 million
Col$59,500 million
This schedule is entirely dematerialized. Custody and management of the issuance are the
responsibility of Depósito Centralizado de Valores de Colombia DECEVAL S.A. and the holders’
legal representative is Fiduvalle S.A. This program is for the following use: 50% for transactions
relating debt management and the remaining 50% for cash flow funding and investments. Our
schedule on issuance and placement of ISA notes was rated AAA - negative perspective – by Duff
& Phelps de Colombia S.A, as agreed at the June 5, 2009 meeting, thus translated into issuances
enjoying high credit rating and almost no risk factors.
Following is the detailed information on each tranche issued:
•
February 2004
On February 20, 2004, we placed internal public debt notes among investors for Col$ 250,000
million. The placement was made under the scheme of Dutch Auction in the Colombian Stock
Exchange (Bolsa de Valores de Colombia) and Corfivalle S.A., Helm Securities S.A. and BBVA
Valores Ganadero S.A. served as placing agents. The placement was concluded in two tranches:
The first, for the amount of Col$100,000 million for a 7-year term and IPC + 7% coupon rate, the
second tranche, for the amount of Col$150,000 million for a 12-year term and IPC + 7.3% coupon
rate.
•
December 2004
On December 7 2004, we placed the third tranche under the schedule for issuance of notes in the
amount of Col$108,865 million, for a 15-year term, by means of an auction carried out at the
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Colombian Stock Exchange (Bolsa de Valores de Colombia). For the first time, a public issuer
placed a 15-year term security subject to prepayment option.
This issuance, which is to expire on December 7, 2019, contemplates certain prepayment option
that may be enforced as from the eight year bearing a 4% premium, a 3% premium for the ninth
th
th
year, a 2% premium for the tenth year and a 1% premium for years 11 to 14 . The issuance’s
closing rate was 7.19% and the total amount demanded totalled Col$311,500 million, thus entailing
a 286% demand in excess.
The placement was concluded under the Dutch Auction scheme at the Colombian Stock Exchange
(Bolsa de Valores de Colombia) and Corfivalle S.A. (68.13%), BBVA Valores Ganadero S.A.
(23.21%) and Helm Securities S.A. (8.66%) served as placing agents.
•
April 2006
On April 7, 2006, we placed in the local market the first lot of tranche 4 under the schedule of notes
for the amount of Col$118,500 million at a 20-year term, IPC + 4.58% coupon rate payable
seamiannually in arrears. This issuance was placed through Dutch Auction at the Colombian Stock
Exchange (Bolsa de Valores de Colombia). Correval, Corficolombiana and Helm Securities served
as placing agents and the total demand amounted to Col$302,500 million.
th
These notes bear a Prepayment Option that we may enforce as from the tenth (10 ) year counted
as from the subscription date. Prepayment of the notes shall be using an option price understood as
the price we shall pay for each note if the prepayment option is enforced.
•
September 2006
On September 21, 2006, we placed an issuance of notes in the amount of Col$110,000 million, at a
7-year term, by means of an auction carried out at the Colombian Stock Exchange (Bolsa de
Valores de Colombia). This issuance, to expire on September 21, 2013, had a closing rate of 4.84%
over the IPC and the total amount demanded was Col$239,010 million, entailing a demand in
excess of 2.17. The placement was made under the Dutch Auction scheme at the Colombian Stock
Exchange (Bolsa de Valores de Colombia) and Corficolombiana (63.5%) and Correval (36.5%)
served as placing agents.
•
December 2008
On December 4 2008, ISA placed the second lot of the fourth tranche of its schedule of notes for
the amount of Col$104,500 million, expiring on April 7 2026 and a closing rate of 7.09% over the
IPC. The total amount demanded was Col$163,500 million, with an excess in demand of 1.63. The
placement was made under the Dutch Auction scheme and Citivalores, (71.77%), Valores
Bancolombia (19.62%) and Correval (8.61%) acted as Placing Agents.
April 2009
On April 2, 2009, ISA placed series A and B of Lot One of the Sixth tranche of its Schedule for
notes with the following characteristics:
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SERIES A6
SUBSERIES B9
Demanded Amount: $263,200 Million
Demanded Amount: $174,500 Million
Allocated
Amount:$150,000
Allocated
Amount:$59,500
Million
Million
Plazo: 9 years
Term: 6 years
Maturity Date: 2 Abr.2018
Maturity Date: 2 Abr.2015
Placement Rate: IPC + 5.90% E.A.
Placement Rate: IPC + 4.99%E.A.
The total demanded amount decreased in $437,600 million and the operation demand was 2.19
times. The issuance was made through Dutch auction and the following acted as Placing Agents
Correval (43.22%), Valores Bancolombia (29.81%) and Citivalores (26.97%).
2.
Offering of ISA Capital’s notes.
Although this is not an issuance directly made by our company or the only issuance made by our
subsidiaries, given the resulting commitments and its significance for the group, we consider
relevant to include information relating the issuance carried by one of our subsidiaries.
On January 29, 2007, ISA Capital - one of our subsidiaries - made two simultaneous offering of
senior notes under Rule 144A/Reg. S, for a total amount of U.S.$554 million, or the ISA Capital
Note Offering. The ISA Capital Note Offering consisted of the issuance of notes for the amount of
U.S.$354 million to expire in year 2017 and a face rate of 8.80%, and notes for U.S.$200 million to
expire in year 2012 and a face rate of 7.875%. Interest on such notes accrues from January 29,
2007 and shall be payable on January 30 and July 30 each year, as from July 30 2007.
Proceeds from the ISA Capital Note Offering was used to pay a number of interim credits that
ourselves and ISA Capital had entered to fund the acquisition of our 37.46% interest in CTEEP.
The notes offered under the ISA Capital Note Offering were registered under the official listing of
the Luxemburg Stock Exchange, and were rade in the said stock exchange Euro MTF market.
The ISA Capital Note Offering is currently secured by a first-rate collateral over nearly 56,49 million
CTEEP Common Shares owned by ISA Capital. The indentures governing the ISA Capital Note
Offering provide, among others, a restriction over ISA Capital’s involvement in any business other
than the holding of stock shares in CTEEP. In addition, such documents provide (i) limitations on
ISA Capital’s and CTEEP’s authority to incur in further indebtedness, sell assets, make restricted
payments, and (ii) events of default customary in this type of transactions, including those referring
to chage of control.
V.
SECURITY INTEREST GRANTED IN FAVOR OF THIRD-PARTIES
Following is the information relating security interests granted in favor of third parties:
1. Collaterals and securities granted by ISA comprise delivery on pledge basis, of 100% of the
current and future shares held in subsidiaries Red de Energía de Peru –REP-, ISA Peru and
ISA Bolivia S.A. in favor of the lenders of such companies. These were approved by the
Company’s Board of Directors and required the favorable opinion from the National Planning
Department-DNP- and the authorization from the Ministry of Finance and Public Credit. In the
case of ISA Peru, their term shall be for the term of the credits granted by FMO (Nederlandse
Financierings Maatschappij Voor Ontwikkelingslanden N.V.) and IFC on June 24, 2002 (these
credits are to expire on April 15, 2014 and April 15, 2016, respectively), the FMO credit
outstanding balance was prepaid on October 15, 2007, whereby the pledge in favor of such
entity was cancelled. The same collateral was granted in favor of the Inter-American
Development Bank –IDB- and the Andean Development Corporation –CAF-, the lenders of ISA
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Bolivia under credits granted on April 29, 2005 (these credits are to expire on February 15,
2019); and to secure a number of bank credits of REP and the notes outstanding issued by the
subsidiary.
2. In addition, the counter-guarantee granted by ISA in favor of the Colombian Government on
March 22, 1996, as consideration for the security granted by the Colombian Government to
enter into the credits granted by International Bank for Reconstruction and Development –BIRFremains effective. This counter-guarantee, aimed at securing the Colombian Government’s
receipt of reimbursements on payable amounts, expenses and costs accrued in the event
where might enforce its guarantee, consists of the pledge of ISA’s revenues resulting from the
use of the STN up to 120% of the semiannual debt service under credit agreements entered
with BIRF, including principal, interest and other financial costs borne by the Colombian
Government under the security granted by ISA. This counter-guarantee and the resulting
obligations shall be effective for a term equal to the security granted by the Colombian
Government in favor of BIRF, and shall be renewed until full payment of the crdits to BIRF or
the Colombian Government, as the case may be.
3. Although it is not a security granted directly by us, we emphasize that given its significance, the
ISA Capital Note Offering described in the above section (See “Information on Outstanding Debt
Notes Publicly Offered and Not Yet Redeemed – Offering of ISA Capital Notes”), are currently
secured under a first-degree collateral over the total shares in CTEEP owned by ISA Capital.
4. Collateral granted on June 29, 2007, between ISA as guarantor and Central American Bank for
Economic Integration – BCIE, as beneficiary, whereby ISA secures EPR’s obligations under the
credit agreement entered between the Central American Bank for Economic Integration – BCIE,
for the amount of U.S.$ 40 million, in connection to the funding of the SIEPAC project. The
collateral shall remain effective until full payment of its principal, which expiration date is June
29, 2027.
5. Collateral granted by ISA to satisfy payment obligations under a financial lease operation,
leasing for infrastructure, granted by Leasing de Crédito to Internexa S.A. The amount
corresponds to 75.04% of the whole operation, with a balance as of September 2009 of
Col$1,312 million. The Maturity Date is September 17, 2016.
6. Performance bond granted by ISA, for obligations undertaken under contract ETESA GG-1232007-ISA4500033541, purported to prepare the pre-designs and basic engineering for the
project Interconexión Eléctrica Colombia- Panamá in HVDC and technology transfer for ISA
and ETESA, bearing a balance as of September 2009 for US$423,816. The maturity date is
January 28 2010.
7. Performance bond of obligations corresponding to ISA pursuant to Public Bidding Process
UPME-01-2007, bearing a balance as of September 30, 2009 for Col$14.103 million and
maturity date on September 30, 2010.
8. Collateral signed between ISA and HSBC Colombia, to guarantee the payment of a credit
granted to Inteligacao Eletrica Minas Gerais -IEMG- an affiliate of CTEEP. The amount of the
collateral is US$7 million and maturity date on March 12 2010.
9. Collateral signed between ISA and Banco de Bogotá, to guarantee the payment of a credit
granted to Inteligacao Eletrica Minas Gerais -IEMG- an affiliate of CTEEP. The amount of the
collateral is US$15 million and maturity date on March 13 2010.
10. Collateral granted by ISA and HSBC Colombia, to secure payment obligations under the credit
granted by banco Bradesco to Interligacao Eletrica Norte e Nordeste -IENNE-, an affiliate of
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CTEEP. The balance as of September 30, 2009 was R$58 million. Its maturity date was March
29 2010.
11. Bond to secure effectiveness, validity and performance of offer submitted by ISA within public
bidding process UPME 02-2008 Bosque Project for the amount of US$1 million, effective until
January 15 2010.
12. Performance bond from ISA, to secure obligations undertaken pursuant to public bidding
process UPME 02-2008, Bosque Project with a balance as of September 30, 2009 for US$3
million and effectiveness until August 20 2011.
W.
CONSERVATIVE EVALUATION OF THE ISSUER’S PERSPECTIVES
1.
Growth strategy
Growth strategies of the ISA Group are framed under corporate guidelines of its investment policy
and MEGA.
ISA has define a Great and Ambitious Goal (Meta Grande and Ambiciosa –MEGA), to direct the
economic group’s performance to permanently add value on the next decade. This MEGA is a
guide for decision-making and encouraging day-to-day actions.
MEGA: “In 2016, ISA economic group will be a business corporation worth US$3,500 million in
revenues, from which 80% will be generated outside Colombia”. For this reason:
ISA economic group will be recognized as the one of first three electricity carriers in America and
the largest in Latin America, consolidating its platforms in Brazil and the Andean region and
become a significant player in other countries.
ISA will be present in 50% of energy exchanges between electricity systems from Latin American
countries, through its own assets or with systems under its operation.
At least 20% of revenues will come from business other than electric power transportation.
It will have introduced in other related businesses, such as gas transportation and infrastructure
projects.
Besides it is the largest data carrier in the Andean region, it will have developed energy future
markets in Colombia and other countries.
Encouraged by this ambitious MEGA and to go on through the path of becoming one of the most
important electricity transmission companies in America, a significant portion of our growth will
derive from the enlargement of this business in Latin America, for which we keep working to
consolidate our interest on countries were we are present: Colombia, Peru and Brazil; meanwhile,
we will keep assessing the growth opportunities present to introduce into this business in other
Latin America countries.
This growth becomes real when we are able to participate in bidding processes, concession rights,
enlargements, reinforcements, connections, international interconnections and other processes
leading us to increase electricity transmission assets. Likewise, we are able to consider the
purchase of existing transmission assets, insofar they are consistent with our strict investment
criteria regarding operational margins, return on invested capital, financial conditions, acceptable
policies and economics and a developed regulatory framework.
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Telecommunication Carriage business: We will keep expanding the optic fiber networks and
strengthening the operation in such countries where we are present, we will keep searching for
options to grow in function of the regional traffic increase, the development of new products and we
will keep making feasible other opportunities to integrate our telecommunication network with other
South and Central American countries’.
In the Market Management and Operation business, as a strategy to introduce into capital lessintensive and more efficient business, an idea was conceived on diversifying this business to other
economy sectors where its operation is similar to the electricity sector and to take advantage of the
ability for handling information, knowledge and experience in real-time technologies and valueadding. For this reason, the company explores the transaction needs in sectors other than the
group’s original business. Other important challenge in this business is the development of energy
futures markets in Colombia and other countries.
To obtain a minimum 20% of revenues from business lines other than Electric Power Transportation
and with the decision in mind of becoming a business corporation working around the design,
operation and construction of linear infrastructure systems, it has decided to enter into the
development of linear infrastructure projects, both in Colombia and other Latin American countries.
Based on the trust ISA represents as a serious, responsible and solid Company bearing the
experience required for the development of large works, we have been analyzing opportunities at
various countries to introduce into the development of road infrastructure projects and gas
transportation where we certainly are willing to enter into certain businesses.
2.
Medium-term investment opportunities
Identification and follow-up on existing investment opportunities in the markets, sectors and
businesses pursued by ISA Group are part of a dynamic and continued process that allows the
Organization to become a major actor in the Latin American electricity market.
Presently, several investment options are beig considered for the electric power transmission
business, mainly focused on Colombia, Peru and Brazil, given the organizational platform held by
the Group at these countries.
Colombia: the National Government is projecting transmission investments for US$600 million in the
next 10 years, derived from the construction of new generation projects allocated in recent firm
energy auctions and which will also require the relevant connections to the National Transmission
System, offering business opportunities in terms of extending and strengthening the existing
transmission network.
Peru: We estimate an investment for US$1,000 million in the next three years for enlargements,
reinforcements and new concession processes.
Brazil: We will be awaiting the development of auctions that enable us to enlarge the infrastructure
and consolidate our position in this market; the Electric Energy Expansion Decennial 2007-2016
plan estimates that investment required for energy transmission in the next years could be nearly
US$11 billion.
In addition, feasibility for the integration of energy markets between the region’s countries, such as
the Colombia – Panama international interconnection will be analyzed.
At present, besides the energy transmission traditional operators, most of our competitors are firm
constructing companies and infrastructure funds that have started introducing into the sector with
large financial strengths and highly competitive rates. Some of these competitors have a short-term
vision to remain on the business.
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Regarding the Telecommunication Carriage business, we analyze opportunities to keep extending
the optic fiber network and connecting it to other Central and South American countries.
Peru: the network will be extended to the south of the country.
Chile: a new international operation with this country’s operator is being structured.
Brazil: activities to start operations in the State of São Paulo are being carried out.
Central America: We are accompanying the negotiation conducted by SIEPAC project partners in
order to have in place an important optic fiber infrastructure that interconnects six Central American
countries with North and South America.
ISA through XM is developing with the Colombian Stock Exchange a negotiation system for
standardized derivatives with underlying on electric power.
But the greatest challenged that ISA has been taking on is the development of road concessions.
At present, it is holding a process with the Colombian Ministry of Transport in Colombia for the
project Autopistas de la Montaña, purported to build four double-track 900-km expressways and
operate and keep 1,251 km. of roads bearing like specifications. The works will rely on contributions
from the National Government, the Governor’s Office of Antioquia and the Major’s Office of
Medellin. ISA, through an inter-administrative agreement will carry out the analyses to establish the
technical, legal and financial viability of the works; if the analyses assure the viability, then it would
be in charge of carrying out the project.
Some of the funding options projected to cover future investments include debt capital markets,
issuance of shares and local and international financial institutions both in Colombia and at each
country where the relevant investment is projected, and for certain investments, involvement by
private capital funds and strategic partners have been considered.
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CHAPTER V. CHAPTER V. COMMENTS AND ANALYSIS BY THE MANAGEMENT ON THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF THE ISSUER AND ITS
SUBSIDIARIES
This chapter should be read together with our Financial Statements and Consolidated Financial
Statements and the notes thereto; please refer to the Appendices, the business description and
every other information contained in this information prospectus, relating our company and our
group. This section sets forth forward-looking statements, which involve risks and uncertainty. As a
result of several factors, including, without limitation, risk factors (Chapter 7) and other aspects set
out in this Prospectus, our actual results may substantially differ from those analyzed under the
forward-looking statements. When making investment decisions, investors should rely on their own
examination of our condition, the offering terms and the financial information produced in this
document.
A.
TRENDS, COMMITMENTS OR DISCLOSED OCCURRENCES THAT MAY
SIGNIFICANTLY AFFECT LIQUIDITY OF THE ISSUER, THE RESULTS OF ITS
OPERATIONS OR ITS FINANCIAL CONDITION
1.
General Aspects
Our operational and financial performance are primarily affected by the availability of our electricity
transmission assets, operational and maintenance expenses, capital expenses and capital costs.
The electricity transmission business requires huge capital resources and is subject to significant
regulations passed by the by national bodies regulating the electricity sector in the countries where
we operate, mainly through determination of Regulated Revenues by such regulating entities.
Results of our operations are affected by internal and external factors, including:
2.
•
Review and adjustment of our Regulated Revenues by national electricity regulating entities
in the countries where we operate;
•
Actions adopted, regulations passed and policies implemented by national electricity
regulating entities in the countries where we operate;
•
Control of our operating costs and operational and maintenance expenses;
•
Profitability variations on investments at the telecommunication sector encompasing around
3.5% of all ISA’s revenues
•
Fluctuation of macroeconomic variables.
•
Governmental laws and regulations in the countries where we operate; and
•
Economic conditions in the countries where we operate.
Regulated Revenues
Our results of operations are significantly affected by changes on our regulated revenues.
Substantially, all our revenues derive from Regulated Revenues received from making available our
electricity transmission systems in the countries where we operate, to the national interconnected
systems located in those countries.
We receive our Regulated Revenues in the form of monthly payments from or on behalf of each
user of our electricity transmission system. These revenues are not affected by electricity supply or
167
demand or by the volume of electricity consumed or transmitted through our electricity transmission
network. Our Regulated Revenues are adjusted on annual, semiannual or monthly basis, as the
case may be, to take into account inflation variations, measured as per consumer and producer
price indexes from the countries where we operate, in accordance with the methodology set by the
regulation. Our Regulated Revenues may be further adjusted when such regulating entities approve
certain types of additional investments on electricity transmission assets.
Revenues from electricity transmission services account for 84.60%, 84.03%, 85.35% and 83.23%
st
of our total consolidated revenues in the years ending on September 30, 2009, December 31 ,
2008, 2007 and 2006, respectively.
As of September 30, 2009, we derived 32,37%, 56.68%, 9.54%, and 1.41% of the total
consolidated revenues relating electricity transmission services, from our operations in Colombia,
Brazil, Peru and Bolivia, respectively.
In Colombia, CREG sets out the methodology to determine our regulated revenues. Monthly, we
receive those Regulated Revenues from traders through application of usage charges by XM. The
amount of revenues to be received per each transmitter is determined by XM, acting as
administrator of the SIC and liquidador and manager of the STN’s accounts. Regulated revenues
are subject to reductions in case of non-achievement of the availability goals set for our electricity
transmission assets and, are also subject to increases in the event where new transmission projects
come into operation following their award to ourselves pursuant to bids carried out by the UPME.
Pursuant to Law 143 of 1994, CREG is the entity in charge of setting the methodology for
calculation of Regulated Revenues received monthly by transmission companies, as well as the
usage charges applicable to agents for the collection thereof.
Law 143 of 1994 requires that Regulated Revenues be set at a level sufficient to cover the costs of
investment made by electricity transmission companies on their electricity transmission assets
including a capital cost undertaken by such companies and maintenance, operation and
administration of the STN. The general remuneration scheme provided in Law 143 is aimed to
ensure that the Colombian transmission business as a whole is financially and operationally viable.
In general terms, the remuneration methodology for transmission in Colombia corresponds to a
Regulated Revenue scheme (Revenue Cap”), wherein the transmission company holds revenues
not affected by variations in the system’s energy demand.
The remuneration methodology of transmission companies is periodically revised by the regulator,
since the electricity transmission was defined as independent activity in 1994, when the electricity
generation, transmission, distribution and trading activities were separated.
The standing
methodology to calculate Regulated Revenues for national transmission companies is in effect
since 2000 (year regarded by regulator as a year of transmission) and it was kept for the standing
period (2001 – 2009).
To determine revenues for national transmission companies under the new scheme it is necessary
to apply four resolutions: CREG Resolution 022 of 2001, containing remuneration methodology;
CREG Resolution 026 of 1999, defining constructive units and the relevant unit costs (New
Replacement Value of each asset); CREG Resolution 061 of 2000, providing quality standards; and
finally CREG Resolution 103 of 2000 containing the methodology for calculation of usage charges
applicable to traders for collection of revenues pertaining national transmission companies.
It should be noted that the herein-referred revision only corresponds to revenues from national
transmission assets not being subject to public bidding processes made by UPME, which for the
first 25 years of operation are remunerated based on the annual income offered by bidder for each
of these years. Only by year 26, these assets are remunerated based on the methodology of
assets not subject to bidding process.
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After a review process that began on 2005, CREG issued in Resolution 011 of 2009, “Whereby
methodology and charge formula are established or the remuneration of the electric power
transmission activity under the National Transmission System”.
According to information from the regulator, this new methodology will start application in the next
months. In accordance with the preliminary assessments made by the Company, it is expected that
the revenues will be kept in the current levels. However, the final result will be known once CREG
issues the specific resolution for ISA upon approval of the basis of assets to be remunerated, and
based on which the Settler and Administrator of Accounts of the National Transmission System will
settle and invoice revenues corresponding to ISA with the methodology defined under CREG
Resolution 011 of 2009 and in application of the compensations for service quality that might take
place pursuant to the same Resolution. A relevant change under the new scheme is the fact that a
single Resolution comprises all parameters required to define the revenues for national
transmission companies, except for the remuneration fee, which calculation methodology and value
for the new period was set under CREG Resolution 083 of 2008 (“Whereby the methodology for
calculation of the return rate applicable to the remuneration of the electric power transmission
activity is defined and such rate is fixed”)
As a result of the above, following we will describe the standing remuneration methodology for
transmission concerning assets not subject to bidding process, as well as the new methodology,
and additionally the remuneration methodology for assets subject to bidding process.
a. Regulated Revenues for assets subject to bidding process
As of the date of this Information Prospectus, these assets represent nearly 20% of all our electricity
transmission assets in the STN (share based on the replacement-to-new value for Assets). There
are basically 4 bidding process projects, under commercial operation since 2001 in the case of
projects UPME 01 and 02 of 1999, and between December 2006 and May 2007, for projects UPME
01 and 02 of 2003:
UPME 01 of 1999
Primavera – Guatiguará – Tasajero - 230 kV (under operation)
UPME 02 of 1999
Sabanalarga - Termocartagena - 230 kV (under operation)
UPME 01 of 2003
Primavera – Bacatá - 500 kV (under operation)
UPME 02 of 2003
Primavera – Bolívar - 500 kV (under operation)
In addition, ISA was awarded with other two projects, which will start receiving revenues once they
start commercial operation between 2010 and 2011.
UPME 01 of 2007
Conexión Porce - 500 kV (under construction)
UPME 02 of 2008
Conexión El Bosque - 230 kV (under construction)
As mentioned under the “Expansión” section, the awarded bidder under the process will be in
charge of the construction, operation and maintenance of the new electricity transmission assets
and it is responsible for the execution of investments required for the development, construction,
commissioning, maintenance and operation of such assets for the whole twenty-five (25) year
period and in turn it will receive the Regulated Revenues included in bidder’s tender. Once the
twenty-five (25) year period has expired, as from year twenty-six (26) the Regulated Revenues
related with electricity transmission assets will be calculated by using the methodology applicable
169
for the calculation of Regulated Revenues for assets not subject to bidding process. See
“Regulated revenues for assets not subject to bidding process”.
Regulated revenues awarded from bidding processes are annually adjusted as of December of the
immediately preceding year based on the PPI index (Producer Price Index – Series
WPSSOP3200). Revenues are monthly payable, for which reason the monthly revenues
correspond to the twelfth portion (1/12) of the annual revenue offered each year.
a.
Regulated revenues for assets not subject to bidding process
st
In general these assets comprise the transmission network under operation as of December 31 ,
1999, and additionally certain projects under development by that time and that started operation on
further date. At the date of this Information Prospectus (October 2009), these assets account for
80% of all ISA’s electricity transmission assets on the STN (share based on the Assets’ New
Replacement Value).
•
Current methodology in effect– Resolutions CREG 022 of 2001
Our Regulated Revenues relating assets not subject to bidding processes (in general assets in
operation before January, 2000) are calculated annually based on a formula that considers:
•
Replacement value for new transmission assets (electricity assets) set by CREG Resolution
026 of 1999, which are monthly updated in pesos based on the producer’s price index
(PPI). These unit costs and the constructive units are reviewed by the regulator at the
aforementioned periodical reviews.
•
Remuneration rate of our investments on our electricity transmission assets, presently in
9.00%;
•
specified useful life of such assets, currently, 25 years;
•
A percentage of the replacement value to new of our assets for recognition of our
administration, operational and maintenance expenses.
•
Remuneration of our investments on non-electric assets (percentage for that recognized as
electric asset); and
•
revenue decreases due to non compliance of availability targets set by the regulation for the
STN’s assets.
These Regulated Revenues are calculated using the formula described below:
 IRR × (1 + IRR )n 
IA = VRN × 
 × (1 + ANE ) + VRN × AOM
n
(
)
1
+
IRR
−
1


IA
IM =
−C
12
Where:
IA
IM
VRN
IRR
Is the Annual Regulated Revenue
Is the Monthly Regulated Revenue
Is the replacement value of each constructive unit, established by CREG Resolution
026 of 1999. The VRN is expressed in US dollars of December 1997, converted into
Colombian pesos at the exchange rate in effect in December 1999 and adjusted in
the relevant month to take into account changes in the IPP.
Is the return rate set by CREG. The current rate is currently 9.00%.
170
N
NEA
AOM
C
Is the useful life of the electricity transmission assets, as set by CREG, which is
currently 25 years, under the current methodology.
Is the percentage at which electricity transmission companies are compensated for
their investments in non-electric assets, currently set by CREG at 5.00%.
Is the percentage on the VRN at which electricity transmission companies are
compensated for expenses incurred by them in the administration and operation and
maintenance of their electricity transmission assets, currently set by CREG at 2.50%
for assets that are not located in areas with saline contamination and 3.00% for
assets located in areas affected by saline contamination (i.e., assets located in
coastal areas near the ocean), to compensate for the additional maintenance costs
that these assets require.
Is the decrease on revenues for non compliance with availability targets set by
CREG, according to such methodology provided in CREG Resolution 061 of 2000.
For substations, an additional 8.50% on the cadastral value of the typical area on which the
substation is built is recognized as additional revenue for lands. This land is remunerated based on
the typical areas defined by CREG and the cadastral value of each Substation reported by each
transmission company.
Regarding the allocation of payments for transmission revenues, CREG Resolution 103 of 2000
provided that since January 01 2002, generators will make no payments for usage charges and
usage charges would be exclusively allocated to energy traders.
•
New Methodology– CREG Resolution 011 of 2009
Pursuant to CREG Resolution 007 of 2005, the electric transmission companies, their end users
and all interested parties were informed of the commencement of the process for CREG revision of
revenues to determine the new criteria for remuneration of electric transmission services for a new
5-year period, specifically regarding assets not subject to bidding process. In addition, this review
includes the review of the quality scheme applicable to all assets pertaining to the National
Transmission system.
In accordance with the review grounds set under CREG Resolution 007 of 2005, the regulator
focused this review in all parameters involved in the remuneration of assets: constructive units,
remuneration rate, non-electricity assets, remuneration for land, management, operation and
maintenance percentage and service quality scheme.
Between 2005 and 2009, the regulator interacted with transmitters, agents from the sector and
interested third parties requesting information, developing technical analyses on different
parameters involved in the calculation of remuneration and submitting and receiving comments on
each analysis. As a result of this review, the regulator initially issued CREG Resolution 110 of 2007,
for which it ordered “publicizing a project for resolution the CREG intends to adopt to establish
formulae for remuneration of electric power transmission”, which was presented by CREG and
analyzed by transmission companies, agents and interested third parties.
Thereafter, and once the comments received were analyzed, CREG issued CREG Resolution 011
of 2009, “whereby the methodology and fee formulae are established for the remuneration of
electric power transmission within the National Transmission System”, and which will be applicable
within the next months in accordance with regulator’s information. Once approved by CREG
through Resolution, the bases for assets to be remunerated to each TN; for such effect, each
company reported to CREG its inventory of assets under operation, classified by Constructive Unit.
171
Based on the assets defined by CREG, the Settler and Administrator of Accounts of the National
Transmission System will settle and invoice the revenues corresponding to TN, with methodology
defined by CREG Resolution 011 of 2009 and in application of the Compensations arising pursuant
to such Resolution.
In general, the remuneration methodology remained (“Regulated Revenue” methodology) but
different parameters involved in connection therewith were revised. The primary changes are as
follows:
•
The administration, operation and maintenance percentage will be annually revised based
on the actual AOM expense of the Company for the immediately preceding year.
•
The quality scheme provides more stringent availability goals and incorporates the nonsupplied energy signal for calculation of compensations for non-availability. Besides, it
provides express responsibilities for the carrier regarding the power quality.
•
The rights of way for transmission lines, remunerated under the current scheme within the
electric asset component, will be now independently remunerated based on actual
investments made by the company on this regard.
•
Unit costs were revised; new constructive units were defined, as well as the value of the
remuneration rate and the useful life of the transmission assets.
Following is the general formula to calculate revenues for assets not subject to bidding process.
The detail of the methodology is contained under CREG Resolution 011 of 2009.
These Regulated Revenues are calculated based on the following formula:
 IRR × (1 + IRR )n 
IA = VRN × 
 × (1 + ANE ) + VRN × AOM
n
 (1 + IRR ) − 1 
IA
IM =
−C
12
Where:
IA
IM
VRN
IRR
N
NEA
AOM
Is the Annual Regulated Revenue.
Is the Monthly Regulated Revenue
Is the replacement value of each construction unit, established by CREG Resolution
026 of 1999. The VRN is expressed in pesos of December 2008 and after adjusted to
the month for calculating the revenue based on the IPP.
The new remuneration rate is 11.50%, set under CREG Resolution 083 of 2008
Is the useful life of the electricity transmission assets, as set by CREG, in 30 years for
substations, 40 years for transmission lines (CREG Resolution 011 of 2009).
Percentage for remuneration of non-electric assets fixed by CREG in 5.00% (CREG
Resolution 011 of 2009).
Is the percentage on the VRN at which electricity transmission companies are
compensated for expenses incurred by them in the administration and operation and
maintenance of their electricity transmission assets. For the first year of application of
the scheme, it will apply the reference percentage based on the actual 2001 – 2007
expenditure, and the AOM 2008 revenue. This reference percentage estimated by
ISA, and still subject to approval from CREG, is in 3.13%.
For the second year, and thereafter, the percentage will be revised based on the
172
actual expense of the immediately preceding year, within the range based on the
reference AOM percentage (between 1% and 3.53%). The cap is the reference AOM
plus 0.4%
Is the decrease on revenues for non compliance with availability targets set by
CREG, and non-supplied energy in accordance with the methodology defined
through CREG Resolution 011 of 2009.
C
For substations, an additional 5.69% on the cadastral value of the typical area on which the
substation is built is recognized as additional revenue for lands. This land is remunerated based on
the typical areas defined by CREG and the cadastral value of each Substation reported by each
transmission company.
The rights of way for transmission lines will be independently remunerated based on the annual
value of right of way reported by each national transmitter based on the actual investments made in
this regard. The annualization is made based on the remuneration rate and the useful life of
transmission lines set under CREG Resolution 011 of 2009.
See “Information Relating Risks of the Issuer - We are subject to extensive governmental laws and
regulation that may affect our business, results of operations and financial condition”.
b.
Payment and distribution of regulated revenues
According to CREG Resolution No. 103 of 2000, since January 1, 2002, usage charges for
collection of Regulated Revenues from electricity transmission companies must be paid by
electricity traders in proportion to their electricity demand.
Pursuant to the contract (Mandate) executed by electricity transmission companies and XM, as
administrator of the SIC and settler of charges for the use of the STN, XM issues debit notes on
monthly basis to the electricity traders therein specifying the proportion of usage charges allocated
for payment by such traders and credit notes to the electricity transmission companies therein
specifying payments that each electricity trader should pay to such electricity transmission
companies. The total amount of such payments should be equal to the amount of usage charges
payable to electricity transmission companies.
Pursuant to the connection contracts entered into with each user of our electricity transmission
system regarding the connection of such user to our electricity transmission system, or Connection
Contracts, we monthly charge to each user of the system for the connection they have with our
electricity transmission system.
c.
Guarantee System
Payments due to usage charges payable by electricity traders on the use of the STN must be
monthly secured by means of any of the instruments listed below: (i) letter of credit issued by a
banking institution; (ii) bank guarantee; (iii) in the case of electricity traders that are also electricity
distributors, assignment of XM’s accounts receivable on occasion of payments to such companies
for the use of their distribution network; (iv) monthly prepayments; or (v) weekly prepayments. The
amount secured under those instruments is calculated by XM based on the portion of Usage
Charges paid by each electricity trader with respect to the previous month and adjusted on weekly
basis to reflect the actual electricity demand in the relevant month. If an electricity trader fails
granting the guarantee instrument within twenty (20) days as specified by XM, XM shall notify the
CREG and XM, shall be bound to reduce the electricity supply to the concerned trader, thus leading
to partial interruption of the service to the electricity end-users. If the electricity trader fails to pay the
tariff monthly payments charged to users on their due date, XM may enforce its rights under the
173
guarantee instrument (without need of resorting to judicial proceedings) and shall distribute the
proceeds from such rights among the electricity transmission companies that comprise the STN.
Besides, if an electricity trader fails to pay its usage charges and the guarantee does not suffice,
XM is entitled to enforce such promissory notes (after completing the amount thereof) provided to
XM by the electricity trader when negotiations began before the SIC.
d.
Economic growth
In Colombia after outstanding GDP growth rates of 6.94% and 7.55% in 2006 and 2007,
respectively, according DANE’s data, the economic development showed the impact from
international market crisis on Colombian economy which due to its structure amendments was one
of the less affected from the region; this was consistent with the reply from the energy demand
which according to XM grew 4.10%, 4.0% and 1.6% throughout 2006, 2007 and 2008; 2008
response is consistent with the year’s growth; it is expected that energy demand for the next years
will have positive changes as a result of Colombia’s economic reactivation for which 2.6% growth is
expected, and international financial performance.
3. Operating Revenues, last year’s performance.
a. Presentation and Comparison of Our Consolidated Statement of Results.
Under Colombian GAAP, we used the global integration method to consolidate financial results of
companies over which we exercise control as defined in the Commercial Code. When consolidating
companies over which we exercise control, the amount of our investment in the companies under
our control and the interest in their income (loss) and cash flows are replaced by our proportional
interest in the company’s assets, liabilities and income (loss) and cash flows. In addition, accounts
payable, accounts receivable from related parties and transactions among members of the
consolidated group and companies under our control are eliminated on a pro rata basis pursuant to
our ownership interest in those companies. The ownership interest of third-party shareholders in
those companies is represented by the minority interest.
The following discussion compares (1) our consolidated results of operations for the period ending
on September 30, 2009 with those of the period ending on September 30, 2008, (2) our
consolidated results of operations for the year ended December 31, 2008 with those of the year
ended December 31, 2007, and (3) our consolidated results of operations for the year ending on
December 31, 2007 with those of the year ending on December 31, 2006. Furthermore, in
connection with our consolidation in CTEEP’s financial statements, we have reclassified CTEEP’s
rights and interest in our Financial Statements with respect to its concession contract entered into
with ANEEL on June 20, 2001 (recorded as “property, plant and equipment” under CTEEP’s
financial statements), and given such reclassification, those concession rights have been recorded
as intangible assets. Consequently, amounts recorded as property, plant and equipment in our
consolidated balance-sheet as of December 31, 2008 and September 30, 2009, exclude
Col$4,072,344 million and Col$4,637,982 million respectively, in CTEEP’s fixed assets and
CTEEP’s depreciation expenses relating such assets shall continue to be recorded in our Financial
Statements as amortization of intangible assets throughout the remaining term of CTEEP’s
concession rights under the cited contract.
Amounts reported in Bolivian pesos, Brazilian reais and New soles were converted into Colombian
pesos by using the functional exchange rate methodology provided in NIC Rule 21 of the
International Accounting Standards, or IAS 21. Pursuant to this methodology for currency
conversion, the financial results of our subsidiaries in Brazil, where by the beginning of year 2007
Brazilian reais are the functional currency, are converted into a Colombian pesos as follows: (i)
monetary and non-monetary assets and liabilities are converted at the exchange rate in force on the
174
date of the relevant balance-sheet, (ii) the shareholders’ capital interest is converted at the
exchange rate in force by the time when the capital contribution or retained profits took place, (iii)
revenues and expenses are converted at average exchange rates in force in the relevant fiscal
period, and (iv) the effects from conversion into Colombian pesos are included under the
shareholders’ equity. Financial results of our subsidiaries in Peru and Bolivia must be converted into
U.S. dollars prior to their conversion into Colombian pesos. Conversion of Bolivian pesos and New
Peruvian soles into U.S. dollars is made as follows: (i) monetary assets and liabilities are converted
at the exchange rate in force on the date of the relevant balance-sheet, (ii) non-monetary assets
and liabilities are converted at the exchange rate in force by the time of the relevant purchase or
accrual, (iii) revenues and expenses are converted on monthly basis, at average exchange rates in
force during the relevant fiscal period, (iv) the conversion effects are included in the determination
of the shareholders’ equity in the relevant fiscal period, under the item “Exchange difference due to
conversion”. Following conversion into U.S. dollars of our Bolivian and Peruvian subsidiaries
financial results, their conversion into Colombian pesos is made through the rules described above
for conversion of our Brazilian subsidiaries’ financial results into Colombian pesos.
a.
Principal line items
Our Financial Statements have been presented in accordance with Colombian GAAP and the
accounting principles and methodologies established by the CGN and the SSPD. Following is a
description of the principal line items relating our consolidated statements of results:
i.
Operating revenues
Operating revenues consist of revenues received for the rendering of services which are part of our
corporate purpose and include the following items:
•
Electricity transmission services. This item refers to (i) Usage Charges received by us on
account of our regulated revenues, (ii) the permitted annual revenue received by CTEEP in
Brazil, and (iii) the Regulated Revenues received by Transelca, ISA Peru, REP,
Transmantaro and ISA Bolivia, in each case, in consideration for making available our and
our consolidate subsidiaries' electricity transmission system to users of our electricity
transmission systems.
•
Connection Charges. This item refers to payments for our connection services provided by
us, which consist of providing generators, regional transmission companies, local
distribution companies and unregulated customers with a physical connection to the STN,
as well as the construction of electricity transmission lines and substations necessary for
such connection to be made.
•
Dispatch and Coordination CND (Centro Nacional de Despacho). This item refers to
payments received by XM in consideration for the supervision and coordination of the
dispatch of electricity from the generators to the purchasers of such electricity.
•
Administration Services of the Wholesaler Energy Market (STN-SIC). This item refers to
payments received by XM in consideration for the administration of the SIC and the
collection of usage charges and charges for the use of the STR from trading agents, and
the allocation of usage charges and charges for the use of the STR among electricity
transmission companies and electricity distribution companies, respectively.
•
Telecommunications. This item refers to revenues received by Internexa, Internexa Peru
and Transnexa for the provision of telecommunication services.
175
•
Other Operating Revenue. This item refers to payments for services ancillary to electricity
transmission that we and our subsidiaries provide in the countries in which we operate,
including maintenance and operation of third-party-owned electricity transmission assets,
construction services, the preparation of feasibility studies related to the development of
new electricity transmission infrastructure and the improved operation of electricity
transmission lines.
ii.
Operating costs and expenses
Operating costs and expenses consist of the following items:
•
Operating costs. This item refers to costs and expenses related to the operation and
maintenance of our and our subsidiaries' electricity transmission assets and with the
provision of telecommunication services, including personnel expenses, depreciation,
amortization, insurance. See Note 21 of our Consolidated Financial Statements.
•
Administrative Expenses. This item refers to our and our consolidated subsidiaries' selling
and administrative expenses and maintenance and operating costs and expenses not
directly related to the provision of electricity transmission services, including materials,
taxes, depreciation, amortization, personnel and other expenses not directly related to the
provision of electricity transmission services.
iii.
Operating income
Operating income corresponds to the difference between operating revenues and operating costs
and expenses of us and our consolidated subsidiaries.
iv.
Non-Operating Income (Expenses)
Non-operating income (expenses) consists of the following items:
•
Non-Operating Income. This item refers to income derived from services that are not directly
related to our corporate purpose and from extraordinary items, and includes:
Financial revenues: revenues derived from interest received by us and our consolidated
subsidiaries with respect to accounts payable and inter-company loans. It also includes
revenues from the exchange difference in the appraissal of items from the balance sheet
and the revenues for appraissal of hedging derivative instruments, mainly ISA Capital do
Brazil’s swap.
Other revenues: Revenues derived from recoveries, extraordinary lines, adjustments from
former periods and others.
•
Non-Operating Expenses. This item refers to expenses that are not directly related to the
conduct of our business as contemplated by our corporate purpose, and includes:
Financial expenses: interest, commissions, exchange difference and other costs incurred in
connection with financing transactions. It also includes the expense from the exchange
difference in the appraissal of items from the balance sheet and the expenses for
appraissal of hedging derivative instruments, mainly ISA Capital do Brazil’s swap.
Extraordinary expenses and others: one-time charges and other non-recurring expenses
from former periods, expenses for extraordinary events and other non-recurring expenses
that are not incurred as a result of the operation of our business.
v.
Non-operating profit (loss)
176
Non-operating profit (loss) is non-operating income minus non-operating expenses.
vi.
Income before Provision for Income Tax
Income before provision for income tax is the sum of our operating income and our non-operating
profit (loss).
vii.
Provision for income tax
It corresponds to expenses caused from applying the nominal rate to the taxable net income in
accordance with the regulations in effect at the countries where ISA is present.
The laws applicable to us and our subsidiaries in Colombia provide that taxable income is subject to
a 33% income tax rate. For 2007 and 2006 taxable years, the income tax rate was 34% and 35%,
respectively.
viii.
Income before minority interests
Income before minority interests refers to our and our consolidated subsidiaries after-tax income
before giving effect to the minority interest held by third-party shareholders of our consolidated
subsidiaries.
ix.
Minority interests
This line represents the portion of our and our consolidated subsidiaries' income allocated to
shareholders of our consolidated subsidiaries that own less than 50% of the voting stock of such
companies.
x.
Net income
This line refers to net income of us and our consolidated subsidiaries after deduction of minority
interest. Under the Colombian GAAP, net income is calculated on the basis of accrual. See
“Information relating risks of the issuer - Under the Colombian law, our Bylaws and the declaration of
our controlling shareholder, we may be required to pay dividends, even if no sufficient cash is available
to make such payments”.
xi.
Net income per share
Net income per share is calculated using the weighted average of the outstanding shares of our
capital stock during a given year. In 2008 such average corresponded to 1,075,661,374 and in 2007
it was 1,023,129,780.
c.
•
Consolidated statement of results
Period ending on September 30, 2009, compared with period ending on September 30, 2008.
We had a net income for Col$315,096 million for the period ending on September 30, 2009, which
represents an increase of 73.37% compared with Col$181,744 million for the same period in 2008.
Increase for Col$133,352 million results from the 10.82% increase on operating results and the
higher revenues from exchange difference, due to the Colombian and Brazilian exchange rate
behaviors.
177
The table below summarizes our consolidated results of operations for the period ending on
September 30, 2009 and 2008:
Period ending on September 30,
2009
2008
Percentage
change
(in millions of Colombian pesos, except
for net income per share, which is in
pesos)
OPERATING REVENUES
Electricity transmission services
2,121,967
1,965,759
7.95%
219,742
184,855
18.87%
27,991
23,614
18.53%
20,029
22,463
-10.83%
Telecommunications
86,231
86,427
-0.23%
Other operating revenues
32,130
37,064
-13.31%
2,508,090
2,320,182
8.10%
729,881
706,069
354,603
329,497
1,084,484
1,035,566
4.72%
1,423,606
1,284,616
10.82%
669,920
513,201
911,039
822,662
(241,119)
(309,461)
Connection charges
Dispatch and coordination CND
(Centro Nacional de Despacho)
Administration Services of the
Wholesaler Energy Market(STNSIC)
Total Operating revenues
Operating costs and expenses
Operating costs
Administrative expenses
Total Operating costs and
expenses
OPERATING INCOME
3.37%
7.62%
NON-OPERATING INCOME
(EXPENSES)
Non-Operating Income
Non-operating expenses
NON-OPERATING PROFIT
(LOSS)
30.54%
10.74%
-22.08%
178
Income before Provision for
Income Tax
Provision for income tax
Income before minority interests
Minority interests
NET INCOME
NET INCOME PER SHARE
•
1,182,487
975,155
400,150
349,600
782,337
625,555
467,241
443,811
315,096
292.93
181,744
168.96
21.26%
14.46%
25.06%
5.28%
73.37%
Year ending on December 31st, 2008 compared with year ending on December 31st, 2007
We had a net income for Col$236.593 million regarding the year ending on December 31st, 2008,
which represented an increase of 4.7% compared with Col$226.021 million for the year ending on
December 31st, 2007. This increase was mainly due to the operating income as there was a 12.2%
increase of revenues and a 5.6% decrease on expenses; increased revenues is due to the
following: (i) IPP growth in Colombia and IGPM growth in Brazil for 9.00% and 9.8% respectively,
which causes greater revenues at ISA, Transelca and CTEEP, (ii) operations started for the optic
fiber project and the Caño Limón compensation project at ISA, (iii) greater revenues in CTEEP
derived from invoicing to Companhia Paulista de Forca e Luz, (iv) starting operations of affiliate
Proyectos de Infraestructura del Peru – PDI-, of Internexa Peru, (v) commencement of
consolidating of results of Transnexa due to the 50% interest held on this Ecuadorian company, (vi)
greater revenues in REP derived from the entering in operation of the enlargement of Zapallal –
Paramonga- Chimbote line, and new operation and maintenance services to third parties, along
with the entrance into operation of Arboleda Substation belonging to ISA Bolivia, (vii) expenses
show a decrease, specially on CTEEP’s personnel expenses, after implementation of a voluntary
retirement plan in 2006, (viii) reduced provisions for labor contingencies at CTEEP, (ix) reduction of
AOM expenses in Transmantaro as a result of the absorption of management process by REP, (x)
reduced actuarial calculation amortizations at ISA and Transelca regarding the former period, taking
into consideration the accelerated amortization of pension liabilities associated with extra-legal
benefits, (xi) a decrease on ISA Capital do Brazil of the expense for commercial credit amortization,
as a result of the CTEEP’s corporate reorganization.
The table below summarizes our consolidated results of operations for the years ending on
December 31st, 2008 and 2007:
Year ending on December 31
2008
2007
Percentage
change
(in million Colombian pesos, except for the net income per share which is expressed in
Colombian pesos)
OPERATING REVENUES
Electricity transmission services
Connection charges
Dispatch and coordination CND (Centro
Nacional de Despacho) MEM
2,659,505
269,967
2,408,178
234,024
10.44%
15.36%
32,369
28,844
12.22%
179
Administration Services of the Wholesaler
Energy Market(STN-SIC-SID)
Telecommunications
Other operating revenues
Operating costs and expenses
Operating costs
Administrative expenses
OPERATING INCOME
NON-OPERATING INCOME (EXPENSES)
Non-Operating Income
Non-operating expenses
NON-OPERATING LOSS
Income before taxes
Provision for income tax
Income before minority interest
Minority interest
NET INCOME
NET INCOME PER SHARE
•
29,061
109,209
64,930
32,373
107,786
10,470
-10.23%
1.32%
520.15%
3,165,041
2,821,675
12.17%
1,000,637
448,256
1,448,893
1,716,148
950,880
584,492
1,535,372
1,286,303
5.23%
-23.31%
-5.63%
33.42%
793,867
-1,261,921
-468,054
1,081,662
-1,103,007
-21,345
-26.61%
14.41%
2092.80%
1,248,094
-434,723
813,371
576,778
236,593
219.95
1,264,958
-392,927
872,031
646,010
226,021
220.91
-1.33%
10.64%
-6.73%
-10.72%
4.68%
-0.43%
Year ending on December 31st, 2007 compared with year ending on December 31st, 2006
Our net income for the year ending on December 31st, 2007 was Col$226.021 million, which
represented an increase of 50.21% compared with Col$150.469 million for the year ending on
December 31st, 2006. This increase was mainly a result of (i) the exchange effect that caused an
important increase of CTEEP’s revenues by the conversion processes of its financial statements
from Brazilian reais to Colombian pesos, (ii) ISA’s acknowledgement of CTEEP’s revenues in 2007,
(ii) revenues resulting from the entry into operation of projects from ISA, CTEEP, REP and
Transelca, (iv) increase of CTEEP’s revenues due to the updating of the Market Price General
Index– IGPM, indicator used for revenue indexation, (v) reduction of revenues for tariff contractual
renegotiation made by INTERNEXA with its customers, (vi) the reduction of operating costs and
expenses was due to the process carried out with personnel expenses as a result of implementing
the Voluntary Retirement Plan – PDV- since 2006 in CTEEP, cost and expense increase at ISA and
Transelca related with the recognition of actuarial liabilities for extra-legal benefits to retirees and
higher expenses associated to the payment of contribution for social security funding– COFINSand social integration programs – PIS- of Isa Capital do Brazil, resulting from interest on own capital
received from CTEEP.
The table below summarizes our consolidated results of operations for years ending on December
31st, 2007 and 2006:
180
Year ending on December 31,
Percentage
2007
2006
change
(in million Colombian pesos, except for the net income per share which is
expressed in Colombian pesos)
OPERATING REVENUES
Electricity transmission services
Connection charges
Dispatch and coordination CND (Centro
Nacional de Despacho) MEM
Administration Services of the Wholesaler
Energy Market(STN-SIC-SID)
Telecommunications
Other operating revenues
Operating costs and expenses
Operating costs
Administrative expenses
OPERATING INCOME
NON-OPERATING INCOME (EXPENSES)
Non-Operating Income
Non-operating expenses
NON-OPERATING LOSS
Income before taxes
Provision for income tax
Income before minority interest
Minority interest
NET INCOME
NET INCOME PER SHARE
2,408,178
234,024
1,678,272
172,474
43.49%
35.69%
28,844
29,618
-2.61%
32,373
107,786
10,470
25,133
101,535
9,290
28.81%
6.16%
12.70%
2,821,675
2,016,322
39.94%
950,880
584,492
1,535,372
1,286,303
688,361
989,397
1,677,758
338,564
38.14%
-40.92%
-8.49%
279.93%
1,081,662
-1,103,007
-21,345
444,843
-612,457
-167,614
143.16%
80.10%
-87.27%
1,264,958
-392,927
872,031
646,010
226,021
220.91
170,950
-63,665
107,285
-43,184
150,469
156.42
639.96%
517.18%
712.82%
-1395.95%
50.21%
41.23%
C.
SIGNIFICANT CHANGES ON SALES, SELLING COSTS, OPERATION EXPENSES,
INTEGRAL FUNDING COSTS, TAXES AND NET INCOME (CONSOLIDATED FIGURES)
1.
Period ending on September 30, 2009, compared to and closing on September 30,
2008
a.
Operating revenues
Operating revenues for the period ending on September 30, 2009 were Col$2,508,090 million,
representing an increase of 8.10% on operating revenues of Col$2,320,182 million for the same
period. This increase was mainly due to greater revenues from CTEEP and ISA Colombia.
•
Electricity transmission services
181
Revenues derived from our electricity transmission services for the period ending on September 30,
2009 represented 84.60% our operating revenues, for a total of Col$2,121,967 million, which
means an increase of 7.95% compared with Col$1,965,765 million for the same period in 2008.
This increase was mainly the result of the consolidation of financial statements pertaining Brazilian
and Colombian companies. Participation per country was 56.68%, 32.37%, 9.54% and 1.41% for
Brazil, Colombia, Peru and Bolivia respectively.
•
Connection charges
Revenues derived from our connection charges for the period ending on September 30, 2009
represented 8.76% our operating revenues, for a total of Col$219,742 million, which means an
increase of 18.87% compared with Col$184,855 million for the same period in 2008. This increase
was mainly due to greater revenues for this concept in CTEEP, ISA and Transelca.
•
Dispatch and coordination CND (Centro Nacional de Despacho)
Revenues derived from our services for dispatch and coordination from CND (Centro Nacional de
Despacho) for the period ending on September 30, 2009 represented 1.12% of our operating
revenues, for a total of Col$27,991 million, which means an increase of 18.53% compared with
Col$23,614 million for the same period in 2008.
•
Administration Services of the Wholesaler Energy Market–MEM- (STN-SIC)
Revenues derived from our services for MEM (STN-SIC) administration for the period ending on
September 30, 2009 represented 0.80% of our operating revenues, for a total of Col$20,029 million,
which means a decrease of 10.83% compared with Col$22,463 million for the same period in 2008.
•
Telecommunications
Revenues derived from our telecommunications services for the period ending on September 30,
2009 represented 3.44% of our operating revenues, for a total of Col$86,231 million, which means
a decrease of 0.23% compared with Col$86,427 million for the same period in 2008.
•
Other operating revenues
Other operating revenues for the period ending on September 30, 2009 represented 1.28% of our
operating revenues, for a total of Col$32,132 million, which means a decrease of 13.31% compared
with Col$37.064 million for the same period in 2008. This variation showed the result of the
reduction of technical services, consulting agreements and construction services.
b.
Operating costs and expenses
Operating costs and expenses for the period ending on September 30, 2009 were Col$1,084,484
million, which represents an increase of 4.72% compared with Col$1,035,566 million for the same
period in 2008. This variation was mainly due to the following factors.
•
Operating costs
Our operating costs for the period ending on September 30, 2009 were Col$729,881 million, which
represents an increase of 3.37% compared with Col$706,069 million for the same period in 2008.
Increase in our operating costs of Col$23,812 million was mainly due to the incorporation of
182
Companies, such as Internexa Peru and Transnexa, into the consolidated financial information, as
well as the increase of personnel expenses and contributions and taxes.
•
Administrative expenses
Our administrative expenses for the period ending on September 30, 2009 were Col$354,603
million, which represented an increase of 7.62% compared with Col$329,497 million for the same
period in 2008. This increase was mainly due to lease, contribution and tax expenses, among
others.
c.
Operating income
Operating income for the period ending on September 30, 2009 was Col$1,423,606 million, which
represents an increase of 10.82% with respect to operating income of Col$1,284,616 million for the
same period in 2008, as a result of the aforementioned factors.
d.
•
Non-Operating Income (Expenses)
Non-Operating Income
Non-Operating Income for the period ending on September 30, 2009 amounted to Col$669,920
million, which represents an increase of 30.54% compared with Col$513,201 million for the same
period in 2008. This increase was due to higher revenues from exchange difference, resulting from
the revaluation in Colombia and Brazil that mainly affected financial obligations of Isa Capital do
Brazil e ISA Colombia.
•
Non-operating expenses
Non-operating expenses for the period ending on September 30, 2009 amounted to Col$911,039
million, which represents an increase of 10.74% compared with Col$822,662 million for the same
period in 2008. This increase basically reflected the loss on the swap appraisal on ISA Capital do
Brazil, hedging operation made to cover notes issued by this company.
e.
Non-operating profit (loss)
For the period ending on September 30, 2009 we had a non-operating loss for a total of
Col$241,119 million, which reflects a decrease of 22.08% on the non-operating loss of Col$309,461
million for the same period in 2008. This decrease was mainly due to the result of the factors
mentioned above under headings “Non-Operating Income ” and “Non-operating expenses”.
•
Income before Provision for Income Tax and Minority interest
Income before Provision for Income Tax and Minority interest for the period ending on September
30, 2009 amounted to Col$1,182,487 million, which represents an increase of 21.26% compared
with Col$975,155 million for the same period in 2008. This increase was due to the aforementioned
results.
•
Provision for income tax
Provision for income tax regarding the period ending on September 30, 2009 was Col$400,150
million, which represents an increase of 14.46% compared with Col$349,601 million for the same
period in 2008. This increase mainly resulted because of the better results of CTEEP, ISA Colombia
and REP.
183
•
Income before minority interests
Income before minority interests for the period ending on September 30, 2009 was Col$782,337
million, which represents an increase of 25.06% compared with Col$625,555 million for the same
period in 2008, due to the aforementioned factors.
f.
Minority interests
Minority interests for the period ending on September 30, 2009 was Col$467,241 million, which
represents an increase of 5,28% compared with Col$443,811 million for the same period in 2008.
This increase was mainly due to the best results of CTEEP, REP and Transmantaro.
g.
Net income
Net income for the period ending on September 30, 2009 was Col$315,096 million, which
represents an increase of 73.37% over the net income of Col$181,744 million for the same period in
2008, due to the factors discussed above.
h.
Net income per share
Net income per share for the period ending on September 30, 2009 was Col$292.93 which
represents an increase of 73.37% over the net income per share of Col$168.96 for the same period
in 2008, due to factors mentioned above.
2.
Year ending on December 31st, 2008 compared with year ending on December 31st,
2007
a.
Operating revenues
Operating revenues for the year ending on December 31st, 2008 were Col$3,165,041 million, which
represents an increase of 12,17% over the operating revenues of Col$2,821,675 million for the year
ending on December 31st, 2007. This increase is due to (i) IPP growth in Colombia and IGPM
growth in Brazil for 8.99% and 9.8% respectively, which causes greater revenues at ISA, Transelca
and CTEEP, (ii) operations started for the optic fiber project and the Caño Limón compensation
project, (iii) greater revenues in CTEEP derived from invoicing to Companhia Paulista de Forca e
Luz, (iv) greater revenues in REP derived from the variable growing to which its revenues are
indexed, (v) the entering in operation of the enlargement of Zapallal – Paramonga- Chimbote line,
(vi) new operation and maintenance services to third parties, along with the entrance into operation
of Arboleda Substation belonging to ISA Bolivia.
•
Electricity transmission services
Revenues derived from our electricity transmission services for the year ending on December 31st,
2008 represented 84.03% our operating revenues, for a total of Col$2,659,505 million, which
means an increase of 10.44% compared with Col$2,408,178 million for the year ending on
December 31st, 2007. This increase was the result of the macroeconomic growth in Colombia and
Brazil, the entry into operation of various projects, as well as enlargements in Peru and the new
substation in Bolivia.
•
Connection charges
184
Revenues derived from our Connection charges for the year ending on December 31st, 2008
represented 8.53% of our operating revenues, for a total of Col$269,967 million, which means an
increase of 15.36% compared with Col$234,024 million for the year ending on December 31st,
2007. This increase was the result of new Connection Contracts executed and the entry into
operation of connection assets.
•
Dispatch and coordination CND (Centro Nacional de Despacho)
Revenues derived from our services for dispatch and coordination of CND (Centro Nacional de
Despacho) for the year ending on December 31st, 2008 represented 1.02% of our operating
revenues, for a total of Col$32,369 million, which means an increase of 12.22% compared with
Col$28,844 million for the year ending on December 31st, 2007. This increase reflected the higher
charges for dispatch and coordination included in XM’s operating budget for the period approved by
CREG.
•
Administration Services of the Wholesaler Energy Market–MEM- (STN-SIC)
Revenues derived from our services for MEM (STN-SIC) administration for the year ending on
December 31st, 2008 represented 0.92% of our operating revenues, for a total of Col$29,061
million, which means a decrease of 10.23% compared with Col$32,373 million for the year ending
on December 31st, 2007. This increase was the result of higher charges for dispatch and
coordination included in XM’s operating budget for the period approved by CREG.
•
Telecommunications
Revenues derived from our telecommunications services for the year ending on December 31st,
2008 represented 3.45% of our operating revenues, for a total of Col$109,209 million, showing an
increase of 1.32% compared with Col$107,786 million for the year ending on December 31st, 2007.
This increase was mainly due to the fact that on July 3, 2007 Internexa S.A. ESP, obtained
authorization from the Peruvian Ministry of Transport and Communications for the granting of the
concession related to domestic and international long distance services for a 20-year period, in
addition to the entry into operation of optic fiber projects.
•
Other operating revenues
Other operating revenues for the year ending on December 31st, 2008 represented 2.05% of our
operating revenues, for a total of Col$64,930 million, showing an increase of 520.15% compared
with Col$10,470 million for the year ending on December 31st, 2007. This increase is derived from
the inclusion of company Proyectos de Infraestructura del Peru in the consolidated financial
statements, and construction services for third parties rendered by ISA.
b.
Operating costs and expenses
Operating costs and expenses for the year ending on December 31st, 2008 were Col$1,448,893
million, representing a decrease of 5.63% compared with Col$1,535,372 million for the year ending
on December 31st, 2007. This decrease was mainly due to the following factors.
•
Operating costs
Our operating costs for the year ending on December 31st, 2008 were Col$1,000,637 million,
representing an increase of 5.23% compared with Col$950,880 million for the year ending on
December 31st, 2007; it corresponds to costs associated to revenues for construction services in
Peru and Colombia and increase of materials and maintenance in the latter country.
185
•
Administrative expenses
Our Administrative expenses for the year ending on December 31st, 2008 were Col$448,256
million, representing a decrease of 23.31% compared with Col$584,492 million for the year ending
on December 31st, 2007. The decrease corresponds to: (i) a lower amortization regarding 2007
because in that year there was an accelerated amortization of pension liabilities related with extralegal benefits at ISA and Transelca, (ii) lower expenses in CTEEP associated to the voluntary
retirement plan, (iii) there were higher expenses on last year at ISA Capital and CTEEP due to
financial transaction taxes, (iv) decreased amortization is mainly due to the less commercial credit
amortization expense in ISA Capital through the CTEEP’s corporate reorganization, (v) there is less
expenditure execution associated to provisions for labor contingencies at CTEEP.
y.
Operating income
Operating income for the year ending on December 31st, 2008 was Col$1,716,148 million, which
represents an increase of 33.42% with respect to operating income for Col$1,286,303 million with
regards to the year ending on December 31st, 2007, for the aforementioned factors.
z.
•
Non-Operating Income (Expenses)
Non-Operating Income
Non-Operating Income for the year ending on December 31st, 2008 amounted to Col$793,867
million, representing a decrease of 26.61% compared with Col$1,081,662 million for the year
ending on December 31st, 2007. This decrease takes into account: (i) the higher value of swap
appraisal of ISA Capital associated to the reais-US dollar devaluation, (ii) in 2007, there were
recoveries for CTEEP’s provisions, in accordance with the legal analysis of legal counsels and (iii)
on the last year, revenues were obtained from CTEEP regarding the CETEMEQ Agreement; in
addition, there were labor liability recoveries in last year, which were adjusted by actuarial
calculation and commercial credit amortization.
•
Non-operating expenses
Non-operating expenses for the year ending on December 31st, 2008 amounted to Col$1,261,921
million, which represents an increase of 14.41% compared with Col$1,103,007 million for the year
ending on December 31st, 2007. This increase mainly corresponds to the exchange difference of
ISA Capital’s and ISA’s (parent company) debt, associated with the reais and the peso-US dollar
devaluation, respectively; there is also a decrease on the real property and urban territorial tax on
CTEEP’S CETEMEQ-related assets.
aa.
NON-OPERATING LOSS
For the year ending on December 31st, 2008 we suffered non-operating losses amounting to
Col$468,054 million, which represents an increase of 2,092.80% on our non-operating losses of
Col$21,345 million for the year ending on December 31st, 2007. This reduction was mainly due to
the result of such factors mentioned under above sections “Non-Operating Income” and “Nonoperating expenses”.
•
Income before Provision for Income Tax
186
Income before Provision for Income Tax for the year ending on December 31st, 2008 was
Col$1,248,094 million, representing a decrease of 1.33% compared with Col$1,264,958 million for
the year ending on December 31st, 2007, due to the aforementioned reasons.
•
Provision for income tax
Provision for income tax for the year ending on December 31st, 2008 was Col$434,723 million,
which represents an increase of 10.64% compared with Col$392,927 million for the year ending on
December 31st, 2007. This increase is due to a higher tax-related income and lower special
deduction for investment on ISA’s productive assets.
•
Income before minority interests
Income before minority interests for the year ending on December 31st, 2008 amounted to
Col$813,371 million, representing a decrease of 6.73% compared with Col$872,031 million for the
year ending on December 31st, 2007, for such reasons mentioned above.
bb.
Minority interests
Minority interests for the year ending on December 31st, 2008 was Col$576,778 million compared
with Col$646,010 million for the year ending on December 31st, 2007, showing a decrease of
10.72% as a result of lower profits at such companies not fully owned by ISA economic group.
cc.
Net income
Net income for the year ending on December 31st, 2008 was Col$236,593 million, which represents
an increase of 4.68% over net income of Col$226,021 million for the year ending on December
31st, 2007, due to previously mentioned factors.
dd.
Net income per share
Net income per share for the year ending on December 31st, 2008 was Col$219.95 representing a
decrease of 0.43% over the net income per share of Col$220.91 for the year ending on December
31st, 2007.
3. Year ending on December 31st, 2007 compared with year ending on December 31st, 2006
a.
Operating Revenues
Operating revenues for the year ending on December 31st, 2007 were Col$2,821,675 million, which
represents an increase of 39.94% over the operating revenues of Col$2,016,322 million for the year
ending on December 31st, 2006. This increase was mainly due to: (i) the currency exchange effect
on CTEEP’s revenues, (ii) ISA’s acknowledgement of CTEEP’s and Transmantaro’s revenues,
which companies were acquired on June and December 2006, respectively, (iii) acknowledgement
of revenues from the entry into operation of projects pertaining to ISA, CTEEP, REP and Transelca,
(iv) increase on CTEEP’s revenues for the updating of the Market Price General Index -IGPM- used
for revenue indexation.
•
Electricity transmission services
Revenues derived from our electricity transmission services for the year ending on December 31st,
2007 represented 85.35% of our operating revenues, for a total of Col$2,408,178 million, which
means an increase of 43.49% compared with Col$1,678,272 million for the year ending on
187
December 31st, 2006. This increase was due to: (i) ISA’s acknowledgement of CTEEP’s and
Transmantaro’s revenues, (ii) acknowledgement of revenues from the entry into operation of
projects pertaining ISA, CTEEP, REP and Transelca.
•
Connection charges
Revenues derived from our services for connection charges for the year ending on December 31st,
2007 represented 8.29% of our operating revenues, for a total of Col$234,024 million, which means
an increase of 35.69% compared with Col$172,474 million for the year ending on December 31st,
2006. This increase is the result of ISA’s acknowledgement of connection-related revenues from
CTEEP and new Connection Contracts executed by ISA and Transelca.
•
Dispatch and coordination CND (Centro Nacional de Despacho)
Revenues derived from our services for Dispatch and coordination - CND (Centro Nacional de
Despacho) for the year ending on December 31st, 2007 represented 1.02% of our operating
revenues, for a total of Col$28,844 million, which means a decrease of 2.61% compared with
Col$29,618 million for the year ending on December 31st, 2006. This decrease showed less
charges for dispatch and coordination received by our subsidiary XM.
•
Administration Services of the Wholesaler Energy Market–MEM- (STN-SIC)
Revenues derived from our services for MEM (STN-SIC) administration for the year ending on
December 31st, 2007 represented 1.15% of our operating revenues, for a total of Col$32,373
million, which means an increase of 28.81% compared with Col$25,133 million for the year ending
on December 31st, 2006. It corresponds to the increase on administration charges included in the
budget for the period approved by CREG.
•
Telecommunications
Revenues derived from our telecommunication services for the year ending on December 31st,
2007 represented 3.82% of our operating revenues, for a total of Col$107,786 million, which means
an increase of 6.16% compared with Col$101,535 million for the year ending on December 31st,
2006. This increase showed a raise on telecommunication-related revenues from new contracts
executed by Internexa.
•
Other operating revenues
Other operating revenues for the year ending on December 31st, 2007 represented 0.37% of our
operating revenues, for a total of Col$10,470 million, which means an increase of 12.70%
compared with Col$9,290 million for the year ending on December 31st, 2006. It corresponds to
greater revenues from XM, Transelca and ISA for other ancillary services: surveys, AOM, among
others.
b. Operating costs and expenses.
Operating costs and expenses for the year ending on December 31st, 2007 were Col$1,535,372
million, reflecting a decrease of 8.49% compared with Col$1,677,758 million for the year ending on
December 31st, 2006. This increase was mainly due to the following factors.
•
Operating costs
188
Our Operating costs for the year ending on December 31st, 2007 were Col$950,880 million,
representing an increase of 38.14% compared with Col$688,361 million for the year ending on
December 31st, 2006. This increase mainly corresponds to the incorporation of CTEEP for the
whole year, while in 2006 it was only included from the purchase by the end of June.
•
Administrative expenses
Our administrative expenses for the year ending on December 31st, 2007 were Col$584,492
million, representing a reduction of 40.92% compared with Col$989.397 million for the year ending
on December 31st, 2006. This decrease was due to the activities carried out by the Group for
optimization and savings, mainly in CTEEP for which in 2006 costs and expenses associated with
the voluntary retirement plan –PDV were implemented and acknowledge in the financial statements
of said company.
c.
Operating income
Operating income for the year ending on December 31st, 2007 was Col$1,286,303 million, which
represents an increase of 279.93% over operating income of Col$338.564 million for the year
ending on December 31st, 2006, due to such factors mentioned above.
d. Non-Operating Income (Expenses)
•
Non-Operating Income
Non-Operating Income for the year ending on December 31st, 2007 amounted to Col$1,081,662
million, which represents an increase of 143.16% compared with Col$444,843 million for the year
ending on December 31st, 2006. There was a favorable behavior mainly due to: extraordinary
revenues at CTEEP for the closing in the CETEMEQ negotiation, relating the selling of land to
Eletropaulo and recovery of provisions concerning contingencies and updating of pension liabilities
through actuarial calculation and a currency exchange difference due to debt updating.
•
Non-operating expenses
Non-operating expenses for the year ending on December 31st, 2007 amounted to Col$1,103,007
million, which represents an increase of 80.10% compared with Col$612,457 million for the year
ending on December 31st, 2006. This variation corresponds to the hedging appraisal on ISA Capital
do Brazil notes, which effect is offset with the revenues due to currency exchange difference
resulting upon the debt; besides the real property and territory and urban tax is included on
CTEEP’s CETEMEQ-related assets.
e. Non-operating profit (loss)
For the year ending on December 31st, 2007 we had non-operating losses amounting to
Col$21,345 million, reflecting a reduction of 87.27% with respect to non-operating losses of
Col$167.614 million for the year ending on December 31st, 2006. This reduction is mainly due to
the result of factors mentioned above under sections “Non-Operating Income” and “Non-operating
expenses”.
•
Income before Provision for Income Tax
Income before Provision for Income Tax for the year ending on December 31st, 2007 was
Col$1,264,958 million, reflecting an increase of 639.96% compared with Col$170,950 million for the
year ending on December 31st, 2006, for such reasons mentioned above.
189
•
Provision for income tax
Provision for income tax for the year ending on December 31st, 2007 was Col$392,927 million,
reflecting an increase of 517.18% compared with Col$63,665 million for the year ending on
December 31st, 2006. This increase is explained by the revenues received from the negotiation
with Eletropaulo and minor tax-related benefits in the purchase of productive assets.
•
Income before minority interests
Income before minority interests for the year ending on December 31st, 2007 was Col$872,031
million, which represents an increase of 712.82% compared with Col$107,285 million for the year
ending on December 31st, 2006, for such reasons mentioned above.
f.
Minority interests.
Minority interests for the year ending on December 31st, 2007 was Col$646,010 million, which
means an increase of 1,395.95% compared with Col$(43,184) million for the year ending on
December 31st, 2006. This increase was basically resulting from improved results of affiliates not
fully owned by ISA Group
g. Net income
Net income for the year ending on December 31st, 2007 was Col$226,021 million, which represents
an increase of 50.21% with respect to the net income of Col$150,469 million for the year ending on
December 31st, 2006, for the reasons mentioned above.
h. Net income per share
Net income per share for the year ending on December 31st, 2007 was Col$221 which represents
an increase of 41.61% with respect to the net income per share of Col$156 for the year ending on
December 31st, 2006.
D.
PENSION LIABILITIES AND FRINGE BENEFITS PAYABLE
1.
Retirement pensions payable by the issuer
Pursuant to our collective bargaining agreements and individual labor agreements, we are bound to
advance retirement pensions to all those workers who meet certain erquirements relating age and
length of service. However, the Social Security Institute (ISS) and the Pension Managing
Companies have assumed the largest portion of such liability, in compliance with certain legal
requirements.
The present value of pension liabilities as of December 31, 2008 and 2007, was determined by
using actuarial surveys in conformity with the applicable regulations and, particularly, with the
collective and individual labor agreements now in force (Pact and Agreement). The core estimates
used in the actuarial calculation were:
Actual interest rate
Actual increase on pension and salaries
Number of people covered under the plan
5.15%
2008
4.80%
444
4.77%
2007
4.80%
450
190
As of December 31, 2008, we had 619 (2007: 633) active employees, 64 (2007:90) of which are
covered under the pension regime provided in individual labor agreements and collective bargaining
agreements, while the remaining 555 (2007: 543) are subject to the regime contemplated in Law
100 of 1993. The actuarial calculation covers active personnel (64), retired personnel (323),
postmortem allowances or pension substitution (41), quotas payable by ISA (12) and contingent
personnel, and retired personnel who has provided services for 20 years or more (4).
As of December 31, 2008 76.08% (2007: 81.35%) of projected pension liabilities for pension
allowances has been amortized; amortization is calculated based on such methodology set under
Resolution No. 356 of September 5, 2007 issued by the Colombian National Accounting Office.
Movements on actuarial calculation and deferred liabilities, as of December 31, 2008, are as
follows:
Balance as of December 31st, 2005
Plus actuarial calculation increase
Balance as of December 31st, 2006
Plus actuarial calculation increase
Balance as of December 31st, 2007
Plus actuarial calculation increase
Balance as of December 31st, 2008
Projected
liability
97,484
1,615
99,099
4,971
104,070
9,141
113,211
Deferred
cost
16,298
-646
15,652
3,754
19,406
7,671
27,077
Net
Liabilities
81,186
2,261
83,447
1,217
84,664
1,470
86,134
Monthly allowances were paid during the year in the amount of Col$10,737 (2007: Col$10,258).
2.
Extra-legal benefits granted by the issuer
For the purposes of determining pension liabilities the Company included extra-legal benefits
received by pensioners, other than those required by the legal provisions. This practice was
adopted as an action of prudence since year 2005, advancing the application of International
Accounting Rules (NIC).
In making the relevant calculation, allowances and extra-legal benefits were included, as
contemplated under individual labor agreements and collective bargaining agreements to which
current and future pensioners are entitled, to wit: education allowances, health allowances
(supplemental plans and allowances for health expenses) and pension contributions; assessment
and amortization were as follows:
Total
liabilities
2008
Old-age allowance
Education allowance
Health allowance
Total
Amortization percentage
3,975
2,183
28,844
35,002
Total
liabilities
2007
4,925
2,067
27,721
34,713
Total
amortized
Dec 2008
3,975
2,183
28,844
35,002
100%
Total
amortized
Dec 2007
4,925
2,067
27,721
34,713
100%
191
Until 2006, the amortization methodology for allowances and benefits was the same used for
pension liability amortization; as of December 31st, 2007, allowances and benefits were 100%
amortized thereby achieving a closer compliance with the international standard. Accounting
records for acknowledgement of this liability and the related expense are made under accounts
independent from the actuarial calculation.
192
3. Labor liabilities of the issuer
st
As of December 31 , labor liabilities comprised (Figures in million pesos):
2008
Labor liabilities
Severance pay and interest
Vacations
Extra-legal benefits
Others
Total labor liabilities
Less – long-term portion
Short-term labor liabilities
2007
3,098
1,514
2,100
1,106
7,818
1,323
2,815
1,383
2,214
27
6,439
1,085
6,495
5,354
4. Consolidated figures
Pursuant to collective bargaining and individual labor agreements, ISA, TRANSELCA and XM are
bound to pay retirement pensions to those workers who meet certain requirements concerning age
and length of service. However, the Social Security Institute –ISS– and pension managing
companies have assumed the greatest share of this liability, in accordance with legal requirements.
The present value of pension liabilities as of December 31, 2008 and 2007 was determined by
using actuarial surveys in conformity with the regulations, and namely such provisions contained
under current collective bargaining and individual labor agreements (Pact and Agreement).
For the purposes of determining pension liabilities ISA included extra-legal benefits received by
pensioners, other than those required by the legal provisions. This practice was adopted as an
action of prudence since year 2005, advancing the application of International Accounting Rules
(NIC). The present value of this calculation was Col$35,002 million (2007 Col$34,713 million) which
is fully amortized.
The present value of benefits for medical assistance, education and energy allowances received by
TRANSELCA’S pensioners for the amount of Col$48,824 million was fully amortized in 2008 with an
effect on the results of Col$9,243 million.
The main estimates used for actuarial calculation were the following:
Detail
Actual interest rate
Actual
increase
on
pension and salaries
Number
of
people
covered under the plan
2008
ISA
TRANSELCA
XM
4.80%
4.80% 4.80%
2007
ISA
TRANSELCA
4.80%
4.80%
XM
4.80%
5.15%
4.77%
6.00%
4.77%
444
187
19
444
5.15% 5.15%
189
19
As of December 31st, 2008 77.87% of the projected pension liability for payment of pension
allowances was amortized; amortization is calculated based on such methodology set under
Resolution No. 356 of September 5, 2007 issued by the Colombian National Accounting Office.
193
Movements on actuarial calculation and deferred liabilities, as of December 31, 2008, are as
follows:
Projected
liability
Balance as of December 31st, 2006
Actuarial calculation increase
Retirement pension expenses for the
year
Total pension expenses on results
Payment of pensions
Balance as of December 31st, 2007
Actuarial calculation increase
Retirement pension expenses for the
year
Total pension expenses on results
Payment of pensions
Partially commuted pension liability
Balance as of December 31st, 2008
160,136
5,568
165,704
12,353
178,057
Deferred
cost
Commuted
pension
liability
Net
Liabilities
-22,887
-1,567
137,249
4,001
-24,454
-6,907
13,810
17,811
-13,810
141,250
5,446
-31,361
18,148
23,594
-18,148
-8,042
138,654
-8,042
-8,042
st
On the other hand, as of December 31 , consolidated labor liabilities comprised (Figures in million
pesos):
Labor liabilities
Severance pay and interest
Vacations
Extra-legal benefits
Provision for voluntary retirement plan
Others
Total labor liabilities
Less long-term portion
Short-term labor liabilities
E.
2008
4,763
9,664
6,266
13,994
2,074
36,761
1,461
35,300
2007
4,499
10,203
6,882
30,216
1,149
52,949
1,246
51,703
EFFECTS FROM INFLATION AND EXCHANGE RATE FLUCTUATION
If we take into account the high co-relation ordinarily existing between the IPP performance
indexing our revenues and the IPC performance indexing some of our expenses, it is possible to
sustain that such two indexes inflation do not affect our financial condition and results of operations
significantly. Although some of our operating costs increase by reason of inflation, such increases
are offset and sometimes counterbalanced against adjustments to our regulated revenues.
However, this adjustment may not occur if the co-relation between IPC and IPP ceases to exist, in
whole or in part, in the Colombian economy or if any temporary differences arise between the time
when we incur in incremental costs and the time when we receive incremental revenues, following
the periodic adjustment to our regulated revenues.
Our financial condition is affected by fluctuations in the exchange rate and movements in the
interest rate. As of September 30, 2009, from all our consolidated debt we had Col$2,831,783
194
million debt denominated in foreign currency and Col$1,608,875 million debt denominated in
Colombian pesos, adjusted on the basis of the TRM changes. Our debts denominated in foreign
currency decreased based on the Colombian pesos in 2007, 2008 and the first nine months of
2009, due to the revaluation of the Colombian peso vis-à-vis US dollar for these periods.
To the extent that we incur additional debt with interest rates that are directly influenced by
Colombia's monetary policies, increases in prevailing interest rates in Colombia could adversely
impact our interest expense and, accordingly, our net revenues (See “Chapter 7 – Information on
risks related to the issuer - A substantial portion of our consolidated revenues is denominated in
Colombian pesos, while a substantial portion of our consolidated indebtedness is denominated in
U.S. dollars and, therefore, to a large extent we depend on the economic conditions and policies
from Colombia”). We have significant investments in financial instruments and bank deposits with
rates that are directly influenced by Colombia's monetary policies. Therefore, increases in prevailing
interest rates in Colombia can increase our financial income, thereby offsetting a portion of the
increase in our financial expense (See Notes 3.3 and 23 of our Consolidated Financial Statements
as of December 31, 2008).
The following table shows the inflation rate in Colombia for the period ending on 30 September
2009, and the years ending on December 31, 2008, 2007 and 2006.
Inflation
Ending on
September 30
2009
2.12%
Year ending on December 31,
2008
2007
2006
7.67%
5.69%
4.48%
Source DANE
On the other hand, as of September 30, 2009, we had Col$2,831,783 million in financial liabilities
denominated in foreign currency (mainly Brasilian reais (46.51% of our total financial liabilities) and
US dollars (16.45% of our total financial liabilities). In addition, nearly 47.26% of our total assets
and 53.28% of our total revenues are denominated in Brazilian reais.
Basic regulations allow free negotiation of foreign currency through banks and other financial
intermediaries at exchange rates that vary in accordance with the supply and demand of the foreign
currency market. In the case of debts, indebtedness operations and handling of debts in local and
foreign currency require approval from the Ministry of Finance and Public Credit.
Operations and balances under foreign currency are converted at the exchange rates in effect,
certified by the Colombian Financial Superintendency, formerly Banking Superintendency. Currency
exchange rates used for preparing the financial statements as of December 31st, 2008 and 2007,
expressed in Colombian pesos, were the following:
Currency
US dollar
Euro
Bolivian pesos
New soles
Brazilian reais
Code
USD
EUR
BOL
PEN
BRL
2008
2,243.59
3,119.04
317.34
711.24
961.68
2007
2,014.76
2,961.29
262.68
671.59
1,137.45
Application of accounting rules on adjustments for exchange difference resulted in currency
exchange differences in pesos, recorded under the following accounts:
195
2008
2007
Revenues
Expenses
378,908
(719,057)
497,887
(169,124)
Total net exchange difference resulting
(340,149)
328,763
On the other hand, we purchased equipment from foreign suppliers and therefore, we must pay
significant amounts each year, in currencies other than Colombian pesos, mainly in U.S. dollars and
Euros. Taking into account our current investment plan – that may be reviewed in the future – we
have considered that nearly 15% of our capital expenses in 2009 will be made in US Dollars and
Euros. Therefore, exchange rate fluctuations in the countries where we operate will produce
fluctuations on the expenses’ local currency value.
In September 30 2009, impact on exchange rate fluctuations resulted in revenues for Col$384,280
million, compared with a loss of Col$(75,810) million in the same period in 2008.
Hedging instruments
To properly mitigate effects from the uncertain exchange and interest rate variations upon the
company’s financial results, the Company systematically implements a risk-hedging strategy,
thereby reducing variations on cash flows associated to the debt service.
Relating the impact from IPP variations, the company issues IPC-indexed indebtedness (Notes),
thus achieving significant hedging for its results, subject to preservation of the co-relation existing
between IPC and IPP.
Furthermore, we have handled risks relating exchange rate and interest rate fluctuations through our
participation in domestic equity markets from Colombia and Peru, and implementing hedging for our
exposure in US Dollars in Brazil. We believe that this strategy for risk management has improved our
structure of indebtedness and the company’s risk profile. As of September 30, 2009 we had a swap
agreement subject to Brazilian reais-U.S. dollars for Col$1,053,721 million.
On February 12, 2007, ISA Capital entered into swap agreements for US$554 million with ABN Amro
Bank N.V. and JPMorgan Securities Inc. affiliates to hedge its US Dollar exposure of the principal
under the ISA Capital Note Offering for 5 and 10 years. Under such agreements, upon the notes
maturity, ISA Capital shall pay the notes principal in Brazilian reais converted at the exchange rate
agreed under the Swap agreements, adjusted by inflation based on the IGPM plus a “spread”. Swaps
entered by ISA Capital do not hedge its obligation to pay interest for the Notes. Up to this date, the
Company has entered into forward agreements to hedge its US Dollar exposure with respect to the first
two interest payments under the notes offering, in July 30, 2007 and January 30, 2008. ISA Capital
expects hedging them is the market conditions are favorable, but there is no assurance to the end that
such exposure will be mitigated in the future.
196
F.
CREDITS AND INVESTMENTS IN FOREIGN CURRENCY
1.
Financial liabilities in foreign currency
a.
Figures of the issuer
Balance of the issuer’s financial liabilities in foreign currency as of December 31, 2008, consists of the
following (figures in million pesos):
Credit facilities
Foreign financial
liabilities
MEDIO CREDITO
CENTRALE
Currency
EUR
BIRF-3954-CO
BIRF-3955-CO
BNP PARIBAS
ABN_AMRO and
JPMORGAN
Interest rate
2008
2007
Date of last
payment
5,675
8,981
19-Jun-10
USD
USD
USD
Fixed rate 1.75%
Fixed rate Tranches
(6.32%)
Libor 6 M + 0.28%
Libor 6 M + 0,345%
1,184
127,593
72,301
4,865
139,260
72,566
15-Feb-11
15-Oct-12
15-May-17
USD
Libor 6 M + Spread
112,180
402,952
18-Jan-09
318,933
628,624
Total foreign financial
liabilities
As of December 31 2008, there was a standing credit with German ECA (Export Credit Agency) for
the funding of goods and supplies in substations. This loan is supported with political and
commercial hedging from German ECA Euler Hermes and it is contracted for US$37,9 million at a
Libor rate + 0.35% for ten (10) years. In 2008 capital repayment was made for the amount of
US$3,8 million (2007: US$1,9 million), thereby having an outstanding balance for US$32 million,
payable in 17 equal semiannual installments.
On July 17, 2006, we entered into a credit agreement for the amount of U.S.$550 million with ABN
Amro and JP Morgan to acquire 50.1% of the Common Shares in CTEEP through ISA Capital do
Brasil. On December 28, 2006, ISA prepaid a tranche on such credit for the amount of U.S.$350
million; thus, the Company is in compliance with all covenants agreed with the rating agencies and
lender banks. The second tranche of such credit, for the amount of U.S.$200 million, was
syndicated by ABN Amro and JP Morgan together with ten (10) domestic and international banks,
thus proving ISA’s creditworthiness by each of the banks involved in the syndication. As of
December 31st, 2008 US$50 million were outstanding and on January 18 2009 they were fully
amortized.
As of December 31st, 2008, our financial liabilities comprised balances in the following currencies:
CURRENCY
US Dollar
Interest rate
Libor + Spread BIRF
Balances in
currency of
origin (1)
2008
2007
139,623 307,552
Balances in local
currency (million)
2008
2007
313,257 619,643
197
Euros
liras)
(formerly
Colombian pesos
(1)
Fixed rate 1.75%
1,820
3,033
DTF + 2.60% a DTF +
4.5%
469,638 320,638
5,676
8,981
469,638
788,571
320,638
949,262
Amounts which currency of origin is other than Colombian peso are expressed in thousands.
b.
Consolidated Figures
Balance of the group’s financial liabilities in foreign currency as of December 31, 2008, consists of
(figures in million pesos):
Credit facilities
BNDES
Banco Safra
Banco Alfa
Banco do Brazil
BIRF-3955-CO.
Banco de Crédito del Peru BCP
BID
CAF
IFC
Scotiabank
BIRF-3954-CO.
Mediocredito - Artigiancassa
BBVA Banco Continental
BNP Paribas
ABN_Amro and JPMorgan
Citibank N.A.
HSBC
ITAÚ
Banco Real
Total foreign financial liabilities
Hedging transactions
Currency
BRL
BRL
BRL
BRL
USD
USD
USD
USD
USD
USD
USD
EUR
USD
USD
USD
USD
BRL
BRL
BRL
Interest rate
TJLP + 2.30%
CDI + 3.00%
CDI + 3.85%
CDI + 3.00%
Libor + 0.53%
Libor + 2.13%
Libor + 4.00%
Libor + 5.00%
6.10%
7.20%
6.32%
1.75%
Libor + 1.45%
Libor + 0.35%
Libor + 1.00%
Libor + 3.13%
120.00% CDI
120.00% CDI
CDI + 6.50%
2008
582,130
127,593
61,146
56,176
41,679
28,489
26,923
1,184
5,676
29,123
72,302
112,180
96,575
96,575
39,754
1,377,505
2007
457,320
79,817
56,872
11,468
139,260
62,280
55,251
40,993
27,812
4,865
8,981
27,900
72,566
402,952
48,441
1,496,778
137
st
As of December 31 , financial liabilities comprised balances under the following currencies:
CURRENCY
US Dollar
Euro
Brazilian Reais
Colombian pesos
In Currency of origin (in
thousands)
2008
2007
248,171
437,928
1,820
3,033
848,967
532,311
619,696
475,127
Total financial liabilities
Balances in local currency
(million)
2008
2007
556,795
882,320
5,676
8,981
815,034
605,477
619,696
475,127
1,997,201
1,971,905
198
2.
Material credit agreements in foreign currency
Some of the most significant credit agreements entered into by us are described below:
(i)
U.S.$550-million credit agreement entered into on July 17 2006 with ABN Amro Bank N.V. and
JP Morgan Chase Bank N.A., as lenders, amended on December 1, 2006. Disbursements
under the agreement bear an interest rate of LIBOR (“London Interbank Offered Rate”) plus a
margin of 0.75%, 0.85% or 1% per annum. Final maturity of Tranche A was July 18, 2009, but
was prepaid in January 18, 2009. Tranche B of this U.S.$ 350 million credit was paid on
December 2006.
(ii)
ISA Subordinated Credit Agreement entered into on December 29, 2006 with ABN Amro
Bank N.V. and JPMorgan Chase Bank, N.A., as lenders, for the amount of up to U.S.$182
million. Loans under this credit facility bear an interest rate equal to (i) LIBOR, plus (ii) a
margin of 2.50% per annum. Final maturity of this credit is August 29, 2007. We used the
moneys under this credit facility to finance a portion of our payment obligations relating
acquisition of our 37.46% interest in CTEEP.
(iii)
Credit Agreement related to the Electric Power Market Development Project, entered into
among the International Bank for Reconstruction and Development, as lender, us, as
borrowers, and the Republic of Colombia, as guarantor, dated as of March 26, 1996, or the
st
1 IDB Loan. The total amount borrowed under this facility was US$104.3 million with an
interest rate of linked to the Cost of Qualified Borrowings plus a 0.5% margin. The final
repayment date is scheduled to occur on August 15, 2012.
(iv)
Credit Agreement (Floating Rate Single Currency Loan) entered into among the
International Bank for Reconstruction and Development, as lender, us, as borrowers, and
the Republic of Colombia, as guarantor, dated as of March 26, 1996. The total amount
borrowed under this facility was US$145 million with an interest rate of LIBOR plus a 0.5%
margin less the weighed average margin below (or above) the LIBOR rate for six-month
deposits with respect to the lender’s euro-dollar liabilities required to fund our credit. Final
maturity of this credit is scheduled to occur on October 15, 2012.
(v)
Credit Agreement entered into between BNP Paribas, as lender, and us, as borrowers,
dated as of November 3, 2005 in connection with the financing of imported supplies for
construction of substations under projects UPME 01-2003 and UPME 02-2003. The
borrowings under this facility were US$33,949,000 (portion A loan) and EUR3,252,950
(portion B loan) with funds provided by Euler Hermes KreditversicherungsAktiengesellschaft. The facility bears interest at a LIBOR (6 months) plus a margin of
0.35% per annum. The final maturity of this facility is 10 years counted as from the last
disbursement date.
(vi)
Financial Convention entered into between Instituto Centrale per il Credito a Medio Termine
- Mediocredito Centrale (today Artigiancassa), as lender, and we, as borrowers, dated as of
January 30, 1990. This facility was originally entered into for the total amount of up to
35,230 million Italian lira and, since June 2001 it was converted into Euros for the
outstanding amount of EUR$10.92 million. The credit facility bears an interest rate of 1,75%
per annum, payable by the end of each each six-month period as from each disbursement
made under the loan. The purpose of this facility relates to the financing of Italian goods
and services in relation to the expansion project of San Carlos, Cerromatoso, Chinu and
199
Sabanalarga electric substations. The Republic of Colombia guaranteed the payment of
U.S.$20.50 million. Final maturity of this credit is scheduled to occur on June 19, 2010.
3.
Investments in foreign currency
st
As of December 31 , we had the following assets in foreign currency expressed in thousands of US
Dollars; the following investment figures may be highlighted (unconsolidated figures):
2008
2007
Assets
Current assets
Cash
Fixed-rent investments
Accounts receivable
Total current assets
Non-current assets
Investments in foreign currency
Total non-current assets
TOTAL ASSETS
4.
449
43,105
11,932
55,486
1,201
31,657
11,873
44,731
455,897
455,897
511,383
516,053
516,053
560,784
Hedging instruments
See “E. Effects from Inflation and Exchange Rate Fluctuation – Hedging instruments”.
G.
RESTRICTIONS AGREED WITH
RESOURCES TO THE COMPANY
SUBSIDIARIES
FOR
THE
TRANSFER
OF
Although these are not agreed restrictions, following is a listing of credit agreements entered into by our
subsidiaries, therein restricting their ability to distribute dividends to us:
1.
ISA Capital
On January 29, 2007, ISA Capital made two concurrent Rule 144A/Reg. S debt offerings of senior
notes in the total amount of $554 million, or the ISA Capital Note Offerings. Maturity of the notes
corresponding to such two issuances is scheduled to occur in 2012 and 2017. The ISA Capital Note
Offerings are currently secured by a first priority pledge on approximately 56.49 million CTEEP
Common Shares owned by ISA Capital. The indentures that govern such ISA Capital Note
Offerings contain covenants that restrict ISA Capital from paying dividends to the issuer until the
notes are paid in full, except for some specific events.
2.
REP
On December 1, 2006, REP entered into a credit agreement with Banco de Crédito del Peru, as lender,
for the amount of up to U.S.$ 34 million. This agreement sets out a number of commitments and
restrictions including a limitation on the distribution of dividends, in case any event of default provided
under the agreement takes place. The maturity date of the credit is December 1, 2016. Such restriction
is also applicable in virtue of the note offering conducted by REP as from 2003.
200
3.
ISA Peru
Credit agreement entered into with International Finance Corporation (“IFC”) on June 24, 2002, for the
amount of up to U.S.$18 million; it includes a commitment that restricts its capacity to distribute
dividends to the parent company, which delivery requires obtaining a minimum value of the Debt
Service Hedging Indicator (DSCR) of 1.20, to be calculated on the latest year’s audited financial
statements. In case that dividends are to be delivered based on the non-audited interim financial
statements, such indicator must be calculated in consideration of the last four quarters of the year and
a waiver from the financial institution will be required. Maturity of this credit is scheduled to occur on
April 15, 2016.
4.
Consorcio Transmantaro
On August 6 2009, CTM entered into a credit agreement with Banco de Crédito del Peru, acting as
lender, for the amount of up to US$20,6 million. This agreement provides under its restrictions that
CTM must abstain from distributing dividends, reducing capital or any other way of profit distribution (i)
throughout the construction period of transmission line Chilca – La Planicie – Zapallal, (ii) if it is under
default of its contractual obligations with this or any other financial creditor; (iii) when it incurs in any
Event of Default as provided in the agreement.
The Maturity Date of the credit is May 15, 2017. Such restriction is also applicable in virtue of note
offerings conducted by CTM.
5.
ISA Bolivia
The following credit agreements entered into by ISA Bolivia provide commitments which restrict its
ability to distribute dividends to the parent company:
(i) Credit agreement entered into between the Inter-American Development Bank, as lender, and ISA
Bolivia, as borrower, dated April 29, 2005 for the amount of up to U.S.$31 million and Addendum to
such credit agreement on August 29, 2008 for the granting of a second disbursement for US$3.79
million. Maturity of this credit is scheduled to occur on February 15, 2019.
(ii) Credit agreement entered into with Andean Development Corporation –CAF-, as lender, and ISA
Bolivia, as borrower, dated April 29, 2005 for the amount of up to U.S.$23 million and Addendum to
such credit agreement on August 29 2008 for the granting of a second disbursement of US$2.9 million.
Maturity of this credit is scheduled to occur on February 15, 2019.
Under the terms of the credit agreements entered into by our subsidiaries in Peru and Bolivia in
connection to expansion or development of their electricity transmission assets, such subsidiaries’
ability to pay dividends and other distributions to us, has been restricted and submitted to conditions
including achievement of certain milestones relating projects completion or performance,
compliance with certain financial tests and the inexistence of defaults or events of default.
H.
INFORMATION RELATING INDEBTEDNESS LEVEL BY THE END OF THE THREE
LATEST FISCAL PERIODS
Our group’s indebtedness level by the end of the 3 latest fiscal periods is shown on the following tables:
201
1. Outstanding notes.
Issuance
Series
Currency
Term
(Años)
Interest Rate
Maturity Year
2008
2007
2006
First
A
US$
8
8.13%
2009
33,654
30,221
-
First
B
US$
9
8.34%
2010
33,654
30,221
-
Second
A
US$
8
6.00%
2011
22,436
20,148
-
Second
B
US$
9
6.25%
2012
22,436
20,148
-
Second
C
Col$
10
DTF + 2.5%
2009
59,700
59,700
59,700
Second
D
Col$
10
IPC + 10%
2009
30,879
30,879
30,879
Third
Single
Col$
10
IPC + 8.10%
2011
130,000
130,000
130,000
First
C
Col$
10
IPC + 7.50%
2012
35,000
35,000
35,000
First
C
Col$
10
IPC + 7.50%
2012
62,000
62,000
62,000
First
A
Col$
7
IPC + 7.00%
2009
16,000
16,000
16,000
First
A
Col$
7
IPC + 6.14%
2011
50,000
50,000
50,000
First
B
Col$
12
IPC + 6.95%
2016
50,000
50,000
50,000
First
A
US$
10
5.75%
2013
43,444
45,606
58,005
Second
Single
PEN
10
VAC + 5.13%
2013
39,604
40,501
46,471
Third
A
US$
12
7.75%
2016
26,124
25,749
43,880
Third
B
US$
12
7.63%
2017
10,671
10,517
-
Fifth
A
US$
10
Libor + 2.56%
2014
42,067
42,310
53,731
Third
A
US$
12
5.88%
2019
17,770
17,125
-
Third
B
US$
12
6.19%
2019
67,308
60,443
-
Fourth
A
US$
12
Libor + 0.75%
2019
43,264
43,318
-
Col$
7
IPC + 7.00%
2011
100,000
100,000
100,000
Col$
10
IPC + 7.30%
2016
150,000
150,000
150,000
Col$
15
IPC + 7.19%
2019
108,865
108,865
108,865
Col$
20
IPC + 4.58%
2026
118,500
118,500
118,500
Col$
7
IPC + 4.84%
2013
110,000
110,000
110,000
Col$
18
IPC + 4.58%
2026
104,500
-
-
US$
5
7.88%
2012
449,489
402,952
-
US$
10
8.80%
2017
795,591
713,225
-
12,359
50,233
7,708
(128,189)
336,636
-
2,657,126
2,910,297
1,230,739
Schedule
Tranche 1
Schedule
Tranche 2
Schedule
Tranche 3
Schedule
Tranche 4 Lot
1
Schedule
Tranche 5
Schedule
Tranche 4 Lot
2
Schedule
Tranche 1
Schedule
Tranche 2
Capitalized
interest
Cobertura
bonos
TOTAL
202
2.
Financial liabilities
Credit facilities
Domestic financial liabilities
BBVA
Currency
Col$
BBVA
Col$
Bancolombia
Col$
Davivienda
Col$
BBVA
Banagrario
BBVA
Banagrario
Davivienda
Citibank Colombia
ABN Amro Colombia
BBVA
Col$
Col$
Col$
Col$
Col$
Col$
Col$
Col$
Banco de Occidente
Col$
Bancolombia
Banco de Bogotá
Banco de Occidente
Col$
Col$
Col$
Davivienda
Col$
BBVA
Bancolombia
Banco de Bogotá
Col$
Col$
Col$
Banco de Crédito
Col$
Bancolombia
Col$
Corficolombiana
Ministry of Finance
Col$
US$
Total domestic financial liabilities
Foreign financial liabilities
BNDES
Banco Safra
Banco Alfa
Banco do Brazil
BIRF-3955-CO.
BID 195 IC/CO
Banco de Crédito del Peru BCP
BID
CAF
IFC
BRL
BRL
BRL
BRL
US$
UAV
US$
US$
US$
US$
Interest rate
2008
2007
2006
DTF + 4.00%
DTF + 1.50% 3.40%
DTF + 2.60%
DTF + 0.24% 3.88%
DTF + 3.89%
DTF + 3.00%
DTF + 4.25%
DTF + 4.50%
DTF + 1.50%
DTF + 3.05%
DTF + 3.30%
DTF + 4.25%
DTF + 4.00% 5.50%
DTF + 3.50%
DTF + 3.50%
DTF + 4.75%
DTF + 3.00% 4.05%
DTF + 5.50%
DTF + 1.93%
DTF + 4.73%
DTF + 4.50%5.75%
DTF + 3.50% 5.50%
¨DTF + 5.50%
Libor + 1.25%
96,638
96,638
96,638
100,000
100,000
100,000
70,000
70,000
70,686
TJLP + 2.30%
CDI + 3.00%
CDI + 3.85%
CDI + 3.00%
Libor + 0.53%
7.42%
Libor + 2.13%
Libor + 4.00%
Libor + 5.00%
6.10%-8.75%
25,000
48,000
75,000
30,000
52,000
21,000
837
22,000
19,000
13,000
837
727
22,000
829,621
925
3,495
7,000
6,000
5,649
10,667
11,000
24,380
15,000
42,332
20,000
15,000
57,067
38,799
15,000
44,000
26,000
980
-
-
66,642
-
-
4,000
920
619,696
474,990
1,279,792
582,130
457,320
79,817
56,872
11,468
139,260
62,280
55,251
40,993
27,812
180,603
155
76,119
64,063
52,182
44,769
127,593
61,146
56,176
41,679
28,489
203
FMO
Bancolombia Panamá
Scotiabank
BIRF-3954-CO.
Mediocredito - Artigiancassa
Banco de Crédito del Peru
BBVA Banco Continental
BNP Paribas
ABN_Amro and JPMorgan
Citibank N.A.
HSBC
ITAÚ
Banco Real
Total foreign financial liabilities
Hedging transactions
Total financial liabilities
(Less) – Current portion
Total long term
I.
US$
US$
US$
US$
EUR
US$
US$
US$
US$
US$
BRL
BRL
BRL
8.24%
Libor + 5.75%
7.20%
6.32%
1.75%
Libor + 4.00%
Libor + 1.45%
Libor + 0.35%
Libor + 1.00%
Libor + 3.13%
120.00% CDI
120.00% CDI
CDI + 6.50%
26,923
1,184
5,676
29,123
72,302
112,180
96,575
96,575
39,754
1,377,505
1,997,201
675,902
1,321,299
4,865
8,981
27,900
72,566
402,952
48,441
-
17,969
269
14,036
12,542
5,469
73,325
447,757
-
1,496,778
137
1,971,905
658,008
1,313,897
989,258
49,643
2,318,693
1,070,829
1,247,864
-
INFORMATION ON LOANS OR FISCAL DEBTS OF THE ISSUER, EFFECTIVE IN THE
PAST FISCAL PERIOD
The December 31, 2008 balance-sheet accounts includes Col$126,617 million under “other liabilities”
relating to deferred taxes (See Note 18 of our Non-Consolidated Financial Statements).
On the other hand, memorandum accounts “Debtors”, include “Fiscal Debtors”, reflecting differences
existing vis-à-vis the accounting, and resulting from application of the system for integral inflation
adjustments for taxation purposes, as well as differences on accounting and fiscal deductions
relating net income determination (See Note 20 of our Non-Consolidated Financial Statements).
J.
INFORMATION RELATING CAPITAL INVESTMENTS COMPROMISED BY THE END OF
THE LAST FISCAL PERIOD AND THE LATEST QUARTER REPORTED, AS WELL AS
DETAILS CONCERNING SUCH INVESTMENTS AND THE NECESSARY SOURCE FOR
FUNDING
We have not undertaken any firm commitment for acquisition of future investments. However, we
advance capital expenses, to be made directly and through our subsidiaries, up to Col$6.5 billion
between 2009 - 2013. Main expenses projected during such periods and their funding modality
were set out in Chapter IV – Financial Information of the Issuer – K. Main Investments Under
Implementation and Funding Modality.
204
K.
EXPLANATION TO MATERIAL CHANGES ON THE MAIN ITEMS OF THE LATEST
FISCAL PERIOD BALANCE-SHEET
1.
By the issuer
Items of the balance-sheet that had material changes between December 31, 2008 and December 31,
2007, were the following:
(i)
•
Assets:
Inventories: This item formerly recorded Col$3,096 million in 2007 to Col$1,872 million in
2008. The variation was mainly due to the fact that in 2008 a reclassification was made on
Long-term inventories for Col$926 corresponding to metalic structure for tower recovery.
Given the nature of ISA’s assets and their related spare parts, they are sometimes difficult to
find and have long delivery terms after requested; for this reason it is necessary having
sufficient inventories to secure an ongoing service that allows complying with the system’s
availability indicators. The Company takes actions to guarantee proper conservation of its
inventories; besides it conducts periodical physical inventories and finds no relevant
differences therein.
•
Permanent Investments: This item formerly recorded Col$1,691,651 million in 2007, to
Col$1,735,050 million in 2008. Variation is mainly due to (i) best results achived and surplus
caused in the appraissal of Transelca’s fixed assets (ii) the effect of the Colombian peso
revaluation with respecto to the reais with ISA Capital Do Brazil, (iii) the entry into operation of
Proyectos de Infraestructura del Peru -PDI-, (iv) stock sale to subsidiary CTEEP concerning
Interligacao Elétrica de Minas IEMG, (v) stock sale and decrease of subscribed and paid-in
capital with actual reimbursment of contributions to shareholders, as approved by FEN’s
General Assembly of Shareholders dated March 13 and November 7 2008, respectively, (vi)
shares recibidas as datio in payment. Companies Electricaribe and Electrocosta merged as of
December 31st, 2007, (vii) a decrease generated on trust rights corresponding to the
cancellation in 2008 of the trust property created to guarantee payment of an audit for project
UPME 1 of 2003, that started operation in December 2006 (viii) decrease of a provision
corresponding to investments from Electricaribe and FEN for cost appraissal.
•
Deferred and other currrent assets: This item changed from Col$8,558 million in 2007, to
Col$97,230 million in 2008, mainly due to (i) Long to short term classification of the deferred
tax.
•
Deferred and other non-current assets: This item changed from Col$394,763 million in 2007 to
Col$331,574 million in 2008, corresponding to a long-to-short term classification of the
deferred tax, deduction of Col$14,449 million in the placement of notes made on December
2008 and premium for the legal stability contract signed with the Ministry of Mines and Energy
for Col$6,427 million.
It includes commercial credit for Col$103,631 million, resulting from the pruchase of 60% of
Consorcio TransMantaro S.A., and Col$130,464 million for the purchase of 34% of
TRANSELCA S.A. E.S.P. through a stock exchange operation with Ecopetrol; this is not
amortized as provided in the public accounting regime, as TRANSELCA has indefinite term.
(ii)
Liabilities:
205
•
Short- and long-term liabilities: This item formerly recorded Col$395,167 million and
Col$554,095 million in 2007 for short and long term, respectively, to Col$269,695 million
and Col$518,876 million in 2008, resulting from the following facts:
(a) On July 2008 and besides US$50 million of the period’s installment, ISA prepaid
US$50 million on the syndicated credit corresponding to portion A of the credit for
US$550 million, that allowed carrying out the purchase of 50.1% of CTEEP’s
Common Shares through ISA Capital do Brazil.
(b) We amortized short and medium term credits for the amount of Col$154,000
million entered into with Citibank, ABN Amro, Davivienda and BBVA.
(c) We obtained resources through local commercial banking to cover the cash flow
and conduct debt handling operations for Col$203.000 million with banks BBVA,
Davivienda and Banagrario.
•
Accounts payable (long term): This account remained stable by showing Col$258,355
million in 2007 to Col$259,768 million in 2008, mainly as a result from the exchange
difference derived from the credit of ISA Capital do Brazil.
•
Current accounts payable: This item formerly recorded Col$161,497 million in 2007 and
changed to Col$125,807 million in 2008, basically corresponding to: Minor resources in
delegate administration, minor accounts payable to suppliers and contractors.
Includes account with Economically Related Parties for loan interest concerning year 2008
Col$23,876 million for Transelca and Col$8,171 million for Isa Capital do Brazil, revenues
received on advance basis for sales of infrastructure projects in the amount of Col$15,280
million and usufruct in the amount of Col$3,597 million, payable dividends for Col$37,648
million and payable interest for Col$35,874 million.
•
Estimate liabilities and current provisions: This item formerly recorded Col$24,766 million in
2007 and changed to Col$51,708 in 2008, resulting from: (i) an increase on retirement
pensions corresponding to the recording of the amortized present value of the obligation for
pensions as of December 31st, 2008 and 2007, set by taking actuarial analyses into account,
(ii) Other provisions for extra-legal benefits, reflecting the present value of future benefits
related with health, education and old-age, recognized to pensioners; increase for year 2008
with respect to year 2007 is due to the 100% amortization of pension liabilities for extra-legal
benefits concerning health and education, (iii) other estimate liabilities and provisions, which
mainly include Col$7,559 of FAER provision (2007: Col$6,179), PRONE provision Col$9,021,
infrastructure projects estimate costs Col$2,100, incentive for variable compensation results
Col$1,228 (2007: Col$2,182) and payroll estimate for outstanding days as of December 31st,
2008 for Col$1,623.
(iii)
Equity:
•
Reserves: This item formerly recorded Col$356,444 million in 2007 to Col$431,872 million in
2008, basically corresponding to (i) Legal Reserve, 10% of annual net profits are set aside as
legal reserve until such reserve is equal 50% of the subscribed capital, (ii) Legal reserve as per
fiscal provisions, where reserve from net profits is set aside in compliance with article 130 of
the Tax Code, in order to obtain tax deductions due to depreciation in excess of accounting
depreciations.
•
Appreciation Surplus: Variation of this account from Col$1,301,520 million in 2007 to
Col$2,185,306 million in 2008, is due to the incorporation of technical assessments of UPME
206
01 and 02 of 2003 projects, Substation Betania and new connection assets, adjustment in the
appraisal of existing assets for use by means of IPP increase and review of useful lifes.
2.
By the group
Accounts from the balance sheet showing significant changes between December 2008 and December
2007, were the following:
(i)
12
Assets:
•
Temporary investments: This item changed from Col$219,498 million in 2007 to Col$267,489
million in 2008, as a result of (i) short-term funding and temporary investments of ISA for
Col$198,026 million (2007 Col$150,445 million), term deposit of REP for Col$12,117 million
(2007 Col$34,487 million) and of TransMantaro Col$33,853 million (2007: Col$24,579 million),
in addition (ii) Corresponds to the derivative instrument Non - Delivery Forward Chain of ISA,
for selling dollars, created in order to reduce the variation of cash flows associated to the
liquidation of revenues from UPME 01 and 02 of 2003.
•
Permanent Investments: This item changed from Col$54,110 million in 2007 to Col$72,990
million in 2008, mainly due to the following facts:(i) with FEN S.A., there is a stock sale and
decrease of the subscribed and paid-in capital with effective cash reimbursement of
contributions to shareholder, as approved by FEN’s General Assembly of Shareholders on
March 13, and November 7, 2008 respectively, (ii) Transnexa and Internexa Peru, as of
December 31st, 2008 are incorporated into the consolidated report, (iii) shares of Electricaribe
and Electrocosta are received as datio in payment; these companies were merged as of
December 31st, 200, (iv) an increase appears in Brazilian companies corresponding to
contributions made by CTEEP in the year to Interligaçao Elétrica de Minas IEMG, Interligação
Elétrica Norte Nordeste S. A. - IENNE-, Interligação Elétrica Pinheiros S. A. - IEPIN - , and
Interligação Elétrica Sul S. A. – IESUL -,(v) there is a decrease in the provision account for
investment protection corresponding to provision recovery arising upon the merger resulting
from Electrocosta and Electricaribe in ISA.
•
Deferred and other current assets: This item changed from Col$38,730 million in 2007 to
Col$124,451 million in 2008, mainly due to the long-to-short term reclassification at ISA of
the deferred tax for Col$92,476.
•
Appreciation: This item changed from Col$1,469,880 million in 2007 to Col$2,442,009 million
in 2008 resulting upon: (i) appreciation of Electrocosta was absorbed due to the merger with
Electricaribe, (ii) in 2008, an economic assessment was made for Colombian subsidiaries on
the main components related with property, plant and equipment, in compliance with the
requirements of the Public Accounting Regime issued by Resolution 354 of September 5,
2007, (iii) the economic assessment of assets under operation for Colombian subsidiaries was
made by using the Linear Deppreciated Replacement Cost, a reknowned technical value
methodology for value allocation of public assets, and approved by the National Accounting
Office, as provided by section 18 of the accounting procedure for recognition and disclosure of
facts concerning property, plant and equipment issued by Resolution 356 of September 5,
2007. This methodology consists in establishing the present value of equipment under
operation, based on the present value of an asset with like characteristics to provide the same
service (New Replacement Value - VRN12-), proportionally affected by the time of service
pending (remaining life) with respecto the total useful life established. This criteria is applicable
to all specialized assets held by ISA under operation, that is, those engaged in the electric
Valores determinados de acuerdo con la regulación aplicable para su remuneración.
207
power transmission service (understood as use and connection). Market value is used for nonspecialized assets, as in the case of vehicles.
(ii)
Liabilities:
•
Short- and long-term financial liabilities: These accounts, in aggregate, changed from
Col$734,378 million in 2005, to Col$2,318,693 million in 2006, mainly due to the following:
(i) (i) the US Dollar credit obtained by ISA Capital Do Brasil for the amount of U.S.$326
million, scheduled to be repaid in one single installment payable on July 19, 2007, which
liability weas prepaid with the January 2007 issuance of notes; (ii) acquisition of resources
by the Parent Company from domestic banks for the cash flow, and (iii) year 2006
disbursement of U.S.$ 73,325 by BNP Paribas to the Parent Company for the construction
of substations related to UPME 1 and 2 projects of 2003.
•
Current accounts payable: This item changed from Col$426,099 million in 2007 to
Col$351,619 million in 2008. Variation is mainly reflected on creditors such as: (i) CTEEP
R$68.5 million equal to Col$65,878 (2007 R$129.0 million equal to Col$146,756) for amounts
payable to CESP foundation for the updated analyses made on actuaries. It also includes
R$24 million corresponding to withholding of resources and amortization of loans made at
CTEEP before December 31st, 1971 for enlargement of electric power utility. Settlement of
these obligations is not defined by the Brazilian Government (ii) other accounts payable
include revenues received in advance at INTERNEXA for Col$129,034 million (2007:
Col$83,989 million).
•
Estimate liabilities and provisions: This item changed from Col$851,527 million in 2007 to
Col$848,316 million in 2008, mainly due to:: (i) the pension retirement account shows an
amortized present value of the pension obligation, as of December 31st, 2008 and 2007, set
based on actuarial analyses, (ii) provisions for contingencies include Col$332,148 million
(2007 Col$367,783 million) of securities payable by ISA Capital do Brazil, to Secretaría de
Fazenda Gobierno de Brazil as a payment commitment for the difference between CTEEP’s
stock purchase price and the payments for retirement pensions provided under Law 4819/58,
in case CTEEP is released, and in CTEEP Col$169,521 million (2007 Col$171,541 million) for
provisions concerning liability on labor proceedings under the partial assignment of Compañía
Energética de São Paulo -CESP- and Empresa Paulista de Transmisión de Energía S.A. EPTE-. (iii) actuarial calculation of pensioners’ extra-legal benefits include an increase
corresponding to the estimate liability for companies ISA, TRANSELCA and XM, reflecting the
present value of future benefits related with health, education and old-age recognized to
pensioners. Increase for year 2008 with respect to year 2007 is due to the 100% amortization
of pension liabilities for extra-legal benefits concerning health and education, (iv) other
estimate liabilities and provisions, which mainly include Col$7,559 million of FAER provision
(2007: Col$6,179 million), PRONE provision Col$9,021 million, infrastructure projects estimate
costs Col$2,100 million, incentive for variable compensation results Col$1,228 million (2007:
Col$2,182 million) and payroll estimate for outstanding days as of December 31st, 2008 for
Col$1,623 million.
•
Other current liabilities: This account recorded Col$228,290 million in 2007 to Col$199,546
million in 2008 corresponding to (i) account for collections in favor of third parties, including
Col$151,304 million (2007 $164,770 million) in XM for collection in favor of energy market
agents and CTEEP Col$27,520 million for regulatory mandates.
(iii)
Memorandum accounts:
208
•
Debtors: As of December 2008, this account shows a balance for Col$3,580,929 million
(2007: Col$3,390,813 million). It includes collections from third parties in charge of XM,
st
Compañía de Expertos en Mercados S.A. E.S.P, affiliate in charge since October 1 , 2005 to
operate as Administrator of the Commercial Exchange System –ASIC- and differences with
the accounting records due to the application of inflation adjustment systems for tax purposes
and differences in accounting and tax deductions to determine the net profit.
•
Creditors: This account recorded Col$1,873,209 million in 2007, and Col$2,129,477 million in
2008. This account includes: (i) ISA and its subsidiaries are currently parties as defendants,
plaintiffs or intervening third parties in administrative, civil and labor proceedings. No
proceeding where they have been sued or summoned as intervening parties may impair the
stability of the economic group’s companies. The companies management and their legal
advisors believe there are remote chances of losses due to such complaints. Likewise, the
group’s companies raised judicial actions on their behalf in furtherance of the corporate
purpose and defense of their interests, (ii) it includes the agreement for fiber optic capacity
availability whereby ISA granted for consideration to INTERNEXA S.A. E.S.P., the available
capacity of its optic fibers installed in its and third parties’ infrastructure, held in usufruct. Such
agreement was signed in order for INTERNEXA S.A. E.S.P., to meet the coverage, quality,
reliability and capacity requirements demanded by telecommunication carriers and other
customers receiving services, (iii) includes securities provided, (iv) tax differences
(iv)
•
3.
Equity:
Appreciation Surplus: This item changed from Col$1,301,520 million in 2007 to Col$2,185,306
million in 2008, basically due to (i) appreciation of Electrocosta was absorbed due to the
merger with Electricaribe, (ii) in 2008, an economic assessment was made for Colombian
subsidiaries on the main components related with property, plant and equipment, in
compliance with the requirements of the Public Accounting Regime issued by Resolution 354
of September 5, 2007,
General trend of the balance-sheet items in the past three (3) fiscal years
(i)
With respect to the parent company:
In the past three years, ISA increased its assets significantly, focused on its expectations relating
the group’s growth and strengthening in Latin America. To achieve this purpose, the company has
used financial resources from operating cash flows, and other resources from capital markets. ISA
is present in Colombia, Peru, Bolivia, Brazil, Ecuador and Central America; throuogh its affiliates
and subsidiaries it has entered into the design, construction, management and operation of linear
infrastructure systems, electricity and telecommunication connectivity. In addition it expects in the
medium term to develop business lines related with gas transportation and roads.
In that connection, investments in other companies have grown, also associated to the growth on
deferred and other assets, mainly due to commercial credits entered under these transactions.
Likewise, fixed assets increased significantly, particularly on occasion of the UPME 1 and UPME 2
bids that were awarded by the end of 2006 and the beginning of 2007, to increase our revenues
from remuneration of these new assets and to optimize costs and expenses. In 2008 increased
revenues were also due to the entry into operation of optic fiber and connection projects, the
purchase of Betania assets and the regularization program for electric networks – PRONE.
Regarding the non-operating result, year 2007 was atypical, where CTEEP received extraordinary
revenues derived from the recovery of provisions for contingencies, a non-productive asset sale
was carried out and the land sale agreement to Eletropaulo (CETEMEQ agreement) took place.
209
Besides, ISA and ISA Capital do Brazil had greater expense due to debt exchange difference as a
result of the peso devaluation and the reais with respect to the dollar.
In addition, there is an increase on liabilities, specially on the debt for note issuance and the
engaging of financial liabilities, by keeping high credit risk rating.
As to equity, in 2007 the equity structure is strenghtened by the issuance of shares at ISA in the
local market for $399,046 million.
(ii)
By the group:
In the past three years, the ISA group significantly increased its level of assets, mainly related to the
acquisition of investments in companies where ISA holds control.
According to the group’s expectations relating growth and strengthening in Latin America, this
growth is reflected on each of the items included in the financial statements, as these correspond
(line to line) with the subsidiaries’ financial statements in furtherance of the consolidation process.
Some aspects are worth mentioning:
Electric power transport infrastructure increased from 37,629 km in 2007 to 38,223 km in 2008, with
the commencement of operation of 594 km of circuits. By the end of 2008 there are 6,535 km under
execution.
The UPME chooses ISA for the construction of Substation Porce and associated works in the
department of Antioquia.
ISA and company ETESA create Interconexión Eléctrica Colombia- Panamá – ICP–.
Consorcio TransMantaro enters into an agreement with Compañía Eléctrica El Platanal to connect
its generation plant to the Peruvian electric power system.
REP opens in Peru the second section of 380-km. Zapallal – Paramonga - Chimbote line.
ISA, associated with Empresa de Energía de Bogotá –EEB–, wins a bid to enlarge nearly 200 km.
of the Peruvian electric power system to connect Chilca with Zapallal.
ISA Bolivia starts operation for Substation Arboleda, which work improves reliability on the Norte de
Santa Cruz system.
CTEEP is awarded in Brazil with five lots including seven substations and 233 km of circuit. In order
to execute these projects, with other partners from the region it creates Interligação Elétrica Sul –
IESUL– and Interligação Elétrica Pinheiros.
CTEEP (51%), in consortium with state-owned companies Furnas Centrais Elétricas (24,5%) and
Compañía Hidro Elétrica do São Francisco (24,5%), are awarded with two lots under public auction
made by ANEEL for the construction, operation and maintenance of two stations and 4,750 km of
circuit, operating at 600 kV. Interligação Elétrica do Madeira –IEMADEIRA– is created for the
purpose of executing these works.
XM, Compañía de Expertos en Mercados, conducts two firm energy auctions, wherein charges for
reliability are allocated to the plants that should provide electric power required by Colombia
between December 2012 and November 2019.
210
XM signs with Bolsa de Valores de Colombia –BVC– a memorandum of understanding purported to
analyze and find options to have in place a system for trading derivatives (commodities).
INTERNEXA, ISA’s subsidiary in Peru, starts comercial operation of a 1,293-km long optic fiber
network to integrate this country with Colombia, Ecuador and Venezuela.
On February 23, 2009 the President of the Republic of Colombia endorsed the proposal made by
Grupo Infraestructura para la Competitividad, for ISA to conduct the feasibility surveys and
execution of the Autopistas de la Montaña Corporate Project.
211
CHAPTER VI. FINANCIAL STATEMENTS
A.
FINANCIAL INFORMATION, A SUMMARY
*Figures relating short-term debt, long-term debt, total debt:
Issuance
Total Outstanding notes
Total long-term outstanding notes
Total short-term outstanding notes
2008
924,803
821,865
102,938
2007
817,882
817,882
0
2006
815,652
815,652
0
FINANCIAL LIABILITIES
Credit facilities
Total Domestic financial liabilities
Total Foreign financial liabilities
Total Financial liabilities
Less – Short-term portion
Total long-term financial liabilities
2008
469,638
318,933
788,571
269,695
518,876
2007
320,638
628,624
949,262
395,167
554,095
2006
336,638
728,418
1,065,056
192,447
872,609
2008
2007
1,340,741 1,371,977
372,633
395,167
1,713,374 1,767,144
2006
1,688,261
192,447
1,880,708
TOTAL DEBT
Total long-term debt
Total short-term debt
Total debt
For further information, see ISA Annual Report 2008, pages 131 and 132, ISA Annual Report 2007,
and ISA Annual Report 2006.
* Short-term indebtedness, long-term indebtedness, total indebtedness
CONCEPTS
Current assets
Non-current assets
Total Assets
Current Liabilities
Non-current liabilities
Total liabilities
Short Term Indebtedness Current Liabilities/ Total
Assets
Long-term Indebtedness
Assets
Total Indebtedness
Non-current Liabilities/Total
Liabilities/ Total Assets
2008
543,034
6,784,663
7,327,697
557,832
1,960,602
2,518,434
2007
384,003
5,966,586
6,350,589
588,145
1,929,124
2,517,269
2006
237,245
5,638,588
5,875,833
340,557
2,222,209
2,562,766
7.61%
9.26%
5.80%
26.76%
30.38%
37.81%
34.37%
39.64%
43.61%
* Total assets, shareholders’ equity, net profits, contingent memorandum accounts:
212
CONCEPTS
Total Assets
Shareholders’ Equity
Net income
Debtors’ Memorandum accounts
Creditors reciprocal Memorandum
accounts
2008
7,327,697
4,809,263
236,593
2,681,805
2007
6,350,589
3,833,320
226,021
2,669,478
2006
5,875,833
3,313,067
150,469
2,566,229
1,268,655
1,214,483 1,131,804
Main investments in other companies per productive sector and the company’s share in the sector of its
main activity:
Investments on
Electric Power
Sector
Transelca S.A.
E.S.P.
2008
2007
2006
ISA’S interest
ISA’S interest
ISA’S interest
Shares
%
Shares
%
Shares
%
Share in the
Sector of its
Core Activity as
of 2008
1,809,679,227
99.9967
1,809,679,227
99.9967
1,809,679,227
1,532 km of STN
99.9967 Colombia
ISA Peru
18,586,446
28.0723
18,586,446
28.0700
18,586,446
393 Km of Circuit
28.0700 in Peru
REP
21,648,000
30.0000
21,648,000
30.0000
21,648,000
5,837 Km of
30.0000 circuit in Peru
95,638
51.0000
95,638
51.0000
95,638
ISA Bolivia S.A.
XM Compañía
de Expertos en
Mercados S.A.
E.S.P.
Isa Capital do
Brazil S.A.
Consorcio
Transmantaro
S.A.
Proyectos de
Infraestructura
del Peru S.A.C
14,789,000
99.7303
14,789,000
99.7300
588 Km of circuit
51.0000 in Bolivia
14,789,000
Operates SIN –
Administers MEM
99.7300 –Coordinates TIE
CTEEP
investment
vehicle which
holds 18,687 Km
99.9999 of circuit in Brazil
828,267,196
99.9999
828,267,196
99.9999
506,200,999
85,382,555
60.0000
85,382,555
60.0000
92,973,755
299,901
99.9670
1,221 Km of
60.0000 circuit in Peru
213
Investments on
Telecommunica
tions Sector
Internexa S.A.
E.S.P.
2008
2007
2006
ISA’S interest
ISA’S interest
ISA’S interest
Shares
34,302,597
%
99.2745
Shares
34,302,597
%
Shares
99.2745 25,647,620
Flycom
Comunicaciones
S.A. E.S.P.
370,733,604,842
Share in the
Sector of its
Core Activity as
of 2008
%
99.9998
Single Carrier of
Carriers in
Colombia
97.1783
For further information see Annual Report ISA 2008 page 120, ISA 2007 page 208 and Annual
Report ISA 2006 Book II.
B.
BASIC FINANCIAL STATEMENTS CORRESPONDING TO THE PAST THREE (3)
YEARS
Attached is a guiding chart to search for all of the required annual reports of years 2008, 2007 and
2006.
Reports Requested
General Balance Sheet
Income and Loss Statement
Statement of Changes in Financial Condition
Statement of Changes in Equity
Cash flow statements
Certification of Financial statements
Notes to financial statements
Management Report
Statutory Auditor’s Opinion
Annual Report ISA
2008 (Compact Disc)
Pages
92 and 93
94
N/A
95
96 and 97
98 - 169
66 - 81 (Printed report)
170 – 172
Annual
Report ISA
2007
Pages
184 and 185
186
N/A
187
188 and 189
14 and 15
190 - 245
66 - 103
246 and 247
Annual Report
ISA 2006 Book
II
Pages
46 and 47
48
50 and 51
49
52
35
57 -101
8. - 32
102 - 103
(annual reports are attached hereto).
C.
BALANCE-SHEET AND STATEMENT OF RESULTS OF THE ISSUER AS OF THE
CALENDAR MONTH IMMEDIATELY PRECEDENT TO THE DOCUMENTATION
SUBMISSION
Following are the comparative General Balance-sheet and Statement of Results as of September
30, 2009 - 2008 and we enclose eleven (11) folios corresponding to forms required by the
Colombian Financial Superintendency for the purposes of reporting financial information
corresponding to the third quarter of 2009.
214
INTERCONEXIÓN ELÉCTRICA S.A. E.S.P.
CONSOLIDATED GENERAL BALANCE SHEET
As of September 30, 2009 and 2008
(Values expressed in million Colombian pesos)
2009
2008
ASSETS
Current assets:
Cash
Temporary investments
Debtors – Net
Inventories
Deferred and other assets
573,241
243,192
802,460
71,569
121,298
423,606
92,237
973,883
53,783
123,018
1,811,760
1,666,527
253,347
717,346
62,449
3,449,341
6,554,462
2,441,701
92,915
610,272
58,035
3,478,812
7,235,677
1,467,603
Total non-current assets
13,478,646
12,943,314
Total assets
15,290,406
14,609,841
3,370,522
2,107,190
3,335,248
1,932,029
Total current assets
Non-current assets:
Permanent Investments
Debtors – Net
Inventories
Property, Plant and Equipment - Net
Deferred and other assets
Appreciation
Memorandum accounts:
Debtors
Reciprocal Creditors
NOTES
2009
2008
SHAREHOLDERS’ EQUITY AND
LIABILITIES
Current liabilities:
Outstanding notes
Financial liabilities
Accounts payable
Labor liabilities
Estimate liabilities and provisions
(12)
(13)
(14)
(15)
(16)
60,450
685,863
571,815
41,553
219,514
136,885
623,918
509,226
48,560
228,049
215
Other liabilities
(17)
243,158
222,966
1,822,353
1,769,604
Outstanding notes
Financial liabilities
Accounts payable
Labor liabilities
Estimate liabilities and provisions
Other liabilities
2,607,277
1,087,068
229,589
2,244
762,500
358,192
2,499,970
1,463,184
278,646
1,475
783,130
326,717
Total non-current liabilities
5,046,870
5,353,122
Total liabilities
6,869,223
7,122,726
MINORITY INTEREST
3,085,168
3,328,453
SHAREHOLDERS’ EQUITY:
Subscribed and paid-in capital
Capital surplus
Reserves
Results from previous years
Net income
Exchange differences on conversion
Equity appreciation
Surplus from Appreciation
Surplus from participation method
35,866
1,062,361
504,965
0
315,096
110,753
592,019
2,185,306
529,649
35,866
1,062,361
431,872
181,744
81,239
612,192
1,299,242
454,146
5,336,015
4,158,662
15,290,406
14,609,841
Total current liabilities
Non-current liabilities:
Total Shareholders’ Equity
Total liabilities, minority interest
and Shareholders’ Equity
Memorandum accounts:
Creditors
Reciprocal Debtors
2,107,190
3,370,522
1,932,029
3,335,248
INTERCONEXIÓN ELÉCTRICA S.A. E.S.P.
CONSOLIDATED STATEMENT OF RESULTS
PERIOD ENDING ON SEPTEMBER 30 2009 and 2008
(Values expressed in million Colombian pesos, except Net income per share which is expressed in
pesos)
2009
2008
216
OPERATING REVENUES
Services for electric power transmission
Connection charges
Dispatch and coordination CND-MEM
MEM (STN, SIC, SDI) Services
Telecommunications
Other operating revenues
2,121,967
219,742
27,991
20,029
86,231
32,130
1,965,759
184,855
23,614
22,463
86,427
37,064
Total Operating revenues
2,508,090
2,320,182
729,881
354,603
706,069
329,497
Total Operating costs and expenses
1,084,484
1,035,566
Operating income
1,423,606
1,284,616
669,920
911,039
513,201
822,662
NON-OPERATING LOSS
(241,119)
(309,461)
Income before taxes
Provision for income tax
1,182,487
400,150
975,155
349,600
Income before minority interest
782,337
625,555
MINORITY INTEREST
467,241
443,811
Net income
315,096
181,744
292.93
168.96
Operating costs and expenses
Operating costs
Administrative expenses
NON-OPERATING INCOME (EXPENSES)
Non-Operating Income
Non-operating expenses
Net income per share
See Appendix D to this Information Prospectus.
217
INTERCONEXIÓN ELÉCTRICA S.A. E.S.P.
NOTES TO SPECIAL-PURPOSES CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2009 and 2008
NOTE 1: NATURE AND CORPORATE PURPOSE OF PARENT COMPANY AND SUBSIDIARIES
Interconexión Eléctrica S.A. E.S.P. – ISA (Parent Company)
On September 14, 1967It was incorporated as a stock-held company by public deed No 3057
granted in Notary Eight of the Notary Circle of Bogotá.
On April 4, 1995 the company was demerged by public deed No 230 granted by the Sole Notary of
Sabaneta.
On December 1st, 1995, by public deed No 808 granted in Sole Notary of Sabaneta and according
to the Residential Utilities Law (Law 142 of 1994), the company changed its legal nature to an
Official Utility Company, incorporated by public entities as a national stock-held company, ascribed
to the Ministry of Mines and Energy, subject to the legal regime set under Law 142, and adopted
the corporate name of Interconexión Eléctrica S.A. E.S.P., company that may also use the acronym
ISA E.S.P.
On November 22 1996, by public deed No 746 granted by Sole Notary of Sabaneta, ISA changed
its legal nature to a Combined-capital utility company, incorporated as a national commercial stockheld company, ascribed to the Ministry of Mines and Energy and subject to the legal regime under
Law 142, which situation became real on January 15, 1997 with the introduction of private
contributions.
In accordance with the Constitutional Court under ruling C-736 of September 19, 2007, ISA has a
special legal nature when defined as a Combined-capital Utility Company, Decentralized Entity by
Services which is part of the executive branch of the public power and with private law special legal
regime.
ISA’s Main Corporate Purpose: 1. The operation and maintenance of our own transmission network;
2. the enlargement of the national interconnection system; 3. the planning and coordinating the
operation of resources from the National Interconnected system; 4. management of the Energy
Exchange and Trading System of the Wholesale Market; 5. develop telecommunication systems,
activities and services; 6. participate, directly or indirectly, on activities and services related with
transportation of other energy products, except those restricted by law; 7. rendering of technical
services on activities related with our corporate purposes and such professional services required
by the group’s companies; 8. develop any other activity for third parties related with electric power
and telecommunication services, under the standing legal framework; and 9. participate, directly or
indirectly, on activities, services and investments related with engineering works.
Special-Purpose Financial Statements
Special-purpose financial statements have been prepared for the purposes of their inclusion under
the information prospectus relating issuance of the Company’s shares, in accordance with the
provisions set forth by the Colombian Financial Superintendency (Superintendencia Financiera de
Colombia); in conformity with the foregoing, the special-purpose financial statements show
218
comparisons as of September 30, 2009 and 2008 and for the nine-month period ended on such
dates. According to the foregoing, disclosures contained on the notes to the financial statements do
not include all information reported, as in the case of year-end financial statements; nevertheless,
the consolidated special-purpose financial statements have been prepared in furtherance of the
same accounting policies and principles used to prepare the underlying financial statements.
Economic Group
The company was entered as Economic Group under the Mercantile Registry of the Chamber of
Commerce of Medellín in September, 2001. To that effect, the Parent Company is Interconexión
Eléctrica S.A. E.S.P. –ISA-, and its subsidiaries are Transelca S.A. E.S.P., Red de Energía del Peru
S.A., Consorcio Transmantaro S.A., ISA Peru S.A., ISA Bolivia S.A., ISA Capital do Brazil S.A.,
Companhia de Transmissão de Energia Elétrica Paulista –CTEEP-, Interligação Eletrica Pinheiros
S.A., Interligação Elétrica Serra Do Japi, Internexa S.A. E.S.P, Internexa Participações S.A.,
Internexa S.A., XM Compañía de Expertos en Mercados S.A. E.S.P., Infra-Estructuras Do Brazil
Ltda. and Proyectos de Infraestructuras del Peru S.A.C..
Following is the information relating subsidiaries, their incorporation date, corporate purpose, main
business domicile and interest of the Parent Company.
SUBSIDIARIES FROM THE ELECTRICITY SECTOR
Transelca S.A. E.S.P.
Transelca is a Colombian, combined-capital, public utility company domiciled in the city of
Barranquilla. It was incorporated on July 6, 1998 and it is engaged in electric power transmission,
coordination and control of the Regional Dispatch Center and connection to the National
Transmission System. After us, Transelca is the second largest company involved in electricity
transmission and is the owner of 8.4% of the STN. We hold directly 99.99% of Transelca’s capital
stock.
Red de Energía del Peru S.A. - REPREP is a Peruvian company domiciled in the city of Lima. It was incorporated on July 3, 2002, with
participation from ISA, TRANSELCA and Empresa de Energía de Bogotá -EEB-. REP provides
electric power transmission services, associated services, including operation and maintenance
services for transmission facilities and energy transportation and specialized technical services.
Currently it is the main electricity transmission company in Peru accounting for 52.44% of the
assets comprising the national electricity transmission system and 5,837.46 km of 220,138 and
60kV electricity transmission circuits supported by 10,908 overhead towers and 46 substations. We
own 30% of REP’s capital stock and, in turn, Transelca owns an additional 30%, whereby we hold
indirect control over REP.
Interconexión Eléctrica ISA Peru S.A.
ISA Peru is a Peruvian company domiciled in the city of Lima. It was incorporated on February 16,
2001 and its primary activity is the electric power transmission, operation and maintenance of
transmission networks.
ISA Perú's transmission network consists of six substations (all of them partially attended), 262 km
of lines at 220kV, and 131 km of lines at 138 kV. Its transformation capacity is 235 MVA, and its
reactive compensation is 8 MVAr. Its infrastructure represents 3.55% of Peru's national
interconnected system. We own 28.07% of ISA Peru’s capital stock and Transelca owns 54.86%,
whereby we hold indirect control over ISA Peru.
219
Consorcio Transmantaro S.A.
Transmantaro is a Peruvian company domiciled in the city of Lima. It was incorporated on January
1998 and until December 12, 2006 it was a subsidiary of Hydro-Quebec International, Inc. of
Canada. Since December 13, 2006, we directly hold 60% of Transmantaro’s capital stock. Its
primary activity consists of the transmission of electric power from generating companies and it
provides operation and maintenance services to diverse facilities.
Transmantaro has 3 substations and a microwave network and operates 1,221 km. of 220kV
electricity transmission lines that connect the Central-North subsystem, from C.H. Mantaro and the
Southern subsystem in the Socabaya substation in Arequipa, the two primary transmission
subsystems in Peru.
Interconexión Eléctrica ISA Bolivia S.A.
ISA Bolivia is a Bolivian company domiciled in the city of Santa Cruz. It was incorporated in July 14,
2003, its primary activity consists of the electric power transmission and the construction, operation
and maintenance of electricity networks. ISA Bolivia is the second-largest electricity transmission
company in Bolivia accounting for 34.13% of the 230 kV and higher voltage transmission system.
ISA Bolivia owns 588 km of lines (Santivañez-Sucre, 246 km; Sucre-Punutuma, 177.5km; CarrascoUrubo, 164.5 km) and five associated substations. It provides electricity transmission at 230 kV,
integrated services of connection to the transmission system and electricity feasibility studies. We
hold directly 51.00% of ISA Bolivia’s capital stock and 48.99% and 0.01%, indirectly through
Transelca and Internexa, respectively.
ISA Capital Do Brazil Ltda.
ISA Capital Do Brazil is a Brazilian company domiciled in the city of São Paulo. It was created in
April 28, 2006 as investment vehicle. Its corporate purposes comprises holding interest on the
capital stock of other companies or other businesses, as partner or shareholder, in Joint Venture,
member of consortium or any other form of business cooperation. On September 19 2006 it was
transformed into an open capital stock held company. Our operations in Brazil are consolidated
through ISA Capital, which holds 89.40% of CTEEP’s voting shares and 37.50% of the total capital
stock of CTEEP. We directly own 99.99% of ISA Capital’s capital stock.
Under the provisions of the Indenture regulating notes issued by ISA Capital on January 29, 2007,
ISA Capital may not distribute dividends to us. Consequently, while these notes are outstanding,
dividends paid by CTEEP to ISA Capital may not be distributed to us or to any of our subsidiaries.
Companhia de Transmissão de Energia Elétrica Paulista – CTEEP
CTEEP, a Brazilian publicly-traded company, with domicile in the city of São Paulo is authorized to
operate as concessionaire of the electric power utility. Its main activities are the planning,
construction and operation of electric power transmission systems, as well as research and
development programs related with energy transportation and other activities correlated with
available technology. Its activities are ruled and supervised by the Agencia Nacional de Energía
Eléctrica - ANEEL.
CTEEP transmits approximately 30% of all electricity in Brazil and 60% of the electricity in Brazil's
southeastern region. CTEEP operates an open-access electricity transmission network that
comprises 18,687 Km of electricity transmission lines with a voltage capacity equal to or greater
than 69kV and 104 operated substations with a total of 516 transformers and an aggregate
transformation capacity of 43,148 MVA, which, as of September 30, 2009, accounted for
approximately 25% of the available transformation capacity in Brazil, according to data compiled by
220
the ONS. CTEEP's high voltage transmission network is part of the Brazilian Interconnected
System operated by the ONS. Through CTEEP, we operate 10% of the electricity networks
comprising the Brazilian Interconnected System.
We control CTEEP indirectly through our holding ISA Capital which holds 89.40% of CTEEP’s
voting shares and 37.50% of the total capital stock in CTEEP.
Under the provisions of the Indenture regulating notes issued by ISA Capital on January 29, 2007,
ISA Capital may not distribute dividends to us. Consequently, while these notes are outstanding,
dividends paid by CTEEP to ISA Capital may not be distributed to us or to any of our subsidiaries.
CTEEP holds 99.99% interest on the capital stock of Interligação Elétrica Pinheiros S. A. - IE
Pinheiros and in Interligação Elétrica Serra Do Japi S.A., where it fully owns these companies. In
addition, CTEEP holds the following interests on companies having shared control:
Interligação Elétrica Norte e Nordeste S.A. –IENNE: Brazilian Company with domicile in the city of
São Paulo, incorporated on December 3, 2007 with the purpose of exploiting the concession of the
utility concerning electric power transmission, namely transmission lines Colinas (Tocantins) Riveiro Gonzalves (Piauí) and Riveiro Gonzalves – São João do Piauí (Piauí). CTEEP holds a
share interest of 25.00% on this company. It has not entered into commercial operation
Interligação Elétrica de Minas Gerais S.A. – IEMG: Brazilian Company with domicile in the city of
São Paulo, incorporated on December 13, 2006 with the purpose of exploiting the concession of the
utility for transmission, rendered through the implementation, construction, operation and
maintenance of transmission facilities, including support and administrative services, supply of
equipment and reserve materials, programming, measuring and other supplementary services
required for electric power transmission; in particular the Neves 1 – Mesquita transmission line. In
compliance with the shareholders agreement entered into with CYMI Holding S.A, ISA assigned
40% of its interest to this company and the remaining 60% to CTEEP, ISA’S subsidiary company.
The project started commercial operation on December 2008.
Interligação Elétrica Sul S.A. – IESUL: Brazilian Company with domicile in the city of São Paulo,
incorporated on July 23 2008 with the purpose of exploiting the concession of electric power
transmission, namely transmission lines Nova Santa Rita–Scharlau and Substation Scharlau,
transmission line Joinville Norte – Curitiba, Jorge Lacerda B – Siderópolis and Substation
Forquilhinha. CTEEP holds 50.10% of interest on this company. This company has not started
commercial operation.
Interligação Elétrica do Madeira S.A. – IEMADEIRA: Brazilian Company with domicile in the city of
São Paulo, incorporated on December 18 2008 with the purpose of executing projects for electric
power transmission collector line Porto Velho (Rondônia) - Araraquara 2 (São Paulo) awarded in
November 2008. CTEEP holds 51.00% interest on this company. It has not started commercial
operation.
Interligação Elétrica Pinheiros S. A. - IE Pinheiros
IE Pinheiros is a Brazilian Company with domicile in the city of São Paulo. It was incorporated July
22, 2008 and its main activity is the exploitation of concessions for transmission, provided through
the implementation, construction, operation and maintenance of facilities for electric power
transmission, lines, substation, control centers and the relevant infrastructure; in particular,
transmission lines and substations of lots E,H and K of Public Bid N° 004 – 2008 of ANEEL,
transmission line Interlagos-Piratininga II, substations Piratininga II, Mirassol II, Getulina, Araras
and Atibada II. We indirectly hold 99.99% through CTEEP. It has not started commercial operation.
221
Interligação Eletrica Serra Do Japi S.A.
Serra Do Japi is a Brazilian Company with domicile in the city of São Paulo. It was incorporated on
June 1st, 2009, its main activity is the exploitation of concession for transmission, provided through
the implementation, construction, operation and maintenance of facilities for electric power
transmission, lines, substation, control centers and the relevant infrastructure; in particular, the
construction of substations Jandira and Salto. We hold indirectly hold 99.99% through CTEEP. It
has not started commercial operation
XM Compañía de Expertos en Mercados S.A. E.S.P.
XM is a Colombian combined-capital public utility company, domiciled in the city of Medellín. It was
incorporated on September 1, 2005 and began operations on October 1, 2005. Its purpose is the
development of activities related with the planning and coordination of resources from the National
Interconnected System and the Management of the Commercial Trading System for electric power
at the wholesale market, as well as the settlement and management of charges for the use of the
National Interconnected System network and the development of connected activities and added
value to its corporate purpose. We directly hold 99.73% of XM’s capital stock.
XM holds a 5.85% interest on the capital stock of the Camara de Riesgo Central de Contraparte de
Colombia S.A. -CRCC-, which purpose is managing the Settlement and Clearance System for
Operations, that is the set of activities, agreements, counterparties, agents, third parties, accounts,
standards, procedures, mechanisms and technological components for acceptance, settlement and
clearance of operations on activities, either acting or not as counterparty.
Proyectos de Infraestructura del Peru S.A.C. – PDI
PDI is a Peruvian company with domicile in the city of Lima. It was incorporated on November 15,
2007 and it is engaged in activities for the construction of transmission lines, electric projects and in
general any activity from the construction sector. It began operations in March 2008 and we directly
hold 99.97% and 0.03% indirectly through Transelca S.A.
Infra-Estruturas Do Brazil Ltda.
Infra-Estruturas is a Brazilian Company with domicile in the city of São Paulo. It was incorporated
on December 14, 2006 and its main activity is the rendering of civil engineering services and
holding interests on other companies. We directly hold 99.90% of the capital stock of InfraEstruturas. It has not started commercial operation.
SUBSIDIARIES FROM THE TELECOMMUNICATIONS SECTOR
Internexa S.A. E.S.P.
Internexa is a public utility company, domiciled in the city of Medellín, incorporated on January 4,
2000, which purpose is the organization, management, trading and provision of telecommunication
services or activities. At present INTERNEXA is engaged in the development and promotion of the
national and international telecommunication transport business. We hold directly 99.27% of
Internexa’s capital stock.
In November 2007, the merger of INTERNEXA and Flycom Comunicaciones S.A. E.S.P was
formalized, which operation was performed under the business strategy of the economic group to
reach leadership and acknowledgement as the largest energy and data carrier in Latin America.
222
Internexa S.A. E.S.P. holds a 99.99% of interest on Internexa S.A.’s capital stock and 99.98% in
Internexa Participações S.A., it has full control on these companies. In addition, Internexa S.A.
E.S.P. holds a 50.00% interest on Transnexa S.A. E.M.A.’s capital stock, on which company it
holds a shared control. Transnexa is an Ecuadorian company domicile in the city of Quito. It was
incorporated on November 29, 2002 and its corporate purpose is the organization, management,
trading and rendering of telecommunication services or activities, such as carrier, telematic, added
value services, supplementary activities and in general any telecommunication service or activity.
Internexa S.A.
Internexa S.A. is a Peruvian company with domicile in the city of Lima. It was incorporated on
October 12, 2006, and its corporate purpose is the organization, management and trading of
telecommunication services, such as: carrier, telematic, added value services. This company built
an optic fiber network to join the southern portion of Ecuador with Lima and improve the availability
and quality of services at such country. This company began rendering services on the first quarter
2008. We indirectly hold 99.99% through affiliate INTERNEXA S.A. E.S.P.
Internexa Participações S.A.
Internexa Participações is a Brazilian Company with domicile in the city of São Paulo. It was
incorporated in July 21 2008 and its main activity is the implementation and management of
investments on telecommunications and holding interests on other companies. We indirectly hold
99.979% of the capital stock through Internexa S.A. E.S.P. and 0.002% through Internexa S.A. It
has not started commercial operation.
OTHER INVESTMENTS
Interconexión Eléctrica Colombia – Panamá S.A. -ICP
ICP is a Panamanian company with domicile in the city of Panamá. It was incorporated on May 14
2007, its corporate purpose is the development of activities for electric power transmission,
operation and maintenance of electricity transmission networks and lines, infrastructures for
transformation of related voltage, telecommunications, data transmission, rendering of technical
services and consulting on such areas and on general engineering. We hold 50.00% of the capital
stock of this company, with shared control. The company has a branch office in Colombia. This
company has not started commercial operation.
Financiera Energética Nacional -FEN
FEN is a national financial institution, incorporated by Law 11 of 1982 as a public capital by shares
company, ascribed to the Ministry of Mines and Energy, with the primary purpose to serve as
financial and credit providing body for the Colombian energy sector. We hold 9 shares equal to an
interest of 0.00069%.
Empresa Propietaria de la Red -EPR
EPR is a Panamanian company with domicile en the city of San José de Costa de Rica. It was
incorporated in 1998 and the company it is ruled by the private law, backed by the “Master Treaty
for Central American Electric Market” and its protocol, whereby each government grants the
relevant permit, authorization or concession for the construction and exploitation of the first electric
regional interconnection system that will join Honduras, Guatemala, El Salvador, Nicaragua, Costa
Rica and Panamá. We hold 5,625 common shares equal to an interest of 11.11% on such
company.
223
ISA Sucursal Peru
On September 4, 2002, ISA created a branch office in Peru in order to perform the contract for
operation and maintenance for 220-Kv transmission lines Oroya-Carhuamayo-Paragsha-Vizcarra
and 138kV Aguaytía-Pucallpa, entered into between ISA and ISA Peru S.A., in accordance with the
requirements of the Concession Contract signed with the Government of Peru. The term of the
branch is indefinite, it has no corporate capacity and does not develop activities independent from
ISA. It is an extension of the company in Peru.
ISA Sucursal Argentina
On January 24 2007, took place the establishment of a branch of ISA, in Argentina, to thus
commence penetration of the country’s electricity market. Formalities were completed before the
General Inspection of Justice, an official body responsible for the Public Registry of Commerce. The
branch was created in view of the requirement to set a domicile in Argentina, when the company is
willing to undertake entrepreneurial activities.
NOTE 2: BASIS FOR PRESENTATION OF FINANCIAL STATEMENTS
2.1 FINANCIAL STATEMENTS CONSOLIDATION
2.1.1
Principles of Consolidation
Audited Financial Statements include accounts of Interconexión Eléctrica S.A. E.S.P. –ISA- (Parent
Company), ISA Capital do Brasil, Companhia de Transmissão de Energia Elétrica Paulista –
CTEEP-; TRANSELCA S.A. E.S.P, Consorcio Transmantaro S.A., Interconexión Eléctrica ISA Peru
S.A., Red de Energía de Peru S.A. -REP-, Interconexión Eléctrica ISA Bolivia S.A., XM Compañía
de Expertos en Mercados S.A. E.S.P., INTERNEXA S.A. E.S.P. INTERNEXA Peru, TRANSNEXA
S.A. y Proyectos de Infraestructura del Peru, companies where the Parent Company holds an
interest (hereinafter referred to as subsidiaries). All balances and significant transactions among the
Parent Company and the subsidiaries were removed in the consolidation. Consolidation is made
through the global integration method and los minority interests corresponding to equity and results
of the period are acknowledged and presented in the Audited Financial Statements, with the
exception of Transnexa S.A E.M.A., with which it has shared control and was consolidated by
means of the proportional consolidation method.
Investments in subsidiary companies from abroad are recorded on the basis of the year-end
Financial Statements, homologated to the accounting rules applicable to the Parent Company and
converted into Colombian pesos, pursuant to the definition of functional currency and using U.S.
Dollars as the pattern currency and pursuant to the procedures described in NIC 21.
2.2
CLASSIFICATION OF ASSETS AND LIABILITIES
Assets and liabilities are classified according to their destination or level of realization, enforceability
or liquidation, in terms of time and value.
To that effect current assets or liabilities (short-term), shall mean those amounts that shall be
realizable or enforceable within a term not exceeding one year.
2.3
INFLATION ADJUSTMENTS
Up to December 31, 2000, non-monetary assets and liabilities and equity, except results and
surplus from the appreciation of assets owned by the Parent Company and its subsidiaries in
Colombia, are updated on monetary basis by using general consumer price indexes (adjustment
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percentages in the taxable year – PAAG-). The relevant adjustments were carried to monetary
correction under the statement of results. As from January 1, 2001 the Colombian National
Accounting Office, by means of Resolution No. 364 of November 29, 2001, ceased the system for
integral inflation adjustments, without reversing inflation adjustments accounted up to December 31,
2000. As from taxable year 2007, integral inflation adjustments for taxation purposes, were
repealed by Law 1111 of 2006.
2.4
SUBSTANTIALITY
Recognition and presentation of economic facts are in conformity with their relative significance.
Economic facts are substantial when their understanding – in view of their nature or quantum – and
taking account of the surrounding circumstances, may significantly alter the economic decisions
made by the information recipients.
In preparing the financial statements, substantiality for purposes of the presentation was
determined by applying a 5% ratio with respect to total assets, current assets, total liabilities, current
liabilities, working capital, net worth, year results, as appropriate.
NOTE 3: SUMMARY OF PRIMARY ACCOUNTING POLICIES AND PRACTICES.
Under the law, preparation and presentation of accounting statements are subject to due
observance of the conceptual framework and instrumental model established by the Colombian
National Accounting Office –CGN–, as well as the accounting provisions issued by the Colombian
Superintendency of Home Utilities (Superintendencia de Servicios Públicos Domiciliarios) -SSPD,
and other applicable regulations.
Following is a description of the primary policies and practices adopted by the Group:
3.1
CONVERSION OF TRANSACTIONS AND BALANCES INTO FOREIGN CURRENCY.
Transactions in foreign currency are accounted at applicable exchange rates in force on the
relevant dates. Each year-end, balances in the assets and liabilities items are adjusted at exchange
rates then in force. With respect to balances under the assets item, any exchange differences are
carried to results, except equity investments which since September 2007 have not been adjusted
as per exchange differences as these are updated through the equity method, in accordance with
opinion 20079-101592 rendered by the Colombian National Accounting Office (See Note 3.3.2);
such change is shown on the September 30, 2007 financial statements in the form of a lesser
expense amounting to 81,830 million in the year results.
In connection to liabilities, only those exchange differences non-attributable to costs relating to the
acquisition of assets are carried to results. Exchange differences are attributable to costs relating to
the acquisition of assets while those assets remain in construction or installation and until the time
when these are in proper condition for utilization.
3.2
CASH EQUIVALENTS
For the purposes of presenting cash flows statements and considering their liquidity, temporary
investments which original maturity is lesser than ninety days are deemed cash equivalents.
3.3
INVESTMENTS
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Investments are recognized as per historic cost and are updated as per prospective realization,
availability of market information and level of control exercised over the issuer, applying
methodologies approaching their economic reality. Methods to update their value include stock
exchange quotation, net present value to determine market prices or internal returns, equity method
and cost method.
3.3.1 Temporary investments
Fixed rent investments are recorded initially with the Parent Company as per their cost and are
adjusted monthly at the Internal Rate of Return (TIR), either credited or charged against the
statement of results in accordance with the parameters established by the Colombian National
Accounting Office –CGN-.
3.3.2 Permanent investments
Variable rent permanent investments by companies not subject to control and not listed in stock
exchanges, are recorded as per their cost. If the investments’ intrinsic value is higher or lesser than
their book value by the year-end, a credit is entered on the appreciation item and the relevant offset
is entered on the equity appreciation surplus or, it is also possible to make a provision against the
statement of results, respectively.
According to opinion 20079-101592, as from September 2007, equity investments in entities
controlled abroad are recognized as per historic cost, applying the Representative Market
Exchange Rate (TRM) effective on the transaction date, for the purposes of their presentation in
legal currency. These investments are updated pursuant to the equity method and are not subject
to adjustment per exchange differences, insofar as the cited method embodies the latter.
3.3.3 Financial derivatives
In order to reduce exposure to exchange rate and interest rate fluctuations on financial liabilities
undertaken with domestic and international banks, as well as relating multilateral entities and note
issuances, the Group resorts to derivatives such as swap, forward and options.
As provided by the Colombian National Accounting Office, effective in September 2007, in
derivatives intended to asset hedging, both rights and obligations are updated based on highly
recognized technical methodologies. The above, to secure that on the date of the agreement
termination any differences between rights and obligations should correspond to collectible
amounts (if rights exceed obligations) or, to payable amounts (if obligations exceed rights).
According to the foregoing, the Group records all rights and obligations derived from agreements
and are shown net on the balance-sheet; rights correspond to the value earned by the company to
offset risks hedged; obligations correspond to the company’s commitment under the hedging.
In their valuation, the Parent Company and its subsidiaries adopted certain policy whereby
derivatives entered for hedging purposes are adjusted to their value in conformity with
methodologies outlined by the Finance Superintendency in Colombia and its counterparts abroad,
and the resulting adjustment is carried to results.
3.4
PROVISION FOR UNCOLLECTIBLES
Risks relating customers’ and other debtors’ receivables are reviewed by the end of each quarter in
order to determine the relevant provisions in percentages ranging between 10% and 100% in
accordance with the type of receivables, expiration and likeliness of recovery, individually
considered.
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3.5
PROPERTY, PLANT AND EQUIPMENT
The Parent Company and its subsidiaries in Colombia account property, plant and equipment as
per their cost, as follows: (a) funding expenses and exchange differences on foreign currency
liabilities; direct operating and administrative expenses; capitalization completed once the relevant
assets are ready for utilization, and (b) up to year 2000, inflation adjustments over costs, excluding
capitalized exchange differences and the portion of capitalized interest corresponding to inflation.
Depreciation is calculated as per the straight line method over costs, based on the assets’
estimated useful life. For the purposes of calculating depreciation, the following table shows the
assets’ estimated useful life:
TYPE OF ASSET
Buildings
Transmission lines
Substations
Fiber Optics
Machinery and equipment
Telecommunications equipment
Furniture, office equipment, laboratory equipment
Communications equipment
Transportation equipment, traction and lifting
Equipment of the National Dispatch Center
Computer and ancillary equipment
USEFUL LIFE
50
40
30
25
15
15
10
10
10
6
5
Expenditures relating to the maintenance of these assets are charged to results, while any
improvements and additions that increase the asset’s profitability and/or useful life are added to
their cost.
3.6
DEFERRED AND OTHER ASSETS
Deferred and other assets comprise expenses paid in advance, deferred charges and other assets.
Expenses paid in advance mainly include monetary line items such as insurance premiums and
interest, which are amortized based on their accrual.
Deferred charges and other assets include commercial credits for acquisition of permanent
investments, costs relating to software acquisition, easements, democratic security levies, fees on
the placement of notes, licenses and rights, which are expected to produce economic benefits in
future periods and a quantifiable monetary measurement. Also, these include deferred taxes
originating from temporary differences between accounting profits and fiscal income.
Software is amortized as per the straight line method within a maximum term of three (3) years,
except for the integrated SAP system that is being amortized in ten (10) years. Once the projects
are found to be viable, charges relating to surveys and researches are treated as expenses and are
not capitalized even in the event it is later decided to develop the project for internal purposes.
Commercial credits, easements, commissions on the placement of notes, licenses and rights are
amortized as per the straight line method during those periods where benefits are expected to
accrue, in accordance with the feasibility studies for its recovery.
As of September 2007, the useful life of intangibles may be definite or indefinite; the latter not being
amortized.
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3.7
APPRECIATION
Equity appreciation also includes:
3.7.1 The result of any surplus on book net costs due to economic appreciation of primary
components of property, plant and equipment, technically determined by independent experts in the
case of real estate properties; market value for transportation equipment in accordance with market
value; all other assets, according to technical studies carried out by officers engaged with
companies pertaining to the ISA Group. Technical appraisals must be performed at least every
three (3) years, or when the market conditions indicate that the values recorded changed
significantly.
3.7.2
Surplus on the intrinsic value of permanent investments, vis-à-vis their net cost.
3.8
INCOME TAX AND DEFERRED TAXES
Provision for income taxes is determined by making the necessary netting to calculate taxable
income and is adjusted by the end of the year based on tax regulations.
The value corresponding to lesser credited current taxes calculated during the year and resulting
from an excess on depreciation and fiscal amortization over accounting amortization is accounted
as deferred taxes after applying useful lives, and methods for depreciation and fiscal amortization
other than accounting methods.
Debited deferred taxes represent temporary differences that have given rise to greater current
income taxes; these are basically represented by fiscal inflation adjustments over non-monetary
depreciable and amortizable assets and, by balances existing for receivables, retirement pensions
and health, education and old-age benefits granted to pensioners, among others.
According to opinion No. 20061-57086 dated January 31, 2006 rendered by the Colombian National
Accounting Office –CGN– when referring to deferred taxes, companies in Colombia are free to
define accounting policies on the matter. In conformity with the above, the Parent Company and its
subsidiaries in Colombia, have considered that all inflation adjustments recognized for taxation
purposes over depreciable fixed assets, are temporary differences likely to accrue deferred taxes;
the above, to the extent that these accrue greater fiscal revenues due to monetary correction;
therefore, payable taxes are increased and recovered in subsequent years as fixed assets are
depreciated.
3.9
LABOR LIABILITIES
The Group labor liabilities are adjusted by the end of each year based on the applicable regulations
and labor conventions in force; these are accrued on monthly basis based on estimated values.
Yearly, an actuarial survey determines the liabilities relating to retirement pensions and future
benefits concerning health, education and old-age benefits granted to pensioners. Pension
payments are conducted affecting the actuarial calculation account for current pensions.
3.10
NET INCOME PER SHARE
Net income per share is calculated on the basis of the annual weighed average of outstanding
shares during the period. As of September 2009 and 2008 outstanding shares were 1,075,661,374
for both periods.
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3.11
RECLASSIFICATION IN FINANCIAL STATEMENTS
Some figures included in the Audited Financial Statements as of September 30, 2009, were
reclassified to render them comparable to the year 2008 financial statements.
3.12
MEMORANDUM ACCOUNTS
Memorandum accounts mainly comprise credits granted but undisbursed, management of third
party accounts, management of the Commercial Exchange System -SIC- and management of the
STN-LAC usage charges, assets depreciated in full, contingencies originating from claims or legal
actions and collaterals granted under credit agreements. Memorandum accounts also include
temporary and permanent differences among accounting and fiscal line items; the former will
reasonably revert in time; the latter will allow drafting specific-purpose reports.
3.13
RECOGNITION OF REVENUES, COSTS AND EXPENSES
Revenues, costs and expenses are recorded on accrual basis. Revenues generated in Colombia
from the provision of services are recognized during the relevant contractual period or upon
provision of the relevant services.
In the opinion of ASIC and LAC, revenues regulated by CREG take into consideration, among
others, all costs incurred by XM Compañía de Expertos en Mercados S.A. E.S.P. in the provision of
services; these costs are determined on the basis of annual budgets approved by CREG.
In XM, Compañía de Expertos en Mercados S.A. E.S.P., during 2008 CREG Resolution 110 of
2006 was applied until May and as of June Resolution 048 of 2008 was applied. CREG Resolution
110 of 2006, establishes the annual recognition of revenue due to operation and investment costs
necessary for providing the service, as well as equity remuneration to shareholders’ equity. As far
as CREG Resolution 048 is concerned, it establishes the remuneration of XM S.A. E.S.P regulated
services, for the next 5 years, thus defining a Maximum Regulated Revenue for each month that
shall correspond to the sum of the following monthly line items: operative expense, investments,
adjustment due to regulatory changes or deviation in investment execution, and equity profitability
margin.
On this basis, XM defined the following accounting criteria for the recognition of regulated revenues:
i) Revenue due to operation cost: recorded as revenue at the moment the service is provided. ii)
Revenue due to investment cost: the new applicable regulation defined the approval of investment
revenue subject to a five-year investment program. Total revenue received corresponding to
investment and project remuneration, must be treated as a deferred revenue at the moment it is
invoiced; said deferred revenue shall be amortized in accordance with the period’s depreciation and
amortization expense, in the proportion resulting from dividing the deferred revenue by the
investment on fixed and intangible (net) assets of the previous year’s balance sheet. The value of
investments not executed is transferred to the following accounting year. iii) Stockholder equity
remuneration: this revenue is cognized at the moment the regulated service is provided.
In ISA deferred revenue is recognized as the amounts received to remunerate UPMES investment
recovery and rights of use that have not been earned given that the respective costs have not been
incurred in or by having fulfilled the commitments that entitle the Company to the revenue. These
deferred revenues are amortized in the periods in which they are earned.
3.14
USE OF ESTIMATES
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Preparation of Audited Financial Statements in accordance with the generally accepted accounting
principles requires making estimates that affect the value of assets, liabilities, revenues, costs and
expenses reported for such periods. The final outcome may differ from these estimates.
3.15 CONTINGENCIES
Contingencies may exist by the time when financial statements are prepared; these contingencies
may lead to losses against the company but are only determinable in the future, upon the
occurrence of one or more facts. The management and the legal counsels are responsible for
assessing those contingencies. The assessment of contingencies necessarily involves an analysis
and judgment to state the relevant views. In assessing contingencies relating to legal proceedings
against the Company, the counsels consider, among others, the merits of the claims, the existing
case law and the current status of the proceedings.
If the assessment leads to conclude the likeliness of material losses and the amount of the relevant
liabilities, then such estimates are included under the financial statements. If the assessment leads
to conclude that potential losses are not likely to occur, but the outcomes are uncertain or nonassessable, then such character of the relevant contingency is disclosed under the financial
statements indicating the probable range of loss. In general, loss contingencies found to be remote
are not subject to disclosure.
D.
AUDITED FINANCIAL STATEMENTS OF THE ISSUER AS OF THE LAST FISCAL YEAR
APPROVED.
Attached is the ISA Group 2008 Annual Report, showing the required information as follows:
Reports Requested
General Balance-Sheet
Statement of Income and Losses
Statement of Changes in Financial Condition
Statement of Changes in Equity
Statement of cash-flow
Certification of Financial Statements
Notes to Financial Statements
Management Report
Statutory Auditor Report
ISA Group Annual
Report 2008
(Compact Disk)
Pages
2 and 3
4
Not applicable
5
6 and 7
183
8. - 88
66 - 81 (printed
report)
89 - 91
(annual reports attached).
230
CHAPTER 7 – INFORMATION ON THE RISKS RELATED TO THE ISSUER.
Our business, operations and financial condition are exposed to several risks. Some of such risks
are described below and you must take these into account to assess or evaluate any investment
decision involving ourselves or to resolve whether or not to participate in the purchase of Common
Shares offered. This section is not comprehensive as to all risks applicable to us, our industry or
business, and is only intended to be a summary of certain material factors.
A.
MACROECONOMIC FACTORS AFFECTING REAL YIELDS ON THE SECURITIES
OFFERED.
Adverse local, regional or worldwide trends may affect the economy of the countries where
we hold investments or conduct operations.
Our operations are located in Colombia, Brazil, Bolivia, Peru and Panama. If the local, regional or
worldwide economic trends adversely affect the economy of the countries where we hold
investments or conduct operations, Colombia or Brazil in particular, our financial condition and
results of operations may be adversely affected.
Economic trends adversely affecting the economies of any emerging country in the South or Central
American region may spread to all countries in the region and to the securities issued by issuers
from the region. Thus, crisis occurring in other countries having emerging markets may reduce the
interest of investors relating securities offered by issuers operating in Central or South America, and
render difficult or impossible for ourselves and our subsidiaries to access capital markets in terms
admissible to restructure our indebtedness, to fund our operations and the growth of our business
on the future. Given the characteristics of the electricity industry (which requires major investments
on operational assets) and given our financial needs, if the access to capital and credit markets is
restricted, we may encounter difficulties to complete our investment plan and to restructure our
liabilities; the above may adversely affect our business, result of operations, financial condition and
our ability to pay dividends and other distributions. See “Situations Relating to Countries where the
Issuer Conducts Operations”, and “Political Factors, such as Social Instability, State of Economic
Emergency, Etc”.
B.
RELIANCE ON KEY STAFF (ADMINISTRATORS).
Our company identifies this situation as a risk component relating to “human capital” and, for the
management of such risk the company implemented several administrative measures including the
proposal to allocate human resources based on the Group’s growth strategy; identification of directive
and technical talent, the structure for staff replacement, the implementation of a technical carrer, the
application of a performance evaluation system, tutorships and follow-up, organizational climate
evaluation, follow-up andmanagement and the definition and development of an Integral Training Plan
(PFI) for company employees. Given the reasons above, we do not foresee any direct risks associated
to the company’s reliance on key staff that might affect the level of risk relating to investment on the
Common Shares offerred
C.
RELIANCE ON A SINGLE BUSINESS SEGMENT.
Our core business in Colombia is the provision of electricity transportation services which generate
84.03% of our operating income (calculated on the basis of the 2008 annual report). Given that this
activity is deemed a natural monopoly feature, electricity transportation is defined in Colombia as a
regulated business exposed to regulatory risks – like any business of the type –.
231
Although the transmission regulatory framework in Colombia has advanced notoriously, regulatory risks
are evidenced on the periodic reviews carried on the scheme (which are also customary in this type of
business). Reviews are aimed to make it consistent with the actual conditions for the provision of
service where transmitters develop their activity. See “Impact from the regulations applicable to the
Issuer and potential changes thereon”.
It is important to highlight that periodic revisions are conducted in accordance with legal norms in
force following a procedure that includes the prior publication of the methodological bases on which
Resolution bills are revised and published, which may be commented on by interested agents and
third parties. This is how the last review process conducted by the CREG that concluded with the
issuance of CREG Resolution 011 of 2009, companies provided the information required for
carrying out the studies conducted during the revision and later analyzed and commented the
results thereof, once published by the regulator.
Even though a process as the one described beforehand does not eliminate regulatory risk, it does
in fact allow interested companies and third parties to interact directly with the regulator during its
realization with the purpose of guaranteeing that the pricing structure is based on objective,
technical and independent criteria in such a manner that it reflects the current cost structure of
companies belonging to our industry in respect of carrying out activities for service provision.
D.
DISRUPTION OF THE ISSUER ACTIVITIES, RESULTING FROM REASONS OTHER THAN
LABOR RELATIONS.
On April 26, 2007, the entire SIN sustained a disruption in the transmission service which caused
electricity failures in over 80% of the Colombian territory. The service was restored between 30
minutes and 4 and a half hours after the disruption, depending on the city or region affected. Our
preliminary diagnosis on the causes that originated the interruption refers to operating breakdown.
Due to this, thers is currently a fine proceeding carried out by the Superintendence of Public utilities
against ISA, which was appealed. The amount of the fine, in case this proceeding were to prevail,
would be Col$923,000,000.
E.
NO SECONDARY MARKET FOR SECURITIES OFFERED.
To the extent that our Common Shares are registered with the BVC, these are freely tradeable through
the BVC transaction systems. The shares’ greater or lesser tradeability shall be an indication for the
base quotation price of the relevant securities. At the cut of September 30, 2009 our shares were
ranked fifth under the Stock Tradeability Index –IBA-, reported by the Colombian Financial
Superintendency (Superintendencia Financiera de Colombia).
Taking the above into account, and this not being the first issuance of our Common Shares but a
“follow-on” issuance, there is a liquid secondary market for our shares, despite the reduced size of our
present public market of securities; continuance and development of such market shall depend, among
others, on the success of the Common Shares placement and the positive perspectives foreseen in the
market for the relevant securities.
F.
NO HISTORIC RECORDS RELATING TO TRANSACTIONS BY THE ISSUER.
Given that we are a company widly recognized in Colombia and in the remaining countries where we
operate, having a four-decade history of operations (See History Overview), we foresee no direct risks
associated to the company’s performance that may affect the level of risk concerning investment on the
232
Common Shares offerred. However, results in the forthcoming years may perform differently,
compared with the results obtained to date.
G.
NEGATIVE, INEXISTENT OR INSUFFICIENT RESULTS IN THE PAST 3 YEARS.
We foersee no risks associated to negative, inexistent or insufficient operating results, likely to affect
the level of risk concerning investment on the Common Shares offerred. See Financial Statements.
H.
DEFAULT ON THE PAYMENT OF BANK OR STOCK-TRADE LIABILITIES.
Throughout our history, we have always honored payment of our bank and stock-trade liabilities and, to
date we are not aware of any circumstance that might entail changes on such trend.
I.
NATURE OF THE BUSINESS CONDUCTED OR PURSUED BY THE ISSUER.
Success of our electricity transmission business depends, in part, on factors beyond our
control.
A significant portion of our business depends on factors beyond our control that may have an
adverse impact on our business:
•
actions adopted, rules enacted and policies implemented by national electricity regulating
agencies from the countries where we operate; among which the periodic revision of our
regulated revenues is included;
•
investments on extension and replacmeent of electricity transmission assets having a rate
of return insufficient to cover our operating and capital costs;
•
economic conditions in the countries where we operate, including inflation and fluctuations
in interest and exchange rates;
•
public order conditions that result in attempts against our transmission infrastructure:
•
changes in tax, accounting or exchange norms in the countries where we operate
1. Our operations are subject to operational perils and non-insured risks, including
aggressions and terrorism in the countries where we operate.
Our operations are subject to inherent risks customarily associated to the electricity transmission
business, including break-up of electricity circuits, explosions, contamination, discharge of toxic
substances, fire, adverse atmospheric conditions adverse and other perils, each of them capable of
causing damages or destruction in our facilities or damages to persons and properties. In addition,
our operations and assets face potential risks associated to aggressions and terrorism in the
countries where we operate. Colombia has experienced several periods of criminal violence during
the past four decades, mainly due to activities by guerrilla groups and drug cartels. As a response
to those actions, the Colombian Government has implemented a number of security measures and
has strengthened its police and military forces through creation of especialized units. Despite these
efforts, guerrilla activities and other crimes associated to drug trafficking still exist in Colombia.
These activities, their potential increase and the violence associated thereto may entail negative
impact over the Colombian economy, whether in the present or in the future.
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The government of the President of Colombia, Álvaro Uribe, reelected for the 2006-2010 period, is
now implementing a plan mainly aimed at the protection of civil rights and the strengthening of
democratic authority. However, it is possible that the mentioned plan fails to achieve its goals and
the economic and social conditions may become deteriorated in the future. Our business or
financial condition, or the market value of our shares and any dividend distributed by us may be
negatively affected by changes on these Colombian and social economic conditions and, further by
the response given to those conditions by the Colombian Government.
Furthermore, in the late 1980s, and early 1990s (1997), Peru underwent high levels of terrorist
activity originated from Shining Path (Sendero Luminoso) and the Tupac Amaru Revolutionary
Movement which aimed their violent actions against the government of Peru and the private sector.
Although in the the past decade the Peruvian government made significant progress to eliminate all
forms of terrorist activity, terrorism incidents might arise in the future, and the business, financial
condition and results of operations of our subsidiaries in Peru might be adversely affected, as well
as their ability to pay dividends or make other distribuciones.
Although we maintain insurance against many of those risks, to the extent and amounts we deem
reasonable, these insurance do not cover all risks. Many of our insurance coverage bear substantial
deductibles and self-insurance levels, as well as ceilings on our maximum recovery. Consequently,
our operations and financial condition might be adversely affected in the event of significant
casualties not entirely covered under the insurance. See “Risks relating to insurance coverage – Our
insurance coverage might not be adequate”.
2. Eventually we may be accountable for losses and damages caused to third parties as a
result of failures in our electricity transmission lines as well as for disruption or disturbance
non attributable to identifiable third parties.
According to the rules and regulations or contracts governing provision of our electricity
transmission services in the countries where we operate, we might eventually become accountable
for:
•
losses and damages caused to third parties as a result of failures in the operation of our
equipment or transmission facilities, which might cause disruption or disturbance on the
distribution and/or transmission systems of third-parties; and
•
disruption or disturbance non attributable to a given participant in the interconnected
systems of the countries where we operate.
Although we maintain insurance against civil liability resulting from those events, to the extent and
amounts that we deem reasonable, these might be insufficient to cover all losses or liabiities
resulting from those events, thus giving rise to material adverse effects over our business, results of
operations, financial condition and, hence over our ability to pay dividends or make other
distributions. See "Risks Relating to Our Operations in Brazil".
3. The execution of projects entails a series of risks that if they were to occur might affect
the expected results.
Among the main risks that the projects are subject to are the following:
•
our ability to timely obtain all necessary licenses and permits for project execution;
•
possible changes in regulation;
•
impediments on our ability to acquire rights of way or land rights necessary for project
execution;
234
•
macroeconomic variationa that affect initial suppositions comtemplated in the budgets;
•
substantial differneces with regards to initial suppositions taken into account in budgets
and the work actually executed, and
•
public order conditions.
If any of these risks were to materialze, it could affect the development of projects and thus the
oppiortunity and profit expected of them.
4. Our rights of way
Our electricity transmission networks are located on lands where we have acquired rights in
conformity with license and easement agreements, which have been obtained on the basis of the
procedure signaled by Colombian law, these easements have been registered substantially in
accordance with the applicable laws. Notwithstanding the observance of the legal procedures, legal
actions may be instituted with respect to the form, contents, priority or registration of such
documents. Additionally, we are involved in a number of proceedings concerning imposition of
rights of way, which proceedings have commenced in the ordinary course of business and assigned
to us under the acquisition of former lines.
5. Take over of ISA.
As a public utility provider, we are subject to supervision of the SSPD. Pursuant to Law 142, the
SSPD has the authority to take over companies that provide public utilities if it is necessary to
guarantee the continuous provision of public utilities.
Ability of the purchasers to enforce their shareholder rights may be restricted if the SSPD takes over
our business in Colombia. In our capacity as public service providers, we are subject to supervision
by the SSPD. Pursuant to Law 142, the SSPD has the authority to takeover public service
providers, if doing so is necessary to secure the continued provision of adequate public services.
The SSPD may takeover our business, if any of the following were to occur:
•
•
•
•
•
•
•
we fail to provide or are unable to provide electricity transmission public services with the
standards of continuity and quality rrequired by the law, and, where such provision is
indispensable to preserve the public or economic order, or to prevent serious and undue
damages to the users or to third-parties;
we breach any material regulation applicable to us;
we breach any of our material contracts;
we fail delivering complete, true and timely information to the competent authorities;
any calamity or public order disturbance arises;
cease our payments generally, or if we are at risk of ceasing the same; or
enter into liquidation proceedings.
If the SSPD assumes control over the operation of our business in Colombia, our administration
would be carried by an agent especially designated to that effect. Given the extensive powers of the
SSPD, it is impossible to predict the impact that an eventual takeover would bear on the price of our
shares, or for how long the payment of dividends might be delayed. We may not assure that, in
conformity with the applicable laws, the SSPD will not takeover our business in Colombia in the
future.
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6.
Given that a substantial part of our assets are devoted to electricity transmission,
these would not be available for liquidation in the event of bankruptcy and cannot be subject
to seizure to secure execution of a court ruling.
Our electricity transmission assets are used to provide essential public services in the countries
where we operate. In such countries, those assets would not be available for liquidation in case of
bankruptcy, insolvency or seizure to secure payment under court rulings. Furthermore, if we
become insolvent or enter into bankruptcy proceedings in any such countries, including Colombia,
our assets (i) shall revert to the relevant local government, or (ii) would be subject to control or
possession by the relevant local government as a mechanism to secure continued provision of the
public services in those countries. Despite the fact that in such cases we might be entitled to
compensation from the, any compensation paid by such government may be lesser than the
amount of our indebtedness and other of our or our subsidiaries obligations in the time being; in
such case, we may lack of available funds to pay dividends or make other distributions.
7. We have participated and, most likely, we will participate in significant transactions with
our controlling shareholder, companies controlled by our controlling shareholder or other
related parties, which may give rise to conflicts of interest.
•
We have participated and, most likely, we will participate in transactions relating the following
issues, with our controlling shareholder, companies controlled by our controlling shareholder or
other related parties:
•
inter-company loans;
•
collaterals; and
•
subordinated indebtedness owed by our subsidiaries.
See “Financial Information of the issuer – Transactions with related parties entered during the
precedent year”.
Although our Good Governance Code and Bylaws provide that our operations with subsidiaries
must be entered at market prices, and although the tax laws provide the need to set market prices
for transactions with related parties from abroad, any of the above-mentioned transactions might
contemplate terms not so favorable to us, vis-à-vis those terms negotiable with unrelated thirdparties, and might further give rise to conflicts of interest.
J.
RISKS GENERATED FROM PAYABLE FRINGE AND PENSIONAL BENEFITS; TRADE
UNIONS.
1. Retirement pensions
According to the individual labor agreements and collective bargaining agreements, we must pay
retirement pensions to those workers who meet certain requirements of age and length of service.
However, the Social Security Institute (ISS) and the Pension Managing Companies have assumed
the largest portion of this obligation.
As of December 31, 2008, we had 619 (2007: 633) active employees, 64 (2007:90) of which are
covered under the pension regime provided in individual labor agreements and collective bargaining
agreements, while the remaining 555 (2007: 543) are subject to the regime contemplated in Law
100 of 1993. The above means that pension payments of the latter 555 workers are not assumed
by us, insofar as we transferred assumption of such risk to third parties, that is, to the Pension
Fund, through monthly payment of given quotas.
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The actuarial calculation covers active personnel (64), retired personnel (323), postmortem
allowances or pension substitution (41), quotas payable by ISA (12) and contingent personnel,
including retired personnel who has provided services for 20 years or more (4).
As of December 31, 2008 76.08% of the projected liabiities has been amortized; the amortization is
calculated on the basis of the methodology stated in Resolution No. 356 dated September 2007
issued by the Colombian National Accounting Office.
Taking the foregoing figures into account, as well as the company’s accounting practices, we consider
that there is no material risk on the matter.
2. Extra-legal benefits.
For the purposes of determining pension liabilities the company included extra-legal benefits
accorded to pensioners, other than those required by the legal provisions. This practice was
adopted as an action of prudence since year 2005, advancing the application of International
Accounting Rules (NIC). The methodology for amortization of allowances and benefits is the same
used for the amortization of pension liabilities; as of December 31st, 2008, allowances and benefits
are amortized in its entirety. Accounting records are made in accounts separate from the actuarial
calculation accounts.
Taking the foregoing figures into account, as well as the company’s accounting practices, we consider
that there is no material risk on the matter.
3. Trade Unions
As of September 30, 2009, we had 636 employees, 438 of which were professionals. Collective
labor relations are regulated under individual labor agreements, collective labor agreements, the
internal labor regulation, the Social Security and Hygiene regulation and the administrative guides
and instructions.
The collective bargaining agreements are the following: the Collective Bargaining Pact (Pacto
Laboral Colectivo) and the Collective Bargaining Agreement (Convención Colectiva de Trabajo) to
which any employee belonging to the Fixed Common regime can become a member.
The workers benefitting from the Collective Bargaining Agreement are members of the ISA labor
union ISA- SINTRAISA and are represented by its Board of Directors.
As of September 84 workers (senior management and professionals) belonged to the Integrated
Salary Regime. There were 552 workers in the Fixed Common Regime, 88.6% of which benefit
from the Collective Bargaining Pact, 489 workers and 11.4% benefit from the Collective Bargaining
Agreement, 63 workers.
The Collective Bargaining Pact is in force until December 31, 2010 and the Collective Bargaining
st
Agreement until March 31 , 2011.
With respect to our subsidiaries and/or affiliates, see “Risks Related with our Operations in Brazil”.
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K.
RISKS INVOLVED IN THE CURRENT STRATEGY OF THE ISSUER.
1. Risks related with growth strategy.
ISA has defined an Ambitious and Big Objective – MEGA – in order to direct the corporate group in its
continuous value adding during the next decade. This MEGA shall be a guide, both for decision making
13
as well as for motivating day to day shares.
Core risks associated to the growth strategy implemented by our Economic Group refer to “growth”,
and “management of the Group”. In the management of these risks, as a matirx of the group, we follow
the guidelines provided for the corporate growth strategy and other criterion set out in investment
policies.
2.
Other risks related with growth strategy and investment on new businesses
•
Reputational risks asscoiated to the unfavorable valuation on behalff of the public that cause
the loss of credibility, trust and image.
•
Risks relating to political decisions, measured as per the incidence of any such decisions over
the conditions adequate to develop our business.
•
Volatility risks of macroeconomic variables mainly associated to exchange rate and inflation in
the various countries where we hold investments.
•
Funding risks relating to the raising of resources to fund the development of new projects and
acquisitions.
•
Regulatory and legal risks concerning changes on the concessions economic and financial
conditions
•
Social and environmental risks associated to the presence of communities and natural
resources in the projects’ development areas and that of its operation.
•
Human capital risks related to finding individuals having specific skills for the development of
activities associated to infrastructure construction and operation.
3. If we increase our financial leverage, our financial condition may be adversely affected.
As a part of our strategy to enlarge our business, ourselves, whether directly or through our
subsidiaries and related companies, have recently increased our financial leverage, which may be
increased in the future to fund capital expenses, as well as the development and construction of
new electricity transmission lines and/or the acquisition of electricity transmission assets. As of
September 30, 2009, our total consolidated indebtedness totalled Col$4.440.658 million. If we
increase our financial leverage, risks aassociated to us may increase and, therefore, become
unable to meet some of our contractual obligations relating to minimum financial ratios.
Furthermore, to increase our financial leverage we will most likely be required to agree on
more restrictive commitments plus entailing further limitations on the way we
manage our business and our ability to dispose or encumber our assets. On January
29, 2007, ISA Capital made two concurrent Rule 144A/Reg. S offerings of senior
notes in the total amount of $554 million, or the ISA Capital Note Offerings. The ISA
13
Taken from the 2008 Annual Report
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Capital Note Offerings are currently secured by a first priority pledge on
approximately 55.92 million CTEEP Common Shares owned by ISA Capital. The
indentures that govern the ISA Capital Note Offerings contain covenants that restrict
ISA Capital from assuming indebtedness, creating encumbrances, selling assets,
and merging or amalgamating. Such “indentures” also prohibit the payment of
dividends by ISA Capital until the time when the notes are paid in full. Furthermore,
under the terms of the credit agreements entered into by our subsidiaries in Peru
and Bolivia in connection to expansion or development of their electricity
transmission assets, such subsidiaries’ ability to pay dividends and other
distributions to us, has been restricted and made subject to conditions including
achievement of certain benchmarks relating to projects completion or performance,
compliance with certain financial tests and the inexistence of defaults or events of
default. See “Comments and Analysis by the Management on the Results of
Operations and Financial Condition of the Issuer and its Subsidiaries - Restrictions
agreed with the subsidiaries to transfer resources to the company”.
In addition, incurring in any further indebtedness on our side or on the side of our subsidiaries and
related companies, and any adverse changes on interest rates or exchange rates associated to
such indebtedness would lead to increases on financial expenses, and the consequent reduction of
our net revenues; consequently, this may affect our ability to pay dividends or make other
distributions.
L.
VULNERABILITY OF THE ISSUER VIS-À-VIS VARIATIONS ON EXCHANGE AND/OR
INTEREST RATES.
Exchange rate risks may adversely affect our results of operations and financial condition.
The Colombian peso and the remaining currencies from the countries where we and our
subsidiaries operate, have been subject to significant devaluation and appreciation vis-à-vis U.S.
Dollar and may be subject to significant fluctuations in the future.
Historically, a significant portion of our indebtedness and the indebtedness of our subsidiaries has
been denominated en U.S. dollars and other currencies (including Euros, Peruvian soles and
Brazilian reais) and, although a significant portion of our revenues is linked to changes in inflation
indexes, consumer prices and producer prices, generally we have been and continue to be exposed
to fluctuations on the currencies from the countries where we operate vis-à-vis U.S. Dollar and the
remaining currencies in which our indebtedness and the indebtedness of our subsidiaries has been
denominated. Although we hedged 100% of our exposure to foreign currency in Brazil under the
ISA Capital Note Offering, by means of derivative transactions, we may not assure that these
measures will be sufficient to mitigate the potential impact over our operations and financial
condition in case of drastic fluctiations on exchange rates. Furthermore, given our obligation relating
payment of interest, premiums and other amounts under las ISA Capital Note Offering, such
liabilities are only covered as to the first two instalments of interest; in the event of fluctuations on
the exchange rate of Brazilian reais and U.S. Dollar, we will be forced to use further cash generated
from the payment of dividends by CTEEP and denominated in Brazilian reais to make those
payments of interest, premiums and other amounts denominated U.S. dollars.
Given such exposure, any cash generated by us and our subsidiaries may substantially decrease
when the currencies from the countries where we operate are subject to devaluation vis-à-vis the
U.S. Dollar. Future volatility on the Colombian peso exchange rate, and other currencies of our
revenues or expenses (Brazilian reais, Peruvian soles and Bolivian pesos included), vis-à-vis the
U.S. Dollar, may adversely affect our results of operations, financial condition and results of
operations and our capacity to pay dividends or make other distributions. See “Chapter 5 –
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Comments and Analysis by the Management on the Results of Operations and Financial Condition of
the Issuer and its Subsidiaries – Impact from inflation and exchange rate fluctuations”.
M.
RELIANCE ON LICENSES, CONTRACTS, TRADEMARKS, KEY STAFF AND OTHER
ITEMS NOT OWNED BY THE ISSUER.
1. Our concessions and licenses, which authorize us to transmit electricity in the countries
where we operate might be subject to early termination and caducity, and might be of limited
duration, without assurance as to their renewal.
We are authorized to transmit electricity in Brazil, Bolivia and Peru in conformity with concessions
and licenses granted by the competent governmental authorities from those countries. Operational
efficiency of the electricity transmission systems in the countries where we operate is measured in
terms of availability of our assets, compared to to the availability targets for interconnected systems
established by the governmental authorities in those countries. If we breach our obligations under
our concession or licenses or if we fail complying with the rules and regulations from such countries,
we may be subject to penalties imposed by the relevant authorities, including warnings, fines,
temporary suspension of the right to participate in bid processes, intervention, termination or
caducity of the relevant concessions or licenses. In addition, our concessions and licenses are
subject to expropriation or early cancellation, for public interest reasons. Either of the abovementioned penalties or the expropriation of our concessions by any governmental authority may
entail material adverse effects over our business, results of operations, financial condition and our
ability to pay dividends or make other distributions.
Although we do not transmit electricity in Colombia under concessions or licenses, the local
authorities in Colombia may takeover the control of our operations if the continued provision of our
electricity transmission services is at risk. See “Regulatory agencies and other governmental
authorities in countries where we operate may penalize or, in certain cases, takeover the control of
our concessions and licenses if we breach the terms of our concession or license contracts or the
rules and regulations applicable to our business in those countries”.
Furthermore, the concession or license contracts, as the case may be, alowing our operations in
Brazil, Bolivia and Peru provide a limited duration. There is no assurance that we will renew those
contracts after their expiration or that we will be granted with new concession or licenses under
terms and conditions similar to those presently in force. If no such renewal is obtained, or if the
terms and conditions thereof are less favorable than the present ones, the expiration or renewal of
our concession or license contracts in the future may entail material adverse effects on our
business, results of operations, financial condition and our ability to pay dividends or make other
distributions. See "Risks Relating to Our Operations in Brazil".
2. Regulatory agencies and other governmental authorities in countries where we operate
may penalize or, in certain cases, takeover the control of our concessions and licenses if we
breach the terms of our concession or license contracts or the rules and regulations
applicable to our business in those countries.
Under the concessions, licenses and rules governing our provision of electricity transmission
services we must observe given quality, safety and maintenance standards in connection to our
electricity transmission assets. The competent authorities in the countries where we operate may
impose fines, penalties and restrictions in case of default or breach to our contractual or legal
obligations concerning those standards. In addition to such fines, penalties and restrictions, the
competent authorities may takeover the control of our operations to secure adequate operation of
240
our electricity transmission facilities and compliance with the applicable laws and regulations. In
Colombia, some events of service interruption might give rise to fines or, in extreme cases, to more
severe penalties such as takeover of our operations by the SSPD; the above will in turn derive into
a reduction of our regulated revenues. Any of the above-mentioned penalties or takeover by the
governmental authority upon our concessions or the assumption of the control of our operations
may have material adverse effects over our business, results of operations, financial condition and
our ability to pay dividends or make other distributions. See "Risks Relating to Our Operations in
Brazil".
3. Expansion of our electricity transmission networks shall be conditioned to obtaining
permits, licenses and rights of way, and, if we require further indebtedness, to approval by
the DNP and the MHCP.
Our ability to engage in expansion projects shall be subject, among others, to numerous business,
economic, regulatory, competition and political uncertainities that are beyond our control. Therefore,
we may not assure the undertaking of expansion or enlargement projects and, if undertaken, the
success thereof.
Success of an expansion project might be conditioned, among others, to the following factors:
•
other entities’ construction of new and competitive electricity transmission lines, after
obtaining regulatory approvals as required;
•
our ability to procure regulatory and environmental permits and approvals as required.
We might also require further capital to fund expansion projects. If we fail generating sufficient
funds or assuring funding in the future, we may be compelled to delay or surrender any prospective
expansion projects. In addition, prior to our undertaking of any new indebtedness, we require the
approval from the DNP and the MHCP. Failing such prior approvals we are not empowered to
undertake any further indebtedness necessary to fund our operations and expansion plans.
Furthermore, prospective expansions may exceed the costs foreseen for completion thereof, and
such costs in excess may be unrecoverable. Any of these factors may have material adverse
effects over our business, financial condition and results of operations, and our capacity to pay
dividends or make other distributions.
N.
SITUATIONS INVOLVING COUNTRIES WHERE THE ISSUER OPERATES.
1. General Aspects.
a.
Economic fluctuations in Latin America are likely to affect our results of operations.
All our operations are located en Central and South America. Although in principle we only operated
in Colombia, by means of strategic acquisitions and investments, we have expanded our operations
throughout South America and acquired some interest in Central America. In 2008 our operations
outside Colombia generated near 61.82% of our consolidated operating income. Consequently, our
consolidated operating income is sensitive to the performance of South American economies as a
whole, particularly Brazil. If the local, regional or worldwide economic trends adversely affect the
economy in any of the countries where we hold investments or operations, our business, results of
operations, financial condition and our ability to pay dividends or make other distributions might be
adversely affected.
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Economic trends adversely affecting the economies of any emerging country in the
South American region may spread to all countries in the region and to the securities
issued by issuers from the region. Thus, crisis occurring in other countries having
emerging markets may reduce the interest of investors related to securities offered
by issuers in South America, and render difficult or impossible for ourselves and our
subsidiaries to access capital markets in terms admissible to restructure our
indebtedness, to fund our operations and the growth of our business. Given the
characteristics of the electricity industry (which requires major investments in
operational assets) and given our financial needs, if the access to capital and credit
markets is restricted, we may encounter difficulties to complete our investment plan
and to restructure our liabilities; the above may adversely affect our business, result
of operations, financial condition and our ability to pay dividends and other
distributions.
b.
Economies in the South American countries where we operate are featured by often
and, occasionally, drastric intervention by governmental authorities, which may
adversely affect our business.
Often, the governmental authorities have modified their monetary, credit, tariffs and other policies,
to influence the course of Colombia, Brazil, Bolivia and Peru economies. These governmental
actions to control inflation and implement other policies usually involve controls over salaries, prices
and tariffs, as well as other intervention measures including bank account freezing and capital
controls. Changes in the governmental authorities policies with respect to tariffs, exchange controls,
regulations and taxes might adversely affect our business and financial results; as well as inflation,
devaluation, social instability and other economic, political or diplomatic events, including responses
from governments in the region in view of the circumstances. If the governmental authorities
intervene in any of the countries where we operate, it might reduce yields on our business and,
therefore, our business, financial condition and our ability to pay dividends or make other
distributions might be adversely afectadas.
c.
Governments in the countries where we operate exert significant influence over their
economies. Political and economic conditions may have direct impact over our
business.
Governments in the countries where we operate often intervene in their economies and introduce
material changes on their fiscal and regulatory policy. Our business, results of operations or
financial condition might be adversely affected from any such changes in government policies, as
well as by reason of:
•
rules and regulations enacted by the MHCP related to our indebtedness;
•
exchange rate fluctuations;
•
inflation;
•
price instability;
•
changes in interest rates;
•
fiscal policy;
•
liquidity in the domestic credit and capital markets;
•
controls over capital flows;
242
•
restrictions on foreign trade; and
•
other political, diplomatic, social and economic issues involving the countries where we
operate or the international markets.
Measures adopted by governments in the countries where we operate aimed at maintaining
economic stability and, also, speculation with respect to future measures, are likely to generate
uncertainty in the economies of such countries, increase volatility in the domestic securities and
exchange markets, and adversely affect our business, results of operations and financial condition,
and our ability to pay dividends and make other distributions.
d.
We might face expropriation or similar risks in the countries where we operate.
Almost all our assets are located in Colombia, Brazil, Peru and Bolivia, and, like in the case of all
companies holding assets devoted to provision of public services in emerging country markets, we
are subject to political, economic and other uncertainties, including expropriation, nationalization,
renegotiation or voidance of existing contracts, exchange restrictions and international monetary
fluctuations. We may not assure that our business, financial condition and operating results will not
be affected if any of such events occur and, also, that our ability to pay dividends and make other
distributions will not be adversely affected.
Given that all of our assets are substantially destinated to electricity transmission, these will not be
available for liquidation in case of bankruptcy and may not be subject to seizure to secure execution
of a court ruling.
Our electricity transmission assets are used to provide essential public services in the countries
where we operate. In such countries, those assets would not be available for liquidation in case of
bankruptcy, insolvency or seizure to secure payment under court rulings. Furthermore, if we
become insolvent or enter into bankruptcy proceedings in any such countries, including Colombia,
our assets (i) shall revert to the relevant local government, or (ii) would be subject to control or
possession by the relevant local government as a mechanism to secure continued provision of the
public services in those countries. Despite the fact that in such cases we might be entitled to
compensation from the, any compensation paid by such government may be lesser than the
amount of our indebtedness and other of our or our subsidiaries obligations in the time being; in
such case, we may lack of available funds to pay dividends or make other distributions.
e.
Changes in taxation laws in the countries where we operate may entail adverse
impact over ourselves and the holders of our Common Shares.
Nevertheless, some of our subsidiaries have served as vehicles to enter into legal and taxation
stability agreements with the governments of the countries where we operate; those governments
have recently implemented, and may once again implement changes on the fiscal laws likely to
adversely affect ourselves and our shareholders. These changes include alteration of tax rates and,
occasionally, charges of temporary fees concerning specific governmental purposes. Some of these
measures may lead to tax increases and the impossibility of achieving timely and full indexation of
our revenues; the above may lead to adverse material effects over ourselves and our ability to pay
dividends.
Furthermore, the national and local authorities responsible for tax collection in the countries where we
operate have interpreted tax regulations differently; such interpretations may differ from the ones we
uphold and rely on. We may not assure that taxation authorities, whether domestic or national, are to
243
interpret and analyze the taxation laws and regulations in the same line as we do. Divergent
interpretations may lead to future disputes on taxation and related cost issues.
2.
Risks relating to our operations in Brazil.
a.
A substantial portion of our revenues is attained in Brazil; therefore, to a large extent,
we depend on the economic and political conditions of Brazil.
As of September 30, 2009, we obtained 53.28% of our operating income from revenues generated
by our subsidiary CTEEP. CTEEP’s properties, its operations and customers are located in Brazil.
Many of CTEEP suppliers are located outside Brazil and their prices are denominated in foreign
currency. Accordingly, CTEEP’s financial condition and results of operations greatly depend on the
macroeconomic conditions or policies prevailing from time to time in Brazil and the exchange rates
between the Brazilian reais and such other currencies.
Any adverse material effect on CTEEP’s financial condition or results of operations will materially
and adversely affect our financial condition and results of operations, and, consequently, our ability
to pay dividends and make other distributions.
As far as CTEEP’s operational results are concerned, these may be adversely affected if ANEEL
does not readjust tariffs under conditions favorable to the Company. Setting the revenues
applicable for the Company in respect of the provision of its services is inherent to the Concession
Contracts, including readjustments and revisions in the manner foreseen in this contract and in the
Concessions Law. ANEEL has the qualification to regulate how calculations are made and
revenues are set, editing corresponding norms. The Concessions Law foresees mechanisms for
adjusting revenue throughout concession contracts, which were contemplated in the Company’s
Concession Contract: (i) annual tariff adjustment; (ii) tariff adjustment every four years; and (iii)
special tariff revision. Contracts are readjusted annually on the date the Concession Contract was
signed. The tariff adjustment compensates the effect inflation has on revenues and its objective is
to ensure maintaining the contracts’ economic-financial balance. Thus the Periodic Tariff Revision
occurs every four years by means of determining the new asset remuneration base and the
calculation of respective revenues necessary for: (i) the adequate remuneration of investments
conducted, (ii) hedging of efficient operational costs and (iii) review of sector encumbrances, (iv)
depreciation and amortization costs.
In addition to the aforementioned mechanisms, the Special Tariff Revision may be requested at any
time so as to repair the Concession Contract’s economic-financial balance, provided that the
Company proves the need.
In the event of tariff readjustments or revisions, or even still, the application of clause reestablishing
economic-financial balance, does not adequately remunerate the Company’s assets or does not
rest the financial condition, the Company’s financial condition and operational results may be
adversely affected.
b. ISA Capital may be bound to make substantial payments to the Government of Sao
Paulo, in connection with Purchase Price Adjustments .
Law No. 4,819 dated August 26, 1958 enacted in the State of Sao Paulo, or Law 4,819/58, created
a supplemental defined benefit pension plan for employees of companies controlled by the
Government of the State of Sao Paulo, or the Government of Sao Paulo, applicable to former
employees and retirees of CTEEP and of CTEEP's predecessors employed until 1974. Prior to ISA
Capital acquisition of 21.00% in CTEEP, the State Government of Sao Paulo - through CTEEP –
made payments on account of liabilities arising under this plan directly to Fundação CESP, a non-
244
profit entity organized under the laws of Brazil. However, in 2004, the State Government of Sao
Paulo determined that its liability to the beneficiaries of Law 4,819/58 did not include certain
extraordinary compensation items, such as certain overtime compensation and additional
compensation for hazardous working environment and dangerous working condition, and should be
further reduced to account for withholding of social security obligations and the application of
certain limitations allegedly applicable to payments by the State Government of Sao Paulo. As a
result of the position taken by the State Government of Sao Paulo, numerous retirees and former
employees of CTEEP entitled to the benefits contemplated by Law 4,819/58 commenced lawsuits
against CTEEP and the Government of Sao Paulo and obtained court orders that require CTEEP to
continue to make payments of the full benefits contemplated by Law 4,819/58, notwithstanding the
position taken by the State Government of Sao Paulo.
According to Edital No. SF/001/2006 Alienação de Ações do Capital Social da CTEEP —
Companhia de Transmissão de Energia Elétrica Paulista, or EDITAL, and the share purchase
agreement entered into by ISA Capital with the State Government of Sao Paulo on July 26, 2006, or
the Share Purchase Agreement, the government of Sao Paulo acknowledged that it is liable for
payments owed to former employees and retirees under Law 4,819/58 up to the amounts indicated
in the Share Purchase Agreement, excluding line items relating to extraordinary compensation and
other limitations described in EDITAL and in the Share Purchase Agreement. The Share Purchase
Agreement finds that those excemptions of liability benefiting the State Government of Sao Paulo
amount to an average of near R$135 million per year, up to 2015. In addition, the Share Purchase
Agreement provides that the State Government of Sao Paulo shall reimburse CTEEP all amounts
required in conformity with any rulings entered against CTEEP, in connection to claims under the
supplemental pension plan defined by Law 4,819/58, subject to the above-mentioned deductions
and limitations and expressly set forth in the Share Purchase Agreement. As a part of the sale of
31,340 million CTEEP Common Shares representing 50.10% of the CTEEP Common Shares and
21.00% of the total issued and outstanding shares of CTEEP’s capital stock sold by the State
Government of Sao Paulo by means of public bid, conducted at BOVESPA in conformity with
Federal Law No. 8,987 dated February 13, 1995, State Laws Nos. 9,361 dated July 5, 1996 and
11,930 dated May 20, 2005, and Edital No. SF/001/2006 Alienação de Ações do Capital Social da
CTEEP - Companhia de Transmissão de Energia Elétrica Paulista, or the CTEEP Privatization
Program, the State Government of Sao Paulo determined R$24.11 as minimum purchase price per
each lot of 1,000 shares, which amount, in accordance with EDITAL and the Share Purchase
Agreement, reflects a reduction in the State Government's valuation of CTEEP by an amount equal
to the difference between the amounts paid and estimated to be paid by CTEEP to the beneficiaries
of Law 4,819/58 and the amounts which the State Government of Sao Paulo has agreed to pay to
ISA Capital on account of such liabilities pursuant to the Share Purchase Agreement.
According to the mechanism for adjustment of the purchase price provided in EDITAL and in the
Share Purchase Agreement, or the Purchase Price Adjustment, ISA Capital is required to pay to the
State Government of Sao Paulo on an annual basis, as additional consideration, an amount equal
to approximately 21% of the positive difference between the amounts estimated in the Share
Purchase Agreement including those payable by CTEEP in conformity with any awards under Law
4,819/58 proceedings, during each year and for which CTEEP is not entitled to reimbursement from
the State Government of Sao Paulo, and any amounts actually paid by CTEEP to the relevant
beneficiaries during ese year and for which CTEEP is not entitled to reimbursement from the State
Government of Sao Paulo. In addition, if CTEEP obtains a final, non-appealable judgment
releasing it from any further liability in connection with the payments to the beneficiaries of Law
4,819/58, ISA Capital will be required to pay to the State Government of Sao Paulo, as additional
consideration, a final Purchase Price Adjustment equal to approximately 21.00% of the net present
value of the remaining annual estimates of such payments set forth in the Share Purchase
Agreement, and ISA Capital will no longer be required to pay the annual Purchase Price
Adjustment.
245
In addition to the cash consideration paid for the mandatory public offering of shares, ISA Capital is
required to pay those shareholders of CTEEP who sold their shares on occasion of the mandatory
public offering of shares, as additional consideration, an amount per share of CTEEP common
stock equal to 80% of the amount per share of CTEEP common stock that ISA Capital is required to
pay to the State Government of Sao Paulo pursuant to the Purchase Price Adjustment.
ISA Capital’s Financial Statements as of September 30, 2009 show long-term liabilities of close to
R$350.29 to honor its liabilities to the State Government of Sao Paulo and the OPA investors with
respect to Purchase Price Adjustments under Law 4,819/58.
The amounts which the State Government of Sao Paulo may required to be paid by ISA Capital on
account of Purchase Price Adjustments, as well as all obligations under Law 4,819/58, for which
ISA Capital shall not receive any compensation from the State Government of Sao Paulo, might be
significant and may adversely affect CTEEP’s business, results of operations, financial condition
and its ability to pay dividends or make other distributions; therefore, these were provisioned and
are updated on monthly basis due to monetary variations.
c. Our capacity to administer CTEEP is subject to limitations and restrictions resulting from
the rules governing the CTEEP Privatization Program and the CTEEP Concession
Contracts.
In acquiring CTEEP shares under the CTEEP Privatization Program, ISA Capital agreed on certain
restrictions and commitments relating to the CTEEP, including, among others, restrictions with
respect to termination of employment contracts until May 31, 2009, relocation of CTEEP’s main
headquarters, continuance of the benefits and pension plan offered by CTEEP to its employees,
and continuance of CTEEP’s financial support to some non-profit organizations until 2008 and
2009.
As a result of these restrictions and commitments, CTEEP’s ability to make administrative
decisions, including those concerning implementation of its business strategy, shall be subject to
limitations.
d.
CTEEP’s ability to implement its business strategy is subject to several factors.
The strategy aimed at the expansion of CTEEP activities in the electricity transmission sector
depends on CTEEP’s ability to:
•
be granted with rights to construct and operate new transmission lines and substations,
under bids public;
•
satisfactorily complete the construction of new transmission projects, prevent construction
delays, unforeseen costs exceeding CTEEP’s budget, engineering and environmental
problems, and avoiding or settling labor issues and legal disputes relating to underlying
properties; and
•
maintain cash funds and credit facilities available to fund transmission projects and CTEE’s
operations.
Any such factors may have an adverse impact over CTEEP’s ability to perform its business strategy
and to generate sufficient funds to pay dividends or make other distributions.
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e.
The Brazilian Federal Government and the State Government of Sao Paulo, which
may have interests differing from ours, hold a substantial portion of CTEEP’s capital
stock.
The Brazilian Federal Government, indirectly holds a total of close to 9.85% of CTEEP Common
Shares, and close to 35.33% of CTEEP capital stock. The State Government of Sao Paulo directly
and indirectly holds nearly 13.94% of CTEEP preferred shares and nearly 7.76% of CTEEP capital
stock. The rights of the Brazilian Federal Government and the State Government of Sao Paulo as
CTEEP shareholders may restrict the entity’s abillity to respond in view of market progresses, to
participate in given transactions or to otherwise introduce changes in its business and operations;
furthermore, it may expose CTEEP to public or political pressure, likely to affect CTEEP’s business,
results of operations, financial condition and its ability to pay dividends or make other distributions.
f.
CTEEP is subject to extensive regulation and governmental laws relating the Brazilian
electricity industry, which may affect its bussiness, results of operations and financial
condition.
Core activities of CTEEP—implementation, operation and maintenance of electricity transmission
systems— are regulated and supervised by the Brazilian Federal Government through several
authorities including BMME, ANEEL and ONS. Historically, the authorities have exercised
significant influence over CTEEP’s activities. BMME, ANEEL and ONS have discretional authority
to implement, modify and interpret policies and rules applicable to the various aspects of CTEEP
business. The areas most affected include operations, maintenance and safety.
CTEEP has two long-term concessions for the provision of electricity transmission services in the
State of Sao Paulo under concession contracts entered into with ANEEL, on behalf of the Brazilian
Federal Government (hereinafter referred to as the “Concession Contracts”). Concession Contract
No. 059/2001, dated June 20, 2001, or Concession Contract 059/2001, refers to CTEEP primary
substations and electricity transmission lines and expires in 2015. Concession Contract No.
143/2001, dated December 21, 2001, or Concession Contract 143/2001, refers to the Chavantes–
Botucatu electricity transmission line and expires in 2031. Concession Contracts are also subject to
ANEEL’s decision-making authority. CTEEP Regulated Revenues are determined in conformity with
the Concession Contracts entered into with ANEEL, and are subject to ANEEL’s decision-making
authority. The Concession Contracts provide two types of rate review: (1) annual adjustment,
designed to setoff inflation effects over tariffs; and (2) special review, concerning changes in laws or
unforeseeable events beyond the control of CTEEP and likely to cause increases on its operating
costs. Concession Contract 059/2001 also contemplates a periodic review, to take place every 4
years and designed to respond to other variations in CTEEP’s costs and rates of return on invested
capital, or Periodic Review of Permitted Annual Revenues.
Any significant regulatory measure adopted by BMME, ANEEL and ONS may entail significant
burden over CTEEP activities, and may have a material adverse effect over its business, results of
operations and financial condition.
g.
Contrary decisions in judicial proceedings where CTEEP is a party, may adversely
affect our consolidated results of operations and financial condition.
CTEEP is a party to several judicial proceedings involving material claims. These proceedings refer
to a wide range of subjects, including administrative proceedings, labor claims, regulatory charges
and taxes and contractual disputes. In addition, CTEEP is a party to several judicial proceedings
that commenced earlier or later than the spin-off that led to the establishment of CTEEP in 1999;
these proceedings involve obligations relating to assets segregated from CESP—Companhia
Energética de São Paulo, a vertically-integrated State-owned electricity generation, transmission
and distribution company, or CESP, and transferred to CTEEP and, on occasion of the merger of
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EPTE—Empresa Paulista de Transmissão de Energia Elétrica S.A., or EPTE, with CTEEP. EPTE
was established once Eletropaulo—Eletricidade de São Paulo S.A., a vertically-integrated Stateowned electricity generation, transmission and distribution company, or Eletropaulo, approved the
Protocol for Partial Spin-off of Eletropaulo (Protocolo de Cisão Parcial da Eletropaulo), the
Eletropaulo Spin-off Protocol, whereby the assets, liabilities and concession rights of Eletropaulo
were transferred to three different companies in order to segregate generation, transmission and
distribution business of Eletropaulo attending the new electricity sector model proposed at that time.
Under the Eletropaulo Spin-off Protocol, all of Eletropaulo’s assets, liabilities and concession rights
for electricity transmission were transferred to EPTE.
Many of those proceedings, including the executive action filed by Centrais Elétricas Brasileiras
S.A., a stock company controlled by the Brazilian Federal Government, or Eletrobrás, against
Eletropaulo in 1989 and CTEEP as successor of EPTE, also involve substantial claims. Given that
we derive 37.50% of CTEEP’s net profit, we can be negatively affected inasmuch as a final decision
in any of thse proceedings and/or the insufficiency of said reserves negatively affects CTEEP
business, financial conditiom and capacity to pay dividends or make ant other contributions in our
favor.
h.
CTEEP’s concessions authorizing it to transmit electricity, are subject to early
termination and caducity under given circumstances.
If CTEEP defaults its obligations under the Concession Contracts or under the applicable
regulations and rules, it may be exposed to penalties by ANEEL, including warnings, fines, and
temporary suspension of the right to participate in bids, takeover and termination of the relevant
concession. Penalties applicable by ANEEL vary according to the nature of the breach and the
magnitude of the damages caused to users, as well as penalties antformerly imposed to CTEEP in
the past four years, due to breach of Concession Contracts. If CTEEP files legal or administrative
actions to face any such penalties, their application will be stayed while the relevant cases are
settled.
Under given circumstances, following a breach to concession contracts, ANEEL may assume
control over CTEEP’s concession by issuing a resolution therein indicating the period, reasons,
objetives and limitations of the mentioned assumption of control by ANEEL, and designating a
receiver or administrator to manage the concession. Within 30 days following issuance of the
resolution, ANEEL is required to commence administrative proceedings to justify its assumption of
control and to evaluate the consequences of the underlying default. If these proceedings are not
concluded within 180 days thereafter, the assumption of control shall be voided.
In addition, ANEEL is empowered to terminate CTEEP’s concessions prior to their expiration, by
means of a warrant of expropriation or caducity.
Expropriation is the early cancellation of a concession due to public interest reasons.
Declaration of caducity entails repealing CTEEP’s concessions as a consequence of CTEEP’s
breach to its obligations under the relevant concession contract. If CTEEP breaches its obligations
under the Concession Contracts, whether in whole or in part, ANEEL may revoke the relevant
concession or impose legal and contractual penalties, as applicable. Specifically, ANEEL may
declare caducity of the concession if:
•
CTEEP provides inadequate or defficient services based on the rules, criterion, indexes and
parameters relating to service quality;
•
CTEEP breaches the applicable laws and regulations;
•
CTEEP ceases the provision of electricity transmission services, except in force majeure
events;
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•
CTEEP is no longer in economic, technical or operational condition to maintain adequate
level of services under the concession;
•
CTEEP fails to satisfy any penalties imposed in case of default, within the stated deadlines;
•
CTEEP fails to cure any serious disruption in the provision of electricity transmission
services, following ANEEL’s instruction to do so; or
•
the entry of a final unappelable decision against CTEEP by a competent court, adjudging
CTEEP’s liability for the non payment of taxes, including social security.
If ANEEL determines that CTEEP breaches any of its Concession Contracts, it must first give
CTEEP detalued information of the alleged breach and indicate the time during which CTEEP can
try to cure it. In order to declare concession caducity, ANEEL shall have to prove the alleged breach
in an administrtive proceeding and CTEEP sahll have the opportunity of defending itself. If an
adverse ruling is issued, ANEEL can declare caducity of the CTEEP concession.
In case of cancellation of a concession contract, or the issuance of a warrant instructing
expropriation or caducity of CTEEP’s concession, the latter shall be entitled to compensation from
ANEEL, for investments made on assets related to the provision of electricity transmission services,
to the extent that CTEEP has not recovered those investments by means of Regulated Revenues
under the Concession Contracts. However, caducity may occur without need of a decision as to
whether ANEEL is bound to compensatec CTEEP for any investments made in connection to the
concession subject matter of caducity.
Following the declaration of caducity, the Brazilian Federal Government shall not be liable to any
third parties or to the employees of concessionaire, effective on the caducity date. In addition, if
ANEEL believes that a concession contract would be detrimental for the adequate provision of
electricity transmission services contemplated under such agreement, ANEEL may commence an
administrative case to cancel the relevant concession contract.
In turn, CTEEP may seek termination of its Concession Contracts if a court determines that the
Brazilian Federal Government breached a concession contract.
The compensation to which CTEEP is entitled in case of early termination of its Concession
Contracts due to expropriation, caducity or cancellation, may be lesser than the current value of the
assets relating to those concessions. Additionally, if any of the Concession Contracts is terminated
as a result of default to CTEEP’s obligations, the Brazilian Federal Government would be
accountable for the compensation only after the termination and, the amount of such compensation
may be significantly reduced by reason of fines, penalties and damages caused to the Brazilian
Federal Government and/or ANEEL.
i. ANEEL may impose penalties on CTEEP or assume control over its concessions if
CTEEP defaults the terms under its Concession Contracts or the applicable rules and
regulations.
CTEEP must keep certain quality, safety and maintenance standards with respect to its electricity
transmission assets. ANEEL may impose penalties and restrictions on CTEEP due to default or
breach to its legal and contractual obligations relating to the mentioned standards. Depending on
the nature of the breach or default, CTEEP may be subject to any of the following measures:
•
warnings;
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•
penalties up to 2% of CTEEP’s revenues earned during the 12-month period precedent to
the breach;
•
judicial requirements preventing the construction of new transmission facilities or the
purchase of new equipment;
•
restrictions on the operation of existing equipment and transmission facilities;
•
temporary restriction to participate in bid processes relating to new concessions; and
•
early termination CTEEP’s concessions.
In addition to the above-described penalties, ANEEL may assume control (takeover) of CTEEP’s
concessions or assume its operations to secure adequate functioning of CTEEP’s electricity
transmission facilities and compliance with the applicable laws and regulations. Any of the abovementioned penalties or takeover by ANEEL of CTEEP’s concessions or its operations may entail
material adverse effects on CTEEP’s business, results of operations, financial condition and ability
to pay dividends or make other distributions.
j.
CTEEP is liable for losses and damages caused to third parties as a result of failures
in its electricity transmission lines, as well as for disruption or disturbance nonattributable to participant identified under the BSIN.
CTEEP is liable for:
•
losses and damages caused to third parties as a result of failures in the operation of its
equipment or transmission facilities, leading to disruption or disturbance in the distribution
and/or transmission systems; or
•
interruption or disturbance non-attributable to a participant in the BSIN. Damages are
allocated as follows: 35.7% to distributors, 35.7% to generators and 28.6% to transmission
companies, CTEEP included.
Neither ANEEL, ONS or the users of CTEEP’s electricity transmission system are insured against
such losses and disruption. Consequently, any losses or obligations resulting from such may entail
material adverse effects on CTEEP’s business, results of operations, financial condition and its
ability to pay dividends or make other distributions.
k.
CTEEP has significant pension liabilities likely to increase due to future actuarial
adjustments and the outcomes of pending litigations regarding CTEEP’s pension plans.
September 30 1997, Eletropaulo entered into an agreement with EPTE whereby certain pension
liabilities of Eletropaulo a Fundação CESP (a non-profit entity established under the laws of Brazil,
or Fundação CESP) were transferred by Eletropaulo to EPTE under EPTE’s spin-off process.
Those pension liabilities are proportional to the number of workers initially employed by Eletropaulo,
subsequently transferred to EPTE and finally to CTEEP. On November 28 1997, prior to the spinoff of its electricity transmission assets, CESP entered into an agreement with Fundação CESP,
therein changing its pension plan, from a defined benefit pension plan, to a mixed plan consisting of
pre-defined commissions (30%) and benefits (70%). To implement such changes, CESP agreed to
pay the total debt under the defined benefit pension plan, which was funded through monthly
installments for a 20-year period, the latest installment to be payable in the year 2017.
By the end of each fiscal year, an independent company conducts an actuarial valuation and
redefines any surplus or deficit relating to CTEEP’s pension liabilities with respect to CESP and
EPTE employees; the resulting amount is then added or subtracted from the pending balance of the
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debt to Fundação CESP and, the resulting amount is divided by the number of remaining
installments. In recent years, actuarial valuations have led to surplus, but there is no assurance that
such surplus will remain in the future and, in the event of deficit, the amount of CTEEP’s debt will
increase and its operating results and financial condition will be affected and will be likely to have
an adverse effect upon its ability to pay dividends or make other distributions.
In its Financial Statements CTEEP recorded accounts receivable amounting to the difference
between the value which CTEEP considers payable by the government of Sao Paulo in conformity
with Law 4,819/5, and the amount which the State Government of Sao Paulo actually pays on
account of such liabilities. If a court finds that the position of the State Government of Sao Paulo
with respect to its obligation under Law 4,819/58 is correct, we will be bound to pay such accounts
receivable and recognize the relevant loss. If it is desired that CTEEP recognizes such loss, its
results of operations, financial condition and ability to pay future dividends and other distributions
may be adversely and materially affected.
Additionally, in conformity with ANEEL Resolution No. 158/2005, or Resolution 158, if ONS
requests CTEEP to implement certain reinforcements relating its electricity transmission facilities for
the purposes of expanding the BSIN transmission capacity or to improve reliability, CTEEP shall
implement those reinforcements without need of prior authorization from ANEEL. However,
Resolution 158 is silent as to the procedure to determine the cap to increase CTEEP’s Permitted
Annual Revenues, in order to compensate CTEEP for the investments made in connection to such
reinforcements.
In an attempt to balance, on one hand, the interests of electricity consumers to obtain electricity at
reasonable prices, and the needs of CTEEP and other companies operating in the electricity sector
to be eventually profitable, on the other, ANEEL may undertake actions adversely affecting
CTEEP’s yields. ANEEL’s discretion to review CTEEP’s tariffs causes significant uncertainty as to
the operation of its business and revenues. To the extent that ANEEL fails timely delivery of any
significant tariff increases, CTEEP’s business, results of operations, financial condition and ability
to pay dividends or make other distributions may be adversely affected.
l.
The Government efforts to combate inflation may cause significant economic
uncertainty in Brazil, and may jeopardize CTEEP and our consolidated results.
In the past, Brazil experienced extremely high inflation rates. Inflation and the measures adopted by
the Brazilian Federal Government to fight it, have had significant negative effects over Brazilian
economy, thus increasing economic uncertainty and volatility in the Brazilian securities markets.
Measures by the Brazilian Federal Government to control inflation often included upholding of strict
monetary policies subject to high interest rates, thus restricting credit availability and reducing
economic growth. By the end of 2004, 2005, 2006, 2007 and 2008, official interest rates in Brazil
were 17.75%, 18.00%, 13.25%, 11.25% and 13.75%, respectively. As of September 30, 2009, the
official interest rate in Brazil was 8.75%.
Annual inflation rate measured per the IGP-M inflation index, has dropped from 20.10% in 1999
to -0.13% in 2008. However, the measures adopted by the Brazilian Federal Government, including
the reduction of interest rates, intervention in the exchange and stock market to adjust or set the
value of Brazilian reais, may give rise to inflation increases. If Brazil again experiences high-inflation,
provisions for annual inflation adjustments under our concession contracts might be insufficient to fully
hedge the effects derived from those increases.
Furthermore, in case of inflation increases, the Brazilian Federal Government may elect to increase
official interest rates. Increases in interest rates would not only affect CTEEP’s funding costs, but
also, would derive in material adverse effects over CTEEP and, consequently, over ourselves.
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m.
Exchange rate instability may entail material adverse effects on ourselves and the
trading price of our ADS.
In the past decades, Brazilian currency has experienced frequent and material devaluation vis-à-vis
the U.S. Dollar and other foreign currency. Therefore, the Brazilian Federal Government has
implemented numerous economic plans and has utilized different exchange rate policies, including
sudden devaluations, periodic minidevaluations during which the frequency of adjustments has varied
from daily to monthly, floating exchange rate systems, exchange controls and dual exchange markets.
From time to time there have been material fluctuations in the exchange rate between the Brazilian
reais and the U.S. Dollar and other currencies. For example, Brazilian reais were depreciated vis-àvis the U.S. Dollar, as follows: 9.30% in 2000, 18.66% in 2001 and 52.27% in 2002. As of
December 31, 2008, CTEEP has no indebtedness in foreign currency. Although Brazilian reais
was appreciated 8.12%, 11.81%, 8.65% and17.15% vis-à-vis U.S. Dollar in 2004, 2005, 2006 and
st
2007, respectively and depreciated 31.94% as of December 31 , 2008 (in accordance with
information published by the Central Bank of Brazil –Banco Central do Brasil-), no assurance can
be made to the end that Brazilian reais will not be again depreciated vis-à-vis the U.S. Dollar. On
September 30, 2009, the Brazilian reais appreciated 23.92%, the exchange rate being R$1.7781
per U.S.$1.00.
Depreciation of Brazilian reais vis-à-vis the U.S. Dollar may give rise to further inflationary
pressure in Brazil and cause interest rate increases; the above may negatively affect the Brazilian
economy as a whole, and produce material adverse effects on ourselves.
n.
It is possible that our shareholders do not receive the same financial information
concerning CTEEP, as other CTEEP shareholders do, as a result of differences in the
duties relating to disclosure of information between Colombia and Brazil.
Like any company listed in Brazil’s stock exchange, CTEEP is bound to meet the obligations on
reporting and disclosure of financial information, in conformity with the Brazilian rules governing the
public securities market, and the rules and regulations of the competent authority (Comissao de
Valores Mobiliários – CVM); these rules may differ in some material aspects with the Colombian rules
and obligations relating to disclosure of information to the SFC and the BVC. Consequently, under the
Brazilian rules of securities CTEEP’s shareholders may be entitled to receive additional information
from CTEEP, compared to the information received by our shareholders in conformity with the
Colombian rules.
O.
ASSETS ACQUISITION, OTHER THAN IN THE ORDINARY COURSE OF BUSINESS OF
THE ISSUER.
There is no direct evidence of risks associated to the acquisition of assets other than those pertaining
to the ordinary course of our business, which might affect the level of risk of any investment in the
Common Shares offerred.
P.
EXPIRATION OF SUPPLY AGREEMENTS.
There is no direct evidence of risks associated to the expiration of supply agreements, which might
affect the level of risk of any investment in the Common Shares offerred.
Q.
IMPACT FROM THE REGULATIONS AND REGULATIONS CONCERNING THE ISSUER
AND POSSIBLE CHANGES THEREON.
1.
Restrictions on foreign investment in Colombia.
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The General Regime for Capital Investments from abroad in Colombia, Decree 2080 of 2000,
previously amended from time to time, provides the manner how individuals or corporate entitties
non-resident in Colombia are permitted to invest and participate in the public securities market.
Among other requisites, this regime provides the registration of certain portfolio investments in
accordance with this decree and in conformity with the Colombian Central Bank (Banco de la
República) established procedures, the type of fund must be stated, as well a the amount of the
investment, the local administrator and the exclusive purpose of said investment. The registration
shall be carried out under the foreign invertor’s name, in the case of individual funds, and under the
fund itself, in the case of institutional funds.
Local administrators should have the responsibility of advisory provided to investors in regards to
exchange issues, in addition to the responsibility for sending information to control entities, the
Colombian Financial Superintendency and the Colombian Central Bank (Banco de la República)
under the terms and condition these authorities request.
Under these regulations, if a non-resident or his/her proxy fails to timely report or register its
exchange transactions relating to investments in Colombia before the Colombian Central Bank
(Banco de la República), it may be deprived of its rights to remit moneys abroad, it being an
infringment of the exchange regulations and grounds to assess penalties thereon. The Colombian
government, the Congress of the Republic of Colombia or the Colombian Central Bank (Banco de
la República) may elect not to reduce the restrictions applicable to foreign investments, and might
implement more restrictive rules in the future.
Furthermore, in accordance with the Colombian exchange rules, the Colombian Central Bank
(Banco de la República) may restrict the remittance of dividends abroad and/or the investments
denominated in foreign currency, in the event where the international reserves of the Republic of
Colombia fall below an amount equal to the imports made in three (3) months. This measure has
not been implemented since the enactment of the exchange regime in 1991. However, we may not
assure that the Colombian Central Bank (Banco de la República) will not implement it in the future.
2.
We are subject to extensive governmental laws and regulation that may affect our
business, results of operations and financial condition.
Our electricity transmission networks are subject to extensive Laws and Regulations regarding
electricity, the environment and other types at a national and local level, which affect many aspects
of our operations. Said Laws and Regulations are related to, among others, concessions, licenses,
permits and other required approvals, the rates we can charge for our services, the terms and
conditions applied to our services, our capacity for recovering several cost categories and the
acquisition, construction, and disposition of facilities on our behalf.
Even though we believe that our electricity transmission networks have been operated under
applicable material compliance of laws, regulations, concessions, licenses, permits and approvals,
our operations may not be able to comply at some time with all the laws and regulations, and the
remaining conditions established by means of applicable concessions, licenses, approvals and
permits. Furthermore, we may not have the capacity to renew our maintain all of our concessions,
licenses, permits and approval required for possessing or operating our electricity transmission
networks. The impossibility of renewing or maintaining any of our required concessions, licenses,
permits or approvals or our inability to satisfy any applicable legal requirement may result in
increased compliance costs, the need of addition capital goods expenses or a suspension of
operations, which may have a material adverse effect on our cash flow, financial condition and
results of operations.
The nature and degree of regulation and legislation affecting electricity companies in countries
where we operate has become significantly more complex in recent years and there, is no certainty
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that material changes will not occur or that existing policies and laws shall not be applied,
interpreted or complied with in a new or different manner, even in relation to electricity generation,
transmission, distribution and sale in countries where we operate.
Historically, such authorities have exercised significant influence over our activities. The most
affected areas include operations, maintenance and safety. We may not assure that the regulatory
framework currently in force for the electricity sector in the countries where we operate will continue
to be interpreted or applied by the competent authorities in those countries in a manner that does
not affect negatively our operations or our financial results. Furthermore, we may not assure that
new regulations in the countries where we operate will not affect negatively our business and
operations, and our ability to pay dividends and make other distributions.
Also, we may be subject to adverse adjustments on our Regulated Revenues and to other
measures adopted by agencies regulating our business and customers in the countries where we
operate.
In Colombia, CREG is presently finalizing a comprehensive review on the calculation method of
Regulated Revenues that remunerate the electric power transmission activity, in development of
which it issued CREG Resolution 011 of 2009, by which “the methodology and tariff formulas for the
remuneration of the electric power transmission activity in the National Transmission System are
established”. Continuing with this review process, we are expecting the publication of a particular
Resultion by the CREG for each one of the transmission companies where the asset base to be
remunerated is approved, on the basis of which the Liquidator and Administrator of the National
Transmission System Accounts shall calculate and invoice national transmiter revenues using the
methodology defined in CREG Resolution 011 of 2009 and applying compensations for service
quality, also in conformance with the same Resolution. .
In accordance with preliminary assessments we expect revenue to maintain itself at current levels
as a consequence of said revision, nonetheless, the final result and its impact shall be known only
once the CREG Resolution is issued and applied for each national transmitter. With respect to its
application and in accordance with the regulator’s information, the issuance of this particular
Resolution must take place in the coming months. See “Chapter 5 – Comments and Analysis by the
Management on the Results of Operations and Financial Condition of the Issuer and its Subsidiaries –
Trends, commitments or disclosed occurrences that may significantly affect liquidity of the issuer,
the results of its operations or its financial condition”.
Further, inclusion of more strict regulatory requisites concerning integrity of our electricity
transmission networks, may demand further expenditures on capital assets to satisfy the relevant
requisites.
On the other hand, given that we are controlled by the Colombian Government, we may also be
subject to fiscal control by CGR. Regulations relating to control and interpretation thereof may also
be amended or construed to grant CGR gerater powers over ourselves.
3.
A significant decrease of our Regulated Revenues or the enactment of new
regulations supressing indexation of our Regulated Revenues or the guarantee
system implemented to protect us in case of non-payment by our customers, might
negatively and significantly affect our business, results of operations and financial
condition, and our ability to pay dividends and make other distributions.
Revenues from our Colombian electricity transmission business are subject to government
regulation. Under the relevant laws and regulations, revenues from our electricity transmission
services are indexed based on IPP monthly changes with respect to operating assets not subject to
bidding (in general networks existirevisions made every five years according to criterion set forth by
CREG. In Colombia, our asset-related Regulated Revenues not subject to bidding processes
(existing network), representing nearly 83.12% of our revenue from assets used by STN, are
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currently subject to review by CREG. See “Impact of Regulations and Laws Concerning the Issuer
and of Possible Changes Therein. We are subject to an extensive governmental legislation and
regulation that may affect our business, the results of operations and financial condition”.
4.
Under Colombian law, our Bylaws and the declaration of our controlling shareholder, we
may be required to pay dividends, even if no sufficient cash is available to make those
payments.
Under the Colombian law, our Bylaws and the declaration of the Colombian Government in its capacity
as controlling shareholder, we are compelled to pay mandatory minimum dividends equal to 50% of our
adjusted annual net profits, according to figures set forth in financial statements submitted for the
approval of our annual General Meeting of Shareholders, and prepared on unaudited basis. However,
in some cases, such mandatory minimum dividends may equal 70% of our year net profits shown on
the financial statements submitted for the approval of our General Meeting of Shareholders, and
prepared on unaudited basis. The only event where we are not bound to pay mandatory dividends
occurs when our General Assembly of Shareholders, with the affirmative vote of at least 78% of the
Common Shares represented at the meeting, resolves not to distribute any dividends. See “Corporate
dividend policy”. Given that our net profits are calculated on the basis of accrual, rather than cash, we
may be required to pay dividends with respect to our net income (including the net income of our
subsidiaries and other related companies for the same period, to the extent of our interest in such
companies) even in the absece of reserved dividends distributed in cash by our subsidiaries and other
related companies for the same period, and even in the abasence of sufficient cash availabilities to pay
such minimum mandatory dividends.
Net income as of September 30, 2009 and for the years ended on December 31, 2008, 2007 and
2006, was Col$315,096 million, Col$236,593 million, Col$226,021 million and Col$150,469 million,
respectively; net income attributable to our interest in subsidiaries and other related companies for
the same periods was Col$154,989 million, Col$62,521 million, -Col$2,492 million and -Col$56,644
million, respectively; and dividends in cash by our subsidiaries and related companies for the same
periods were Col$22,651 million, Col$39,261 million, Col$43,720 million, and Col$33,951 million,
respectively.
Furthermore, under the agreements governing note issuances our affiliate ISA Capital, may not pay
dividends or make other distribuciones in cash to ourselves (including dividends received from CTEEP)
even in circumstances where it would be legally empowered to do so. See “Comments and Analysis
by the Management on the Results of Operations and Financial Condition of the Issuer and its
Subsidiaries – Restrictions agreed with the subsidiaries to transfer resources to the company”.
Failing sufficient moneys to pay dividends in conformity with the Colombian law, our Bylaws and the
declaration of our controlling shareholder, we may be forced to incurr in significant indebtedness to
fund such payment of dividends, thus adversely affecting our business, results of operations, financial
condition and our ability to pay dividends and make other distributions
R.
IMPACT OF ENVIRONMENTAL REGULATIONS.
We may be subject to substantial costs, including indemnization and penalties due to
environmental damages or changes in laws relating to environmental protection, which may
entail adverse effects over our business, financial condition or results of operations.
We are subject to extensive laws and regulations, both national and local, relating to environmental
protection. Given that we will provide electricity transmission services in countries with
environmentally protected areas, we are subject to regulations likely to render ourselves liable for
damages in any such protected areas. Under the laws of these countries, anyone who directly or
255
indirectly causes damages to the environment, may be adjudged liable for such damages,
regardless of whether or not these resulted from the fault by that person.
Furthermore, in some of the countries where we operate, companies from the electricity
transmission sector must obtain environmental licenses and permits from the relevant governmental
agencies, in order to conduct their business. Non-compliance with the laws and regulations from the
countries where we operate may lead to administrative, civil and criminal penalties, injunctions and
precautionary measures to secure their future compliance. Compliance of such obligations may
lead to (i) significant costs relating to the installation and maintenance of anti-pollution controls, (ii)
fines and penalties due to non-compliance, and (iii) potential limitations over our operations, likely to
include the caducity of any licenses or concessions or our right to provide electricity transmission
services. Remedial obligations may entail significant costs associated to the investigation and
remedy or cleaning-up of contaminated properties, as well as claims on the grounds of property
contamination or the impact over natural resources.
Although we consider that the operation of our electricity transmission networks substaintially
comply with the applicable safety and environmental laws and regulations, risks concerning costs
and major liabilities, including leaking and explosion, are inherent to the operation of electricity lines
and may lead to significant costs and liabilities, including those concerning claims for property
damages, personal injuries or death, as a result of the operations of the relevant electricity line.
In addition, governmental agencies and other authorities in the countries where we operate may
implement laws, regulations and policies stricter than those currently in force or seek more
restrictive interpretations of the existing laws and regulations; the above may require incurring in
additional expenses with respect to environmental compliance (including environmental licenses for
facilities and equipment that formerly did not require such environmental licenses or the requisite of
which had been previously excepted by law, in addition to further requirements for renewing the
existing license). Eventually, the amendment of environmental and health laws and regulations
may compel us to allocate budgetary amounts to fund capital expenses relating to the compliance
of such laws and regulations and, consequently, to destinate funds towards investments other than
those planned. Such change of destination, as well as the assessment of fines or the revokal of
licenses or concessions and other similar actions by governmental agencies, may bear material
adverse effects over our business, results of operations and financial condition, and over our ability
to pay dividends or make other distributions.
S.
EXISTENCE OF CREDITS COMPELLING THE ISSUER TO PRESERVE GIVEN
PROPORTIONS IN ITS FINANCIAL STRUCTURE.
1.
Loan-related commitments.
We agreed to meet the following indexes during the term of our credit agreements:
2.
To International Bank for Reconstruction and Development.
The (i) credit agreement related to the Power Market Development Project and (ii) the credit
agreement (Floating Rate Single Currency Loan) entered into among the International Bank for
Reconstruction and Development, as lender, us, as borrowers, and the Republic of Colombia, as
guarantor, dated March 26, 1996, which final maturity dates are scheduled for August 15 and
October 15, 2012, respectively, provide a number of commitments including the limitation to incurr
in further indebtedness, unless our net income in the year precedent to the indebtedness, or in a
twelve-month period ending prior to such date, amount to at least 1.5 times our estimated maximum
credit needs.
256
Furthermore, we are required to comply with the following financial commitments: (i) in each fiscal
period we are obliged to maintain a percentage not exceeding 23% of the total operating expenses
vis-à-vis the total operating income and (ii) funds from internal sources must be equivalent to no
less than 30% of our annual average of capital expenses incurred or expected to be incurred in a
given year determinado and in the next fiscal period.
257
T.
PENDING TRANSACTIONS LIKELY TO AFFECT THE ORDINARY COURSE OF
BUSINESS.
We have not undertaken any commitments to conclude merger or spin-off processes. Neither do we
have any commitments in connection to development of processes relating to acquisition of other
companies, except what is stated in Subparagraph L Chapter IV – “Financial Information – Firm
Commitments for the Acquisition of Future Investments”, or have entered into economic and/or
financial reorganization processes or dissolution, liquidation and/or creditors’ proceedings with respect
to our company.
U.
POLITICAL FACTORS, SUCH AS SOCIAL INSTABILITY, ECONOMIC EMERGENCY, ETC.
1.
The Colombian Government, which may have interests other than those of the
Common Shares holders, is the owner of a substantial portion of our capital
stock.
The Colombian Government holds directly a total of 52.94% of our Common Shares. In
circumstances involving a conflict of interests between the Republic of Colombia, on one side, and
the remaining shareholders, on the other, the Colombian Government may enforce its capacity to
control us in a manner beneficial for it and detrimental for the remaining shareholders.
The Colombian Government rights, in its capacity as controlling shareholder, may limit our flexibility
to respond to the market development, engage us into given transactions or otherwise introduce
changes to our business and operations, and may subject ourselves to political and public pressure,
thus affecting our business, results of operations, financial condition and our ability to pay dividends
or make other distributions.
2.
Some liabilities relating to given credits and other indebtedness may be accelerated
if the Colombian Government ceases to be our controlling shareholder.
Our liabilities concerning payment of given credits and other indebtedness under our credit
agreements may be accelerated if the Colombian Government ceases to be our controlling
shareholder. Acceleration of our payment obligations in the event of change of control may affect
our business, result of operations, financial condition and our ability to pay dividends and make
other distributions.
3.
A substantial portion of our consolidated revenues is denominated in Colombian
pesos, while a substantial portion of our consolidated indebtedness is denominated
in U.S. dollars and, therefore, to a large extent we depend on the economic
conditions and policies of Colombia.
We are a publicly traded stock company organized as a public utility company under the laws of
Colombia. A substantial portion of our property, operations and customers are located in Colombia,
and as of September 30, 2009 nearly 37.05% of our consolidated revenues are denominated in
Colombian pesos, while 16.45% of our consolidated financial liabilities are denominated en U.S.
dollars. Many of our suppliers are located outside Colombia, and their prices are denominated in
foreign currency. Accordingly, our financial condition and results of operations depend, to a large
extent, on the macroeconomic conditions and policies prevailing from time to time in Colombia, and
on the exchange rates between the Colombian peso and other currencies.
258
4.
Colombia has experienced several periods of violence and instability, and such
instability may affect the Colombian economy and ourselves.
Colombia has experienced several periods of criminal violence during the past four decades, mainly
due to activities by groups acting outside the law. As a response to those actions, the Colombian
Government has implemented a number of security measures and has strengthened its police and
military forces through creation of especialized units. Despite these efforts, activities by those
groups acting outside the law, still exist in Colombia.
However, we have adopted measures that are standard practices in the Colombian industry with
the aim of protecting our business against acts of violence. An example of those measures include
the entry of agreements with the Colombian military forces in order to secure protection of our
assets located in conflicting areas, implementation of security technologies and procurement of
insurance against terrorism, fire, sabotage and vandalism, among others. In the future, these
activities, their outbreaking and the violence associated thereto, may bear negative impact over the
Colombian economy or our business.
V.
COMMITMENTS KNOWN TO THE ISSUER, LIKELY TO ENTAIL CHANGE OF CONTROL
OVER ITS SHARES.
There is no knowledge of commitments of this nature.
W.
POTENTIAL DILUTION OF INVESTORS.
The Common Shares holders are subject to dilution of their interest in our capital stock.
To fund our growth initiatives we might be required to raise additional capital through public or
private issuance of shares or debt notes convertible into shares. Pursuant to the Colombian law and
our Bylaws, those issuances of securities may be conducted without granting preferencial rights to
our shareholders if such issuance without preferred rights is approved by the Assembly of
Shareholders through the affirmative vote of at least 70% of the Common Shares present at the
meeting. If our Assembly of Shareholders approves the issuance of new shares without preferred
rights for our current shareholders, then the shareholders’ interest may be diluted.
X.
RISKS RELATED TO INSURANCE COVERAGE.
Our insurance coverage might not be adequate.
We believe that at the present time we maintain customary insurance in the types and amounts
generally issued by the insurance marketa and contracted by companies devoted to electricity
transmission consistent with the legal requirements applicable to electricity transmission systems,
having a similar size and nature in the countries where we operate.
We are insured against losses or property damages, including damages resulting from electricity
malfunction, tornados, hurricane, earthquake and terrorism in the countries where we operate. This
insurance covers, in our case, and in Transelca and Internexa, losses up to US$50 million, except
in the case of damages caused by terrorist actions, which are subject to a limit of US$20 million; in
the case of ISA Bolivia, it covers up to US$10 million in all cases. In the case of CTEEP, the
insurance covers losses up to an approximate amount of US$80 million. In regards to ISA Peru,
REP, Consorcio Transmantaro and Internexa Peru, our insurance covers losses up to US$50
million. With the exception of Peru, our towers and transmission lines are excluded from the
259
coverage. There is no certainty that such insurance coverage will continue to be available in
reasonable commercial terms or at commercially reasonable rates or, that the insured amounts or
the proceeds from those insurance will compensate our losses in full. Our insurance coverage is
subject to limits and exclusions or limitations that we find reasonable, given the cost relating to the
obtention of such insurance and the current operation conditions.
In the event of total or partial loss of our assets and electricity transmission networks, any insurance
proceeds that we may receive in that connection may be insufficient in given situations for the
purposes of restoring our assets and electricity transmission networks to the condition existing prior
to the loss occurrence. It is possible that certain pieces of equipment might not be easily replaced
by reason of cost or non-availability, even though we have the insurance, given that these are
highly specific for the relevant system. Consequently, without prejudice of our reliance on
insurance, the location of our electricity transmission networks or the limitations existing over our
ability to acquire replacement equipment may give rise to significant delays in their replacement
and, therefore, produce losses in the transmission capacity, likely to have material adverse effects
over our business, results of operations and our ability to pay dividends or make other distributions.
Y.
CHANGES ON TAXATION REGULATIONS.
Changes in Colombian taxes may entail adverse impact over the taxes applicable in connection to
our Common Shares.
The income tax rate applicable companies in Colombia is 33%, since 2006 there have not been any
changes in Colombian tax legislation. During 2008 ISA and the Nation (Ministry of Mines and
Energy) entered into a judicial stability agreement for the electric power transmission activity for a
period of 20 years. This agreement basically stabilized income tax regulations, the following of
which are highlighted: income tax rate in force (33%), deduction of the inflationary component from
financial expenses, 40% special deduction for new investments in real productive fixed assets, a tax
discount for VAT paid in the import of machinery for transporting electricity and y assumed income
at 3% of liquid equity, as well as the temporary nature of taxes on equity. This agreement ensures
that, in the case of adverse modifications of regulations established in this agreement, said
regulations shall continue to be applied as long as the agreement is in effect.
There can be no certainty there will be no changes in Colombian taxes in the future that may
increase tax tariffs and/or withholding percentages of income taxes applicable to dividends, or that
may adversely affect the disposition of our Common Shares.
Z.
PENDING LITIGATION.
Any adverse decisions in litigations to which we are a party may adversely affect our results
of operations and financial condition
Directly or through our subsidiaries and related companies we are party to a number of judicial
proceedings relating major claims. These proceedings relate to a wide range of matters, including
administrative proceedings, labor claims, regulatory charges and contractual disputes.
As of September 30, 2009 we have reserved the amount of Col$441,358 million reflected in our
Audited Financial Statements, to cover any such litigation and consistent with the general
accounting principles applicable in Colombia and our provisioning policies. However, the final
outcomes from these legal proceedings is uncertain and, in case of adverse final decisions, our
business, financial condition and the ability to pay dividends or make other distributions may be
adversely affected. See “Risks Relating to Our Operations in Brazil”.
260
APPENDICES
APPENDIX A
CERTIFICATION OF THE GENERAL MANAGER OF
INTERCONEXIÓN ELÉCTRICA S.A E.S.P.
The undersigned, General Manager of the corporation Interconexión Eléctrica S.A. E.S.P.
demonstrate within my competence, that I employed the due diligence in the verification of the
content of this prospectus in a manner such that I certify its veracity and that it does not present
material omissions in information that may affect the decision of future investors.
rd
In witness whereof this is signed on then twenty-third (23 ) day of the month of November of the
year two thousand and nine (2009).
(signature of Luis Fernando Alarcón Mantilla)
Luis Fernando Alarcón Mantilla
General Manager
Interconexión Electrica S.A. E.S.P.
261
APPENDIX B
CERTIFICATE FROM STATUTORY AUDITOR OF INTERCONEXIÓN ELÉCTRICA S.A. E.S.P.,
ACCORDING TO HER CAPACITY
IA-20091109-1848
Messrs.
Interconexión Eléctrica S.A. E.S.P.
Medellín
Medellín, Antioquia
November 23, 2009
The financial statements of Interconexión Eléctrica S.A. E.S.P, NIT 860.016.610-3, for the years
st
ended December 31 , 2008, 2007 and 2006 were audited by another Statutory Auditor who issued
th
th
a report without any reservation to them on February 27 , 2009, February 15 , 2008 and February
th
th
14 , 2007, respectively. I as chosen as Statutory Auditor of the Company on March 30 , 2009 and
since then have carried out the procedures necessary for fulfilling my functions as Statutory Auditor.
I have reviewed the content of the prospectus for the emission and placing of Interconexión
Eléctrica S.A. E.S.P, common stock, to which this document is attached, to certify, in respect of my
th
competence: (i) the figures of the non-audited financial statements dated September 30 , 2009,
included is said prospects, are in accordance with the Company’s accounting records and official
books and (ii) based on statements of the Administration, I am not aware of any omissions of
information considered material and that may affect the decision of future investors
The financial, accounting and tax information is responsibility of the Company’s Management.
(signature of Alba Lucía Guzmán L.)
Statutory Auditor
Professional Card # 35265-T
Designated by Ernst and Young Audit Ltda. Tr-530
262
APPENDIX C
PERFORMANCE REPORTS AND FINANCIAL INFORMATION
Please refer to CDs corresponding to years 2006, 2007 and 2008 which include the performance
reports and financial information of the company, among others.
263
APPENDIX D
FORM INCLUDING THE BALANCE SHEET AND INCOME STATEMENTS OF ISSUER ENDING
ON THE IMMEDIATELY PRECEDING QUARTER
264
265
APPENDIX E – RELEVANT PROCEEDINGS UNDER WHICH THE ISSUER COMPANY IS A PARTY
Name of
defendant entity
or individual
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Rubén Darío Zuleta
Flórez y Beatriz
Inés Vélez Calle
Name of plaintiff
entity or individual
Dossier
No.
Empresas Públicas de
2000-1877
Medellín
Empresas Públicas de
Medellín
UTE APS
Interconexión
Eléctrica S.A. E.S.P.
ISA
200900140
200800996
200700491
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Administrative
Tribunal. Seventh
Chamber
Nullity of acts
and contracts
Nullity and
Redress
Allocation of the
cause list
Administrative
Tribunal of
Antioquia, Fifth
Deciding Chamber
18 Municipal Civil
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Gómez Cajiao y
Asociados
199803971
Lilia María Morales
200800251
Administrative
Tribunal of
Antioquia, Eighth
Chamber
12 Circuit
Administrative
Court
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Nelson Arturo
Parsons
2009-0083
29 Circuit
Administrative
Court
Grounds for Claim
Registration of
commercial borders
of Muña and Techo
plants
Remuneration for
common property
Civil Liability
Last Stage
Evidentiary Stage
Nullity due to lack of
jurisdiction and remittance to
Administrative Tribunal
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
High
High
Value in
Colombian
Pesos
15
946.670.400
15
2.750.701.546
15
32.018.325.993
10
10.984.264
High
20
2.000.000.000
Low
20
200.000.000
Low
3
Without value
High
Contractual
Remedy
Singular
summary
proceedings
Nullity of acts
and contracts
Nullity and
Redress
Direct
Compensation
Class Action
Class Action
Greater value of
contract 4500029529 Reply to addition to complaint
Breach of loan
agreement secured
with mortgage
Seizure
Nullity of contracts
due to nullity of the
administrative act of
Oct. 10/96, by which
ISA granted the
Contract to
Consorcio ACI Ltda.
– CEDIC S.A.
Summons
Death of a Spouse
caused by touching a
transmission line
Notification
Payments of
transfers from
ISAGEN and
ECOPETROL to
Villavicencio
Municipality
Answer to a Complaint
High
266
Name of
defendant entity
or individual
Ovelesa S.A.
Name of plaintiff
entity or individual
Interconexión
Eléctrica S.A. E.S.P.
ISA y Construcciones
y Equipos S.A.
José Pästor
Álvarez Ortiz
Interconexión
Eléctrica S.A. E.S.P.
Interconexión
Eléctrica S.A.
E.S.P. ISA
Sofonías Correa
Ministry of Mines
and Energy,
Interconexión
Eléctrica S.A.
E.S.P. ISA y
Consorcio S.O.T.
Martha Vidal Collado
Interconexión
Eléctrica S.A. E.S.P.
ISA
SISTEP y Seguros
Confianza
Patricia Elena
Zuluaga Urrea
Interconexión
Eléctrica S.A. E.S.P.
ISA
Orlando Antonio
Salas Villa
Interconexión
Eléctrica S.A. E.S.P.
ISA
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
1996-7705
1st Circuit Civil
Ordinary
General Civil
Proceedings
1999-0388
Circuit Civil
Ordinary Civil
2009-090
4th Circuit
Administrative
Court
2008-0204
4th Circuit Civil
Ordinary
General Civil
Proceedings
Singular
summary
proceedings
Dossier
No.
2008-0086
2000-490.
2007-3093
200886679
13th Administrative
Court
Administrative
Tribunal. Seventh
Chamber
5th Specialized
Prosecutor
Class Action
Action´ º
Grounds for Claim
Right of way
Breach of contract by
a firm went into
bankruptcy
Right of way
imposed for
transmitting
electricity and
telecommunications
Seizure
Class Action
Delays in
performance of a
work contract
Breach of contract
Intentional illegal
acts against public
bodies,
misrepresentation of
facts in a public
record and
ideological
misrepresentation in
a public record
Value in
Colombian
Pesos
Low
20
526.047.736
High
15
3.299.932
High
15
199.795.500
High
6
35.000.000
Answer to a Complaint
Low
2
Without value
Writ of nullity refusal
High
18
4.459.189.151
Arrest warrant
High
5
7.418.170.193
Summons
Nullity due to lack of
jurisdiction and remittance to
administrative courts, where
Ordinary General
the allocation of the cause list
Civil
was assigned to the Circuit 4th
Proceedings
De facto right of way
Court
Breach of loan
agreement secured
with mortgage
Integration of litisconsortium
Contractual
Remedy
Civil party
places on the
criminal
proceeding
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
267
Name of
defendant entity
or individual
Efraín Rivera
Muñoz et al.
Colombian
Government
Mincomunicaciones
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Name of plaintiff
entity or individual
Interconexión
Eléctrica S.A. E.S.P.
ISA
Dossier
No.
200800865
Judicial or
Administrative
Court
1st Criminal Court
of Specialized
Circuit
Type of
Proceedings at
Ordinary
Jurisdiction
Event of integral
indemnity for
damages
Action´ º
Interconexión
Eléctrica S.A. E.S.P.
ISA
2004-1819
MERILECTRICA
2006-2123
MERILECTRICA
2006-2124
Council of State
Administrative
Tribunal Third
Section
Administrative
Tribunal Third
Section
Nullity and
Redress
Nullity and
Redress
Superintendency of
Home Utilities
Interconexión
Eléctrica S.A. E.S.P.
ISA
2008-246
Administrative
Tribunal First
Section
Interconexión
Eléctrica S.A.
E.S.P. ISA
Electrificadora del
Atlántico S.A. E.S.P
2000-344
Administrative
Tribunal
Contractual
Direct
Compensation
Direct
Compensation
Grounds for Claim
Terrorist attacks
against ISA towers
Wrongful charge of
fine for
extemporaneity and
default interest ,
concession contract
New settlement on
capacity-related
charge for year 2005
New settlement on
capacity-related
charge for year 2006
Adjudging nullity of
Resolution No.
SSPD20082400007415 of
March 26, 2008 and
the presumptive act
due to the negative
administrative
silence caused
because SSPD’s
failure to timely solve
the recourses filed
against the same
Application for nullity
of Resolutions in
which default interest
related to accounts
of use of STN and
Energy Stock are
rejected
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Appeal against the judgment
High
2
850.000.000
Appeal
High
2
244.320.572
Evidentiary Stage
Low
6
1.000.000.000
Evidentiary Stage
Low
6
1.000.000.000
Notification of demand
High
8
923.000.000
Partial transaction
Low
2
12.962.252.636
268
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Interconexión
Eléctrica S.A.
E.S.P. ISA
Electrificadora de
Bolívar S.A. E.S.P. en
Liquidation
2001-1185
Administrative
Tribunal
Jhon Gallaguer
Barranco
Claudia Andrea
Córdoba
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
Interconexión
Eléctrica S.A.
Interconexión
Eléctrica S.A.
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Nullity and
Redress
2000-388
Administrative
Tribunal
Administrative
Tribunal
Ordinary
Jairo Navarro
200029634
Court of Civil
Circuit
Civil Ordinary
Right of way
Elias Martinez
Altamar
200029666
Court of Civil
Circuit
Civil Ordinary
Right of way
Wilfredo Bermeo
2000-450
Trial Court of
general jurisdiction
Civil Ordinary
Right of way
Hernando Botero
Maya
2000-481
Trial Court of
general jurisdiction
Civil Ordinary
Right of way
Virginia Gomez De
Cervantes
2000-498
Trial Court of
general jurisdiction
Civil Ordinary
Right of way
Arnulfo Dante
Rodriguez
2000-462
Trial Court of
general jurisdiction
Civil Ordinary
Right of way
Trial Court of
general jurisdiction
Civil Ordinary
Right of way
Nullity and
Redress
Gabriel Diago
CORELCA
2002-1631
2001-032
199712642
Council of State
Direct
Compensation
Grounds for Claim
Application for nullity
of Resolutions in
which default interest
related to accounts
of use of STN and
Energy Stock are
rejected
Compensation due
to occupation of a
real property
Civil Liability extra
contractual
Right of way
imposed for
electricity
Right of way
imposed for
electricity
Right of way
imposed for
electricity
Right of way
imposed for
electricity
Right of way
imposed for
electricity
Right of way
imposed for
electricity
Right of way
imposed for
electricity
Wrongful charge of a
tax
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Evidentiary Stage
Low
4
916.947.711
Closing arguments
Low
3
130.000.000
Answer to a Complaint
Low
7
4.000.000.000
Ruling stage
High
1
432.454
Ruling stage
High
1
928.000
Evidentiary Stage
High
2
3.032.052
Evidentiary Stage
High
2
7.385.600
Closing arguments
High
3
109.200
Appeal.
High
2
4.297.760
Closing arguments
High
1
402.400
Appeal.
High
3
744.000.000
269
Name of
defendant entity
or individual
E.S.P. ISA
Name of plaintiff
entity or individual
Jaime Gomez
Velásquez
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Rafael Gross B
Interconexión
Eléctrica S.A. E.S.P.
ISA
Inmobiliaria
SREDNI
Fernando Cadavid
Cencar S.A.
Flores III Ltda SCA
ESP
Superintendency of
Home Utilities
Jesus Roa
Luz Mery Ramirez
Interconexión
Eléctrica S.A.
E.S.P. ISA
Manuel Antonio
Gómez et al.
Minminas - CREG e
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A.
Municipality of Tuta
Kenzo Jeans S.A. y
DIKAR S.A.
Interconexión
Eléctrica S.A. E.S.P.
ISA
Type of
Proceedings at
Ordinary
Jurisdiction
Dossier
No.
Judicial or
Administrative
Court
2000-1424
Administrative
Tribunal
199611884
Court of Civil
Circuit
Ordinary
199713793
Court of Civil
Circuit
Ordinary
199610864
Court of Civil
Circuit
Ordinary
1998-988
Council of State
Direct
Compensation
2000-8499
Council of State
Nullity and
Redress
2001-132
199515692
Administrative
Tribunal
2008-0546
Council of State
Court of
Administrative
Circuit
Administrative
Tribunal. Third
Section
200700009
Circuit Civil
2005-1410
Civil Ordinary
Action´ º
Grounds for Claim
Direct
Compensation
Compensation for a
de facto right of way
Claim for nonpayment of a right of
way
Claim for nonpayment of a right of
way
Claim for nonpayment of a right of
way
Damages in
claimant’s real
property caused by
Lengupa river Central Chivor
discharge
Nullity and
Redress
Direct
Compensation
Nullity and Redress
of CREG Resolution
Nullity and Redress.
Superintendency
Resolutions
Compensation for
damages
Direct
Compensation
Indemnity for death
of minor child
Direct
Compensation
Occupancy of real
property
Right of way
imposed for
transmitting
Right of way
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Evidentiary Stage
High
4
494.550.068
Ruling stage
Low
3
400.000.000
Evidentiary Stage
Low
4
400.000.000
Evidentiary Stage
Low
5
400.000.000
Ruling stage
Low
1
77.490.000
Ruling stage
High
2
2.343.523.046
Ruling stage
High
2
1.424.829.534
Ruling stage
Low
2
30.000.000
Closing arguments
Low
4
20.000.000
Answer to a complaint
High
9
7.000.000.000
Evidentiary Stage
High
5
21.466.000
270
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Pedro Antonio
Osorno et al.
Interconexión
Eléctrica S.A. E.S.P.
ISA
Adolfo León
Angarita Angarita
Dossier
No.
200700010
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Circuit Civil
Civil Ordinary
Right of way
Interconexión
Eléctrica S.A. E.S.P.
ISA
Municipal Trial
Court of general
jurisdiction
Civil Ordinary
Right of way
Gladys Teresa
Herrera Monsalve
Interconexión
Eléctrica S.A. E.S.P.
ISA
Municipal Trial
Court of general
jurisdiction
Civil Ordinary
Right of way
Cristóbal Pineda
Pérez
Interconexión
Eléctrica S.A. E.S.P.
ISA
Municipal Trial
Court of general
jurisdiction
Civil Ordinary
Right of way
Maria Teresa
Carbonel et al.
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500683
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
Jaime Rafael
Rodríguez
Monterrosa
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600097
Municipal Trial
Court of general
jurisdiction
Civil Ordinary
Right of way
Eduardo Camacho
Piñeres
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500504
2nd Circuit Civil
Civil Ordinary
Right of way
Grounds for Claim
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Reconciliation
High
5
12.818.580
Filing of a claim
High
4
726.658
Filing of a claim
High
4
5.128.500
Filing of a claim
High
4
5.422.960
Notification of claim
High
5
11.999.200
Transfer of nullities
High
5
5.816.000
Transfer of nullities
High
5
6.383.200
271
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
María Stela
Quintero y Cia S en
C
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500401
7th Circuit Civil
Civil Ordinary
Right of way
Libby Yilena
Medina
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500438
5th Circuit Civil
Civil Ordinary
Right of way
Unknown Owner
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600119
6th Circuit Civil
Civil Ordinary
Right of way
Angel María Valle
Rivera
Interconexión
Eléctrica S.A. E.S.P.
ISA
200700079
5th Circuit Civil
Civil Ordinary
Right of way
Lilian Andrea
Vargas Garzón
Interconexión
Eléctrica S.A. E.S.P.
ISA
200700652
13 Administrative
Civil Ordinary
Right of way
Libardo Cabrera
Caballero
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600004
Municipal Trial
Court of general
jurisdiction
Civil Ordinary
Right of way
Sara María Puccini
Miranda
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600027
Municipal Trial
Court of general
jurisdiction
Civil Ordinary
Right of way
Grounds for Claim
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Evidentiary Stage
High
5
4.150.000
Evidentiary Stage
High
5
13.831.340
Notification of claim
High
5
360.000
Notification of claim
High
5
5.643.200
Accepting of a claim
High
5
2.743.500
Ruling
High
5
1.258.400
Transfer of nullities
High
5
759.000
272
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Willer Vargas
Garzón
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600038
Municipal Trial
Court of general
jurisdiction
Civil Ordinary
Right of way
Javier Hernández
Gil
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500203
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
Edith Sanjuan de
Bayona et al.
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600070
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
García Villegas y
Cia S en C
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500109
Circuit Civil
Civil Ordinary
Right of way
Succession of
Roberto Ebrath
Rojas
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600020
Circuit Civil
Civil Ordinary
Right of way
Urbano María
Arzuaga Córdoba
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600019
Circuit Civil
Civil Ordinary
Right of way
Altagracia Mejía
Peinado
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600024
Circuit Civil
Civil Ordinary
Right of way
Grounds for Claim
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Evidentiary Stage
High
5
15.511.532
Evidentiary Stage
High
5
4.700.000
Evidentiary Stage
High
5
9.400.000
Reconciliation
High
5
12.100.000
Evidentiary Stage
High
5
4.088.000
Evidentiary Stage
High
5
6.022.200
Evidentiary Stage
High
5
10.968.000
273
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Luis Peinado
Gómez
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600023
Circuit Civil
Civil Ordinary
Right of way
July Alberto
Calderón Lacouture
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600026
Circuit Civil
Civil Ordinary
Right of way
Rafael July
Maestre Cardiles
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600035
Circuit Civil
Civil Ordinary
Right of way
Eleovigildo García
Rojas
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600051
Circuit Civil
Civil Ordinary
Right of way
José Didier
Blandón Noreña
and other
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500150
Municipal Trial
Court of general
jurisdiction
Civil Ordinary
Right of way
Ruth Marina Rojas
Gómez and other
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500095
4th Circuit Civil
Civil Ordinary
Right of way
María Nicolaza
Polo de Arias
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500096
4th Circuit Civil
Civil Ordinary
Right of way
Grounds for Claim
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Evidentiary Stage
High
5
17.248.000
Evidentiary Stage
High
5
12.793.404
Notification of claim
High
5
6.889.000
Evidentiary Stage
High
5
624.000
Reconciliation
High
5
3.348.000
Transfer for pleading
High
5
5.060.000
Appeal of ruling
High
5
3.257.000
274
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
José Guillermo
Castro Castro
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500097
3rd Circuit Civil
Civil Ordinary
Right of way
Nelly Valera de
Castilla
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500085
1st Circuit Civil
Civil Ordinary
Right of way
Antonio Rafael Villa
Rodríguez
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500098
4th Circuit Civil
Civil Ordinary
Right of way
Cesar Enrique
Almenares Quiroz
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600044
4th Circuit Civil
Civil Ordinary
Right of way
July Lomanto Díaz
and other
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600036
1st Circuit Civil
Civil Ordinary
Right of way
L.C.M. Y Asociados
Ltda.
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600006
3rd Circuit Civil
Civil Ordinary
Right of way
Giovanny
Lacouture Pupo et
al.
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600060
4th Circuit Civil
Civil Ordinary
Right of way
Grounds for Claim
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Evidentiary Stage
High
5
6.007.000
Ruling
High
4
8.385.500
Transfer for pleading
High
4
2.380.000
Ruling
High
4
2.084.000
Evidentiary Stage
High
4
2.429.578
Reconciliation
High
5
19.764.500
Evidentiary Stage
High
5
6.560.000
275
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Himelda Ovalle
Aragón
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600024
4th Circuit Civil
Civil Ordinary
Right of way
Iván de Jesús
Jimenez Zuleta
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600033
2nd Circuit Civil
Civil Ordinary
Right of way
Gabriel Giraldo
Vergara
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600034
2nd Circuit Civil
Civil Ordinary
Right of way
Miguel Salomón
Arzuaga Almenares
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600045
3rd Circuit Civil
Civil Ordinary
Right of way
Valentina
Lacouture
Manrique and other
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600065
2nd Circuit Civil
Civil Ordinary
Right of way
Jorge Eliecer
Fernández de
Castro
Interconexión
Eléctrica S.A. E.S.P.
ISA
200500052
4th Circuit Civil
Civil Ordinary
Right of way
Jorge Díaz
Restrepo and other
Interconexión
Eléctrica S.A. E.S.P.
ISA
Circuit Civil
Civil Ordinary
Right of way
Grounds for Claim
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Evidentiary Stage
High
5
11.686.000
Transfer of Second Instance
High
5
3.620.000
Transfer for pleading
High
5
12.685.750
Appeal of ruling
High
5
1.553.480
Judicial examinations of
evidence
High
5
22.137.000
Ruling
High
5
8.597.000
Notification of claim
High
6
22.309.850
276
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
José Antonio Varón
Tafur
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600105
Circuit Civil
Civil Ordinary
Right of way
West Star
Company S.A.
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600119
Circuit Civil
Civil Ordinary
Right of way
MIG Sánchez
Medina y Cia S en
C
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600116
Circuit Civil
Civil Ordinary
Right of way
Dikar S.A.
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600165
Circuit Civil
Civil Ordinary
Right of way
Luz Helena Larotta
Medina et al.
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600164
Circuit Civil
Civil Ordinary
Right of way
Antonio Galvis
Forero
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600163
Circuit Civil
Civil Ordinary
Right of way
Felipe Restrepo
Acosta
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600173
Circuit Civil
Civil Ordinary
Right of way
Grounds for Claim
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Notification of claim
High
5
5.328.200
Notification of claim
High
5
58.415.999
Evidentiary Stage
High
5
21.230.000
Evidentiary Stage
High
5
92.040.000
Notification of claim
High
5
8.894.000
Notification of claim
High
5
3.600.000
Notification of claim
High
5
7.060.328
277
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Hernando Moreno
Bulla
Interconexión
Eléctrica S.A. E.S.P.
ISA
Gustavo Moreno
Ascucha
Interconexión
Eléctrica S.A. E.S.P.
ISA
Jesús Nicolás
Moreno Veloza
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Circuit Civil
Civil Ordinary
Right of way
200600065
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600063
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
Luis Alberto López
Medina
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600078
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
Eliecer Bernal
Vásquez
Interconexión
Eléctrica S.A. E.S.P.
ISA
200700026
Circuit Civil
Civil Ordinary
Right of way
Carmelo Guzmán
Ortiz
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600017
Council of State
Civil Ordinary
Right of way
Carlos Hernán
Arbelaez and other
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600112
Council of State
Civil Ordinary
Right of way
Grounds for Claim
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Evidentiary Stage
High
5
5.040.000
Evidentiary Stage
High
5
10.298.903
Evidentiary Stage
High
5
759.600
Evidentiary Stage
High
5
950.400
Notification of claim
High
5
2.198.000
Accepting of a claim
High
6
10.000.457
Accepting of a claim
High
6
5.332.000
278
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Maria Berta Noemi
Correa de Muñoz
et al.
Interconexión
Eléctrica S.A. E.S.P.
ISA
200700007
Council of State
Civil Ordinary
Right of way
Luis Fernando
Zambrano
Caballero
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600028
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
Ganadería
Caballero Pérez y
Cia S en C
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600032
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
José Rosario
Gamarra Sierra
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600030
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
José Rosario
Gamarra Vergara
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600031
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
Unknown Owner
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600049
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
Unknown Owner
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600059
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
Grounds for Claim
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Accepting of a claim
High
6
9.093.108
Ruling
High
5
39.759.552
Ruling
High
5
43.104.600
Evidentiary Stage
High
5
15.950.000
Evidentiary Stage
High
5
9.175.000
Notification of claim
High
5
5.416.000
Notification of claim
High
5
2.460.000
279
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Manuel Antonio
Álvarez
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600066
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
José Rosario
Gamarra Sierra
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600138
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
José Rosario
Gamarra Sierra
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600139
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
José Rosario
Gamarra Sierra
Interconexión
Eléctrica S.A. E.S.P.
ISA
200600140
Circuit Trial Court
of general
jurisdiction
Civil Ordinary
Right of way
Gonzalo Carreño
Interconexión
Eléctrica S.A. E.S.P.
ISA
200700004
2nd Circuit Civil
Civil Ordinary
Right of way
Efraín Sanabria de
Caro et al.
Interconexión
Eléctrica S.A. E.S.P.
ISA
2009000286
1st Circuit Civil
Civil Ordinary
Right of way
Luis Antonio
Alquichire and
other
Interconexión
Eléctrica S.A. E.S.P.
ISA
200900285
1st Circuit Civil
Civil Ordinary
Right of way
Grounds for Claim
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Notification of claim
High
5
8,491,000
Evidentiary Stage
High
5
4,175,000
Evidentiary Stage
High
5
1,350,000
Evidentiary Stage
High
5
7,000,000
Notification of claim
High
5
4.304.000
Filing of a claim
High
4
6.658.400
Filing of a claim
High
4
9.876.650
280
Name of
defendant entity
or individual
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Marta Cecilia
Ramírez
Interconexión
Eléctrica S.A. E.S.P.
ISA
200900403
5th Municipal Civil
Civil Ordinary
Right of way
Miguel Armando
Martínez Rivera
Interconexión
Eléctrica S.A. E.S.P.
ISA
200900284
1st Circuit Civil
Civil Ordinary
Right of way
Jairo Antonio
Sanabria de Caro
Interconexión
Eléctrica S.A. E.S.P.
ISA
200900478
5th Municipal Civil
Civil Ordinary
Right of way
Martha Cecilia
Solano Naranjo
Interconexión
Eléctrica S.A. E.S.P.
ISA
200900395
1st Municipal Civil
Civil Ordinary
Right of way
Fabio Alberto Maya
and other
Interconexión
Eléctrica S.A. E.S.P.
ISA
200900270
2nd Circuit Civil
Civil Ordinary
Right of way
Interconexión
Eléctrica S.A. E.S.P.
ISA
200900414
4th Municipal Civil
Civil Ordinary
Right of way
2002 0003
Administrative
Tribunal of
Cundinamarca
Nullity of acts
and contracts
Nullity and
Redress
Pamocol Ltda
La Nación Ministry of Mines
and Energy Comisión de
EMGESA S.A. E.S.P.
Grounds for Claim
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Right of way
imposed for
transmitting
electricity and
telecommunications
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Filing of a claim
High
4
9.684.125
Filing of a claim
High
4
45.030.845
Filing of a claim
High
4
12.018.485
Judicial examinations of
evidence
High
4
12.020.350
Filing of a claim
High
4
28.171.725
Filing of a claim
High
4
10.397.450
Appeal
Low
18
8.737.560.000
281
Name of
defendant entity
or individual
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Name of plaintiff
entity or individual
EMGESA S.A. E.S.P.
CHIVOR S.A. E.S.P.
PROELÉCTRICA &
CÍA. S.A. E.S.P
Dossier
No.
Judicial or
Administrative
Court
2001 1091
Administrative
Tribunal of
Cundinamarca.
First Section
2004
05441
Administrative
Tribunal of
Antioquia.
Deciding Chamber
2002 2366
Administrative
Tribunal of
Antioquia. Second
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Application of nullity
Low
18
8.405.140.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Answer of a claim
Low
18
13.102.000.000
Nullity and
Redress
Liquidation of energy
sale for period from
April 1 to 30, 2001
based on Resolution
CREG 034 of 2001
Summoning to join
proceedings as third-party
guarantor
Low
18
1.222.458.738
282
Name of
defendant entity
or individual
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
Name of plaintiff
entity or individual
CHIVOR S.A. E.S.P.
BETANIA S.A. E.S.P.
BETANIA S.A. E.S.P.
CHIVOR S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2004 0841
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
2005 5918
Administrative
Tribunal of
Antioquia
2004 4619
Administrative
Tribunal of
Antioquia. First
Deciding Chamber
2003 1293
Administrative
Tribunal of
Antioquia.
Seventh Deciding
Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
8.737.560.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal for Reversal
Low
18
138.127.502.200
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
143.287.202.200
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
4.104.000.000
283
Name of
defendant entity
or individual
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Grounds for Claim
Last Stage
Nullity and
Redress
Liquidation of energy
sale for period from
December 1 to 31,
2002 based on
Resolution CREG
034 of 2001
Transfer of nullities
Low
18
130.286.847
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.615.350.000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.396.160.000
Evidentiary Stage
High
18
911.523.879
2003 1841
2004 4312
Administrative
Tribunal of
Antioquia.
Deciding Chamber
BETANIA S.A. E.S.P.
2004 6284
Administrative
Tribunal of
Antioquia
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
FIDUCIARIA LA
PREVISORA S.A
2007
03323
Administrative
Tribunal of
Nullity of acts
and contracts
Contractual
Action
Breach of
commercial agency
BETANIA S.A. E.S.P.
Nullity of acts
and contracts
Nullity of acts
and contracts
Value in
Colombian
Pesos
Action´ º
Administrative
Tribunal of
Antioquia.
Deciding Chamber
PROELÉCTRICA &
CÍA. S.A. E.S.P
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
284
Name of
defendant entity
or individual
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Name of plaintiff
entity or individual
CHIVOR S.A. E.S.P.
BETANIA S.A. E.S.P.
EMGESA S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
Antioquia. Tenth
Deciding Chamber
2002 4720
Administrative
Tribunal of
Antioquia.
Deciding Chamber
2005 7199
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
2006 0118
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Action´ º
Grounds for Claim
agreement entered
into by and between
Electro Sucre and
ISA (now, XM)
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
3.374.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
1.990.730.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Notification of claim
Low
18
4.884.200.000
285
Name of
defendant entity
or individual
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Dossier
No.
Judicial or
Administrative
Court
2006 0126
Administrative
Tribunal of
Antioquia.
Deciding Chamber
EMGESA S.A. E.S.P.
024721 –
2001 0367
Administrative
Tribunal of
Antioquia. Sixth
Deciding Chamber
CENTRAL
HIDROELÉCTRICA
DE BETANIA S.A.
E.S.P.
2003 1288
- 2008
0082
Name of plaintiff
entity or individual
CHIVOR S.A. E.S.P.
TERMOCANDELARIA 2002 0046
C.S.A E.S.P.
- 0198-8
Administrative
Tribunal of
Antioquia. Sixth
Deciding Chamber
Administrative
Tribunal of
Antioquia. Sixth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Answer of a claim
Low
18
5.546.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
81.581’688.859
Summoning to join
proceedings as third-party
guarantor
Low
18
2.772.730.000
Summoning to join
proceedings as third-party
guarantor
Low
15
2.374.678.919
Nullity of acts
and contracts
Nullity and
Redress
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Liquidation of energy
sale for period from
July 1 to 31, 2001
based on Resolution
286
Name of
defendant entity
or individual
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Name of plaintiff
entity or individual
BETANIA S.A. E.S.P.
BETANIA S.A. E.S.P.
PROELÉCTRICA &
CÍA. S.A. E.S.P
Dossier
No.
Judicial or
Administrative
Court
2002 2463
Administrative
Tribunal of
Antioquia
2002 2501
2002 2367
4th Civil Court of
Cartagena Circuit
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Action´ º
Grounds for Claim
CREG 034 of 2001
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
2.102.130.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
2.082.150.000
Nullity and
Redress
Liquidation of energy
sale for period from
September 1 to 30,
2001 based on
Resolution CREG
034 of 2001
Summoning to join
proceedings as third-party
guarantor
Low
18
651.554.227
287
Name of
defendant entity
or individual
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
Name of plaintiff
entity or individual
BETANIA S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2002 3254
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
2002 2066
Administrative
Tribunal of
Antioquia. Sixth
Deciding Chamber
EMGESA S.A. E.S.P.
2002 3504
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
EMGESA S.A. E.S.P.
2002 2364
- 2006
0273
Administrative
Tribunal of
Antioquia.
Deciding Chamber
PROELÉCTRICA &
CÍA. S.A. E.S.P
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
2.080.860.000
Nullity and
Redress
Liquidation of energy
sale for period from
November 1 to 30,
2001 based on
Resolution CREG
034 of 2001
List fixing
Low
18
421.022.941
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal for Reversal
Low
18
8.568.150.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Refuse of appeal
Low
18
8.343.150.000
288
Name of
defendant entity
or individual
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
Name of plaintiff
entity or individual
CHIVOR S.A. E.S.P.
BETANIA S.A. E.S.P.
CHIVOR S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2002 3506
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
2002 3521
Administrative
Tribunal of
Antioquia
2002 2372
Administrative
Tribunal of
Antioquia.
Deciding Chamber
Administrative
Tribunal of
TERMOCANDELARIA
C.S.A E.S.P.
2001 4853
Type of
Proceedings at
Ordinary
Jurisdiction
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
2.914.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Administrative Tribunal takes
over the judicial cognizance
Low
18
2.247.090.000
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Administrative Tribunal takes
over the judicial cognizance
Low
18
2.858.000.000
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Summoning to join
proceedings as third-party
Low
18
2.858.000.000
Nullity of acts
and contracts
Nullity of acts
and contracts
289
Name of
defendant entity
or individual
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Name of plaintiff
entity or individual
EMGESA S.A. E.S.P.
CHIVOR S.A. E.S.P.
CHIVOR S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
Antioquia.
Deciding Chamber
2002 3501
Administrative
Tribunal of
Antioquia.
Deciding Chamber
2002 4207
Administrative
Tribunal of
Antioquia.
Deciding Chamber
2002 2362
Administrative
Tribunal of
Antioquia.
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Action´ º
Grounds for Claim
Resolutions CREG
077 and 111 of 2000
Last Stage
guarantor
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Refuse of appeal
Low
18
8.599.280.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Administrative Tribunal takes
over the judicial cognizance
Low
18
3.330.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.971.000.000
290
Name of
defendant entity
or individual
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Name of plaintiff
entity or individual
BETANIA S.A. E.S.P.
BETANIA S.A. E.S.P.
BETANIA S.A. E.S.P.
BETANIA S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2003 3126
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
2002 1640
Administrative
Tribunal of
Antioquia
2002 4260
2002 2370
Administrative
Tribunal of
Antioquia. First
Section
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Liquidation of energy
sale for period from
May 1 to 31, 2002
based on Resolution
CREG 034 of 2001
Appeal against refusal of
leave to appeal
Low
18
2.680.770.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.095.630.000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.265.370.000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.115.240.000
Nullity of acts
and contracts
Nullity and
Redress
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
291
Name of
defendant entity
or individual
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Dossier
No.
Judicial or
Administrative
Court
2002 1642
- 2007
0315
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
TERMOCANDELARIA
C.S.A E.S.P.
2002 1645
- 2007
0319
Administrative
Tribunal of
Antioquia. First
Deciding Chamber
BETANIA S.A. E.S.P.
2002 1643
- 2008
0065
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
Name of plaintiff
entity or individual
TERMOCANDELARIA
C.S.A E.S.P.
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Liquidation of energy
sale for period from
August 1 to 31, 2001
based on Resolution
CREG 034 of 2001
Summoning to join
proceedings as third-party
guarantor
Low
18
2.015.670.478
Nullity and
Redress
Liquidation of energy
sale for period from
June 1 to 30, 2001
based on Resolution
CREG 034, 2001
Administrative Tribunal takes
over the judicial cognizance
Low
18
707.766.246
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.082.640.000
292
Name of
defendant entity
or individual
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
Name of plaintiff
entity or individual
BETANIA S.A. E.S.P.
CHIVOR S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2002 0896
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
2002 3502
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
TERMOCANDELARIA
C.S.A E.S.P.
2002 2775
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
2002 1641
- 2007
0561
Administrative
Tribunal of
Antioquia.
Deciding Chamber
BETANIA S.A. E.S.P.
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.072.080.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.944.000.000
Nullity and
Redress
Liquidation of energy
sale for period from
January 1 to 31,
2002 based on
Resolutions CREG
034 and 038 of 2001
Summoning to join
proceedings as third-party
guarantor
Low
18
1.386.402.219
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.071.560.000
293
Name of
defendant entity
or individual
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Name of plaintiff
entity or individual
PROELÉCTRICA &
CÍA. S.A. E.S.P
PROELÉCTRICA &
CÍA. S.A. E.S.P
PROELÉCTRICA &
CÍA. S.A. E.S.P
Dossier
No.
Judicial or
Administrative
Court
2002 2448
Administrative
Tribunal of
Antioquia. First
Deciding Chamber
2002 1638
- 2007
00209
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
2002 1193
Administrative
Tribunal of
Antioquia. First
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Liquidation of energy
sale for period from
December 1 to 31,
2001 based on
Resolution CREG
034, 2001
Appeal for Reversal
Low
18
588.143.753
Nullity and
Redress
Liquidation of energy
sale for period from
June 1 to 30, 2001
based on Resolution
CREG 034, 2001
Administrative Tribunal takes
over the judicial cognizance
Low
18
597.401.170
Nullity and
Redress
Liquidation of energy
sale for period from
October 1 to 31,
2001 based on
Resolution CREG034, 2001
Administrative Tribunal takes
over the judicial cognizance
Low
18
651.554.227
294
Name of
defendant entity
or individual
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
Name of plaintiff
entity or individual
PROELÉCTRICA &
CÍA. S.A. E.S.P
BETANIA S.A. E.S.P.
EMGESA S.A. E.S.P.
CHIVOR S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2002 3235
- 2002
04728
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
2002 0897
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
2002 3500
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
2002 4711
Administrative
Tribunal of
Antioquia. Ninth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Liquidation of energy
sale for period from
February 1 to 28,
2002 based on
Resolution CREG
034, 2001
Appeal
Low
7
10.000.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.019.760.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
8.600.870.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
3.336.000.000
295
Name of
defendant entity
or individual
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Dossier
No.
Judicial or
Administrative
Court
2002 4541
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
2002 4716
Administrative
Tribunal of
Antioquia. Ninth
Deciding Chamber
TERMOCANDELARIA
C.S.A E.S.P.
2002 3878
Administrative
Tribunal of
Antioquia. Sixth
Deciding Chamber
Col. Govnmt. Ministry of Mines
EMGESA S.A. E.S.P.
Administrative
Tribunal of
Name of plaintiff
entity or individual
BETANIA S.A. E.S.P.
EMGESA S.A. E.S.P.
2002 4709
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Low
18
2.217.720.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG Tribunal sends the proceeding
to Civil Courts of Circuit
077 and 111 of 2000
Low
18
8.596.410.000
Nullity of acts
and contracts
Nullity and
Redress
Liquidation of energy
sale for period from
April 1 to 30, 2002
based on Resolution
CREG 034, 2001
Appeal
Low
18
829.004.789
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Summoning to join
proceedings as third-party
Low
18
8.683.420.000
Nullity of acts
and contracts
296
Name of
defendant entity
or individual
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Name of plaintiff
entity or individual
EMGESA S.A. E.S.P.
PROELÉCTRICA &
CÍA. S.A. E.S.P
EMGESA S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
Antioquia. Sixth
Deciding Chamber
2002 4715
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
2002 0418
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
2002 2365
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Action´ º
Grounds for Claim
Resolutions CREG
077 and 111 of 2000
Last Stage
guarantor
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
7.272.050.000
Nullity and
Redress
Liquidation of energy
sale for period from
July 1 to 31, 2001
based on Resolution
CREG 034, 2001.
Summoning to join
proceedings as third-party
guarantor
Low
18
540.201.431
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
8.602.920.000
297
Name of
defendant entity
or individual
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
CHIVOR S.A. E.S.P.
2002 4378
- 2007
0041
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
BETANIA S.A. E.S.P.
2002 3922
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
CHIVOR S.A. E.S.P.
2002 3507
- 2007
0216
PROELÉCTRICA &
CÍA. S.A. E.S.P
2002 3561
Administrative
Tribunal of
Antioquia. First
Deciding Chamber
Administrative
Tribunal of
Antioquia. Ninth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
3.351.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.247.090.000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.910.000.000
Appeal
Low
18
969.081.432
Nullity of acts
and contracts
Nullity and
Redress
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Liquidation of energy
sale for period from
March 1 to 31, 2002
based on Resolution
298
Name of
defendant entity
or individual
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Name of plaintiff
entity or individual
PROELÉCTRICA &
CÍA. S.A. E.S.P
CHIVOR S.A. E.S.P.
CHIVOR S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2002 3880
Administrative
Tribunal of
Antioquia.
Deciding Chamber
2002 4719
Administrative
Tribunal of
Antioquia. First
Deciding Chamber
2002 4741
Administrative
Tribunal of
Antioquia. Ninth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Action´ º
Grounds for Claim
CREG-034, 2001
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Nullity and
Redress
Liquidation of energy
sale for period from
April 1 to 30, 2002
based on Resolution
CREG-034, 2001
Summoning to join
proceedings as third-party
guarantor
Low
18
511.387.491
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.953.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal against refusal of
leave to appeal
Low
18
38.588.000.000
299
Name of
defendant entity
or individual
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
Dossier
No.
Judicial or
Administrative
Court
2002 1644
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
2002 1635
Administrative
Tribunal of
Antioquia.
Deciding Chamber
BETANIA S.A. E.S.P.
2002 2073
Administrative
Tribunal of
Antioquia. Eighth
Deciding Chamber
BETANIA S.A. E.S.P.
2002 2071
- 2007
0513
Administrative
Tribunal of
Antioquia. Eighth
Deciding Chamber
Name of plaintiff
entity or individual
PROELÉCTRICA &
CÍA. S.A. E.S.P
BETANIA S.A. E.S.P.
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Liquidation of energy
sale for period from
May 1 to 31, 2001
based on Resolution
CREG 034, 2001.
Amendment of a complaint
Low
18
1.222.458.738
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.034.760.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Amendment of a complaint
Low
18
2.074.220.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Amendment of a complaint
Low
18
19.096.000.000
300
Name of
defendant entity
or individual
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Name of plaintiff
entity or individual
Dossier
No.
TERMOCANDELARIA
C.S.A E.S.P.
2002 1646
CHIVOR S.A. E.S.P.
CHIVOR S.A. E.S.P.
Judicial or
Administrative
Court
Administrative
Tribunal of
Antioquia. First
Deciding Chamber
2003 0289
Administrative
Tribunal of
Antioquia Second
Deciding Chamber
2002 2371
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Liquidation of energy
sale for period from
May 1 to 31, 2001
based on Resolution
CREG-034, 2001
Summoning to join
proceedings as third-party
guarantor
Low
18
4.129.524.590
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
3.369.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.823.000.000
301
Name of
defendant entity
or individual
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
Name of plaintiff
entity or individual
TERMOTASAJERO
S.A. E.S.P.
BETANIA S.A. E.S.P.
Dossier
No.
2003 0293
Administrative
Tribunal of
Antioquia.
Deciding Chamber
2003 0479
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
TERMOCANDELARIA
C.S.A E.S.P.
2002 2074
BETANIA S.A. E.S.P.
Judicial or
Administrative
Court
2003 0295
Administrative
Tribunal of
Antioquia.
Deciding Chamber
Administrative
Tribunal of
Antioquia
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Liquidation of energy
sale for period from
August 1 to 31, 2002
based on
Resolutions CREG034 and 038 of 2001.
Transfer of Second Instance
Low
18
6.053.935.198
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.351.870.000
Nullity and
Redress
Liquidation of energy
sale for period from
November 1 to 30,
2001 based on
Resolutions CREG034 and 038 of 2001.
Summoning to join
proceedings as third-party
guarantor
Low
18
1.508.162.473
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.231,560.000
302
Name of
defendant entity
or individual
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
Name of plaintiff
entity or individual
BETANIA S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2003 0626
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
TERMOCANDELARIA
C.S.A E.S.P.
2002 4543
2003 0288
TERMOCANDELARIA
- 2007
C.S.A E.S.P.
0098
EMGESA S.A. E.S.P.
2002 4723
- 2006
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.573.680.000
Nullity and
Redress
Liquidation of energy
sale for period from
June 1 to 30, 2002
based on
Resolutions CREG034 and 038 of 2001
Summoning to join
proceedings as third-party
guarantor
Low
18
1.132.186.052
Summoning to join
proceedings as third-party
guarantor
Low
18
300.775,084
Summoning to join
proceedings as third-party
Low
18
7.079.570.000
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Nullity of acts
and contracts
Nullity and
Redress
Liquidation of energy
sale for period from
August 1 to 31, 2002
based on
Resolutions CREG034, 2001.
Administrative
Tribunal of
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
303
Name of
defendant entity
or individual
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Name of plaintiff
entity or individual
Dossier
No.
0446
Judicial or
Administrative
Court
Antioquia. Third
Deciding Chamber
EMGESA S.A. E.S.P.
2003 0625
- 2007
0529
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
EMGESA S.A. E.S.P.
2003 0292
- 2007
0080
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
EMGESA S.A. E.S.P.
2002 4710
- 2007
00076
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Action´ º
Grounds for Claim
Resolutions CREG
077 and 111 of 2000
Last Stage
guarantor
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
9.086,850.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
44.500.050
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
7.188.380.000
304
Name of
defendant entity
or individual
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
EMGESA S.A. E.S.P.
2003 0296
- 2007
0343
Administrative
Tribunal of
Antioquia
2003 0294
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
EMGESA S.A. E.S.P.
BETANIA S.A. E.S.P.
2003 0290
BETANIA S.A. E.S.P.
2003 0291
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
Administrative
Tribunal of
Antioquia. Eighth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
7.267.200.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Administrative Tribunal takes
over the judicial cognizance
Low
18
7.176.990.000
Appeal for Reversal and
subsidiary Appeal
Low
18
2.275.730.000
Appeal
Low
18
33.822.558.000
Nullity of acts
and contracts
Nullity and
Redress
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
305
Name of
defendant entity
or individual
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Name of plaintiff
entity or individual
PROELÉCTRICA &
CÍA. S.A. E.S.P
CHIVOR S.A. E.S.P.
CHIVOR S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2003 0037
Administrative
Tribunal of
Antioquia. Sixth
Deciding Chamber
2003 0478
Administrative
Tribunal of
Antioquia. Eighth
Deciding Chamber
2002 3505
Administrative
Tribunal of
Antioquia.
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Liquidation of energy
sale for period from
July 1 to 31, 2002
based on Resolution
CREG 034, 2001
Appeal
Low
18
255.113.322
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
3.481.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.925.000.000
306
Name of
defendant entity
or individual
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
Name of plaintiff
entity or individual
EMGESA S.A. E.S.P.
CHIVOR S.A. E.S.P.
CHIVOR S.A. E.S.P.
EMGESA S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2002 2361
Administrative
Tribunal of
Antioquia. Sixth
Deciding Chamber
2002 2359
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
2002 2358
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
2002 4712
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
8.656.570.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Amendment of a complaint
Low
18
2.911.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal for Reversal
Low
18
2.926.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
7.175.990.000
307
Name of
defendant entity
or individual
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
Name of plaintiff
entity or individual
EMGESA S.A. E.S.P.
PROELÉCTRICA &
CÍA. S.A. E.S.P
Dossier
No.
Judicial or
Administrative
Court
2003 0817
Administrative
Tribunal of
Antioquia. First
Deciding Chamber
2003 1081
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
TERMOTASAJERO
S.A. E.S.P.
2003 1082
Administrative
Tribunal of
Antioquia. Ninth
Deciding Chamber
CHIVOR S.A. E.S.P.
2002 4722
Administrative
Tribunal of
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
8.464.400.000
Nullity and
Redress
Liquidation of energy
sale for period from
October 1 to 31,
2002 based on
Resolution CREG
034, 2001
Appeal
Low
18
132.801.317
Archive
Low
18
3.960.741.388
Appeal
Low
18
3.219.000.000
Nullity of acts
and contracts
Nullity and
Redress
Liquidation of energy
sale for period from
October 1 to 31,
2002 based on
Resolution CREG
034, 2001
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
308
Name of
defendant entity
or individual
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Judicial or
Administrative
Court
Antioquia. Second
Deciding Chamber
Name of plaintiff
entity or individual
Dossier
No.
EMGESA S.A. E.S.P.
2003 0477
- 2007
0287
Administrative
Tribunal of
Antioquia
2003 1292
Administrative
Tribunal of
Antioquia. Second
Deciding Chamber
2003 1290
Administrative
Tribunal of
Antioquia. Ninth
Deciding Chamber
CHIVOR S.A. E.S.P.
BETANIA S.A. E.S.P.
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Action´ º
Grounds for Claim
Resolutions CREG
077 and 111 of 2000
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
7.510.340.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
3.810.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
2.650.640.000
309
Name of
defendant entity
or individual
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Name of plaintiff
entity or individual
EMGESA S.A. E.S.P.
PROELÉCTRICA &
CÍA. S.A. E.S.P
BETANIA S.A. E.S.P.
CHIVOR S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2003 1665
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
2003 1490
- 2007
00120
2003 1288
2003 1491
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Nullity and
Redress
Liquidation of energy
sale for period from
November 1 to 30,
2002 based on
Resolution CREG Tribunal sends the proceeding
034, 2001
to Civil Courts of Cartagena
Nullity of acts
and contracts
Nullity and
Redress
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Low
18
8.536.460.000
Low
18
72.157.234
Summoning to join
proceedings as third-party
guarantor
Low
18
2.772.730.000
Summoning to join
proceedings as third-party
guarantor
Low
18
3.945.000.000
310
Name of
defendant entity
or individual
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Name of plaintiff
entity or individual
CHIVOR S.A. E.S.P.
CHIVOR S.A. E.S.P.
BETANIA S.A. E.S.P.
Dossier
No.
Judicial or
Administrative
Court
2003 1760
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
2003 0816
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
2003 2293
Administrative
Tribunal of
Antioquia. Fifth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Answer and clarification of
amendment of a complaint
Low
18
32.986.800.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Administrative Tribunal takes
over the judicial cognizance
Low
18
3.924.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.597.780
311
Name of
defendant entity
or individual
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
Name of plaintiff
entity or individual
EMGESA S.A. E.S.P.
CHIVOR S.A. E.S.P.
EMGESA S.A. E.S.P.
PROELÉCTRICA &
CÍA. S.A. E.S.P
Dossier
No.
Judicial or
Administrative
Court
2002 3498
Administrative
Tribunal of
Antioquia. Second
Deciding Chamber
2002 2357
Administrative
Tribunal of
Antioquia. Second
Deciding Chamber
2003 2291
Administrative
Tribunal of
Antioquia. Second
Deciding Chamber
2003 2887
Administrative
Tribunal of
Antioquia. Ninth
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
List fixing
Low
18
8.557.120.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
2.837.000.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
6.739.160.000
Nullity and
Redress
Liquidation of energy
sale for period from
March 1 to 31, 2001
based on Resolution
CREG 034, 2001
Summoning to join
proceedings as third-party
guarantor
Low
18
117.486.914
312
Name of
defendant entity
or individual
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
EMGESA S.A. E.S.P.
2002 1634
- 2007
0098
Administrative
Tribunal of
Antioquia. Ninth
Deciding Chamber
EMGESA S.A. E.S.P.
2003 3125
- 2008
0093
Administrative
Tribunal of
Antioquia. Sixth
Deciding Chamber
CHIVOR S.A. E.S.P.
2003 3387
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
CHIVOR S.A. E.S.P.
2003 2851
Administrative
Tribunal of
Type of
Proceedings at
Ordinary
Jurisdiction
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Answer to Addition of Claim
Low
18
8.014.160.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Administrative Tribunal takes
over the judicial cognizance
Low
18
6.928.840.000
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Appeal
Low
18
9.324.000.000
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Summoning to join
proceedings as third-party
Low
18
4.163.000.000
Nullity of acts
and contracts
Nullity of acts
and contracts
313
Name of
defendant entity
or individual
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Name of plaintiff
entity or individual
BETANIA S.A. E.S.P.
BETANIA S.A. E.S.P.
PROELÉCTRICA &
CÍA. S.A. E.S.P
Dossier
No.
Judicial or
Administrative
Court
Antioquia. Third
Deciding Chamber
2003 3509
Administrative
Tribunal of
Antioquia.
Deciding Chamber
2003 3126
Administrative
Tribunal of
Antioquia. First
Section
2003 2288
Administrative
Tribunal of
Antioquia. First
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Nullity of acts
and contracts
Nullity of acts
and contracts
Nullity of acts
and contracts
Action´ º
Grounds for Claim
Resolutions CREG
077 and 111 of 2000
Last Stage
guarantor
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.682.520.000
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.680.770.000
Nullity and
Redress
Liquidation of energy
sale for period from
January 1 to 31,
2003 based on
Resolution CREG
034, 2001
Court declares null and void
the act in which lack of
jurisdiction was stated
Low
18
223.244.217
314
Name of
defendant entity
or individual
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Col. Govnmt. Ministry of Mines
and Energy Comisión de
Regulación de
Energía y Gas
(CREG) and
Interconexión
Eléctrica S.A.
E.S.P. (ISA)
Serina and
Interconexión
Eléctrica S.A.
Dossier
No.
Judicial or
Administrative
Court
2002 4724
Administrative
Tribunal of
Antioquia. First
Deciding Chamber
TERMOCANDELARIA
C.S.A E.S.P.
2002 4259
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Name of plaintiff
entity or individual
Type of
Proceedings at
Ordinary
Jurisdiction
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Action´ º
Grounds for Claim
Last Stage
Nullity of acts
and contracts
Nullity and
Redress
Enforcement of CRT
based on
Resolutions CREG
077 and 111 of 2000
Summoning to join
proceedings as third-party
guarantor
Low
18
2.923.000.000
Nullity of acts
and contracts
Nullity and
Redress
Liquidation of energy
sale for period from
May 1 to 31, 2002
Appeal
Low
18
250.377.695
2002 3499
TERMOCANDELARIA
- 2006
C.S.A E.S.P.
14500
Nullity of acts
and contracts
Nullity and
Redress
Docket was returned to
Administrative Tribunal of
Antioquia
Low
18
6.882.649.458
Mario David Jiménez
Ordinary Labor
Ordinary Labor
Answer of a claim
Low
20
2.233.833
CHIVOR S.A. E.S.P.
Administrative
Tribunal of
Antioquia. Second
Deciding Chamber
Administrative
2002-0351
Tribunal of
Antioquia. Sixth
Enforcement of
Resolution CREG095 and 130 de 2001
Joint and several
payment of wages
and employee
315
Name of
defendant entity
or individual
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Name of plaintiff
entity or individual
Dossier
No.
Wilfrido Castro
2002-0150
Luis Carlos Padilla
2002-0147
Hector de León
Pacheco
2002-0152
José Banda Cabarcas
2002-0350
Osvaldo Salcedo
Martínez
2002-0151
Alfredo Avendaño G.
2002-0148
Yesith Adecheny S.
2002-0149
Oscar Molinares
Blanco
2002-0352
Judicial or
Administrative
Court
Deciding Chamber
Administrative
Tribunal of
Antioquia. Second
Deciding Chamber
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Administrative
Tribunal of
Antioquia. Second
Deciding Chamber
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
Administrative
Tribunal of
Antioquia. Fourth
Deciding Chamber
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Administrative
Tribunal of
Antioquia. Second
Deciding Chamber
Administrative
Tribunal of
Antioquia. Second
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Grounds for Claim
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Answer of a claim
Low
20
827,290
Answer of a claim
Low
20
792,578
Answer of a claim
Low
20
2.144.326
Answer of a claim
Low
20
678,259
Answer of a claim
Low
20
995,89
Answer of a claim
Low
20
1.914.484
Answer of a claim
Low
20
1.788.977
Answer of a claim
Low
20
646,978
316
Name of
defendant entity
or individual
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Name of plaintiff
entity or individual
Dossier
No.
Iván Romero
Ensuncho
2002-0308
Virgelina del S.
Urango
2002-0531
Yadith Margoth
Montiel
2002-0529
Justo Fontalvo Suárez 2002-0528
Pedro Elías Alvarez
2002-0530
William Pacheco S.
2002-0588
Evelio del Cristo
Alvarez
2002-0589
Jairo José Rivera
2002-0535
Francisco Ruiz
2002-0177
Judicial or
Administrative
Court
Administrative
Tribunal of
Antioquia. Second
Deciding Chamber
Administrative
Tribunal of
Antioquia. Sixth
Deciding Chamber
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Administrative
Tribunal of
Antioquia. Sixth
Deciding Chamber
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Administrative
Tribunal of
Antioquia. Third
Deciding Chamber
Administrative
Tribunal of
Antioquia.
Deciding Chamber
Administrative
Tribunal of
Antioquia.
Deciding Chamber
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Grounds for Claim
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Answer of a claim
Low
20
883,275
Answer of a claim
Low
20
789,417
Answer of a claim
Low
20
726,477
Answer of a claim
Low
20
453,958
Answer of a claim
Low
20
706,657
Evidentiary Stage
Low
20
852,34
Answer of a claim
Low
20
891,577
Evidentiary Stage
Low
20
2.060.287
Ruling stage
Low
20
831,239
317
Name of
defendant entity
or individual
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Name of plaintiff
entity or individual
Ricardo E. Castillo
Judicial or
Administrative
Court
First Trial Court of
general jurisdiction
2002-0210
of Labor
Decongestion
Dossier
No.
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Ordinary Labor
Ordinary Labor
José Domingo
Colorado
First Trial Court of
2002-0178 general jurisdiction
of Laboral Circuit
Ordinary Labor
Ordinary Labor
José Morón Alvarez
First Trial Court of
2002-0532 general jurisdiction
of Laboral Circuit
Ordinary Labor
Ordinary Labor
First Trial Court of
Luis Segundo Durante 2002-0540 general jurisdiction
of Laboral Circuit
Ordinary Labor
Ordinary Labor
First Trial Court of
general jurisdiction
2002-0590
of Labor
Decongestion
First Trial Court of
general jurisdiction
2002-0591
of Labor
Decongestion
First Trial Court of
general jurisdiction
2002-0587
of Labor
Decongestion
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
José Germán Madera
First Trial Court of
2002-0442 general jurisdiction
of Laboral Circuit
Ordinary Labor
Ordinary Labor
Yoleima Helena
Causil
First Trial Court of
2002-0441 general jurisdiction
of Laboral Circuit
Ordinary Labor
Ordinary Labor
Maris Basilio
Mendoza
Maritza Romero Coy
Blanca Manjarres
Grounds for Claim
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Evidentiary Stage
Low
20
2.605.719
Evidentiary Stage
Low
20
1.774.426
Answer of a claim
Low
20
891,575
Answer of a claim
Low
20
1.774.426
Evidentiary Stage
Low
20
616,861
Evidentiary Stage
Low
20
801,134
Evidentiary Stage
Low
20
612,695
Answer of a claim
Low
20
728,425
Answer of a claim
Low
20
780,643
318
Name of
defendant entity
or individual
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Verónica Esther
Camacho
First Trial Court of
2002-0389 general jurisdiction
of Laboral Circuit
Ordinary Labor
Ordinary Labor
Mercedes Paternina
Benavides
First Trial Court of
2002-0592 general jurisdiction
of Laboral Circuit
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Luis Cristobal
Monterrosa
2002-0622
Emiro Alvarez Bello
2002-0623
Carmen Romero
Benavides
2002-0626
María Eugenia
Merlano
2002-0628
Enrry Sánchez
Suárez
2002-0627
Jairo Miguel Garcés
2002-0625
Serafina Madera
Ramírez
2002-0624
Second Trial Court
of general
jurisdiction of
Laboral Circuit
Second Trial Court
of general
jurisdiction of
Laboral Circuit
Second Trial Court
of general
jurisdiction of
Laboral Circuit
Second Trial Court
of general
jurisdiction of
Laboral Circuit
Second Trial Court
of general
jurisdiction of
Laboral Circuit
Second Trial Court
of general
jurisdiction of
Laboral Circuit
Second Trial Court
of general
jurisdiction of
Laboral Circuit
Grounds for Claim
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Answer of a claim
Low
20
1.566.463
Answer of a claim
Low
20
765,097
Answer of a claim
Low
20
663,233
Answer of a claim
Low
20
883,877
Answer of a claim
Low
20
781,697
Answer of a claim
Low
20
616,694
Answer of a claim
Low
20
1.769.144
Answer of a claim
Low
20
584,059
Answer of a claim
Low
20
573,256
319
Name of
defendant entity
or individual
Serina and
Interconexión
Eléctrica S.A.
E.S.P. ISA
Name of plaintiff
entity or individual
Rafael Monterosa
Pacheco
Dossier
No.
Judicial or
Administrative
Court
First Trial Court of
2002-0927 general jurisdiction
of Laboral Circuit
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Ordinary Labor
Ordinary Labor
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Luis Alfonso Gil
Morales et al.
1999-0334
Seventh Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Interconexión
Eléctrica S.A.
E.S.P. ISA
Jorge Enrique Bayona
Bautista
2002-0873
Seventh Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Rosalba Gonzalez et
al.
2002-1068
Eighth Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Nelfa Inés Duque
Martínez et al.
2001-0826
Ninth Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Jaime H. Cardona
Callejas et al.
2004-0044
Twelve Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Martha Ligia
Monsalve et al.
2002-1075
Thirteen Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Grounds for Claim
Joint and several
payment of wages
and employee
benefits
Joint and several
payment of wages
and employee
benefits
Indemnity for unfair
dismissal, moral
damages and
indexation
Liquidation of
severance bonus
and interests
according to
Collective Bargaining
Agreement
Joint and several
payment of
employee benefits
and full damages for
death
Liquidation of
severance bonus
and interests
according to
Collective Bargaining
Agreement
Liquidation of
severance bonus
and interests
according to
Collective Bargaining
Agreement
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Answer of a claim
Low
20
883,275
Ruling stage
Low
11
Quantum above
than 10 SMLMV,
without value
Cassation
High
8
300000000
Cassation
Low
8
Quantum above
than 10 SMLMV,
without value
Transfer of Second Instance
High
10
50000000
Cassation
Low
6
Quantum above
than 10 SMLMV,
without value
Cassation
Low
10
Quantum above
than 10 SMLMV,
without value
320
Name of
defendant entity
or individual
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Interconexión
Eléctrica S.A.
E.S.P. ISA and
other
Interconexión
Eléctrica S.A.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Name of plaintiff
entity or individual
Dossier
No.
Lucio Hernán
Burbano
2009-0123
First Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Héctor M. Hérnandez
Ramírez
2007-0489
Fifth Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Alicia Manuela
Hurtado C.
2006-0911
Seventh Circuit
Court of Labor
Decongestion
Ordinary Labor
Ordinary Labor
Jorge Enrique Bayona
Bautista
2004-1257
Third Circuit Court
of Labor
Decongestion
Ordinary Labor
Ordinary Labor
María Hermilda Mazo
M. et al.
2002-1002
Fourth Circuit
Court of Labor
Decongestion
Ordinary Labor
Ordinary Labor
Carlos A. Aristizábal
G.
2006-0730
Eighth Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Jorge Henao
González
2005-0009
Sixth Circuit Court
of Labor
Decongestion
Ordinary Labor
Ordinary Labor
Nelson Vásquez R.
2008-0308
Eleven Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Wilson Guillermo
Aguilar R.
2007-1438
Eleven Ancillary
Circuit Labor
Ordinary Labor
Ordinary Labor
Grounds for Claim
Joint and several
payment of wages,
employee benefits,,
paid holidays, and
indemnity.
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Quantum above
than 10 SMLMV,
without value
Answer of a claim
High
6
Indexation extralegal
retirement pension
Answer of a claim
High
6
Extralegal retirement
pension
Evidentiary Stage
High
6
Ruling
Low
6
42,52
Transfer of Second Instance
High
9
Quantum above
than 10 SMLMV,
without value
Answer of a claim
High
6
Quantum above
than 10 SMLMV,
without value
Evidentiary Stage
High
8
Quantum above
than 10 SMLMV,
without value
Answer of a claim
Low
6
Quantum above
than 10 SMLMV,
without value
Evidentiary Stage
High
4
Quantum above
than 10 SMLMV,
Re-liquidation of
severance bonus
and interest,
indemnity for default,
and indexation
Joint and several Full
indemnity for
damages
Joint and several
invalidity benefit and
full indemnity for
damages
Joint and several
wages, social
benefits and
indemnity for unfair
dismissal
Reality contract
indemnity for
termination of tralow
agreement with
unfair cause and
indexation
Reality contract
wages, social
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
321
Name of
defendant entity
or individual
E.S.P. ISA and
other
Interconexión
Eléctrica S.A.
E.S.P. ISA and
other
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA and
other
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA and
other
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Name of plaintiff
entity or individual
Dossier
No.
Judicial or
Administrative
Court
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Low
9
Quantum above
than 10 SMLMV,
without value
Ruling
High
7
Quantum above
than 10 SMLMV,
without value
Evidentiary Stage
High
4
Quantum above
than 10 SMLMV,
without value
Answer of a claim
High
4
Quantum above
than 10 SMLMV,
without value
Evidentiary Stage
High
6
Quantum above
than 10 SMLMV,
without value
Full indemnity for
damages
Evidentiary Stage
Low
6
Quantum above
than 10 SMLMV,
without value
Ordinary Labor
Survivor Pension
Ruling stage
High
3
Quantum above
than 10 SMLMV,
without value
Ordinary Labor
Joint and several
wages, employee
benefits, indemnity,
deferral and
indemnity, and
10
11.200.000 plus
indemnity,
deferral and
indexation
2005-0304
Twelve Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Juan Carlos Londoño
H.
2004-1218
Seventh Circuit
Court of Labor
Decongestion
Ordinary Labor
Ordinary Labor
Michael Edwin
Agudelo Vega
2007-1042
Fourteen Ancillary
Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Astrid Liliana Mesa M.
2008-0537
Sixteen Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Franciso Luis Campo
2007-0174
Sixteen Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Wilfredo Saldarriaga
2006-0719
Second Circuit
Court of Labor
Decongestion
Ordinary Labor
Ordinary Labor
Margarita Quintero
and other
2008-0263
Seventeen Circuit
Labor Court
Ordinary Labor
Jorge Salazar L. et al.
2002-0073
Ordinary Labor
Joint and several
Indemnity for
reduced labor
capacity, social
security benefits, and
indemnity
Joint and several
Invalidity condition
due to professional
work, wages and
employee benefits
Indemnity for unfair
termination of the
contract and
indexation
Wages, employee
benefits and
indemnity
Joint and several
paid holidays,
employee benefits
and indemnity
Last Stage
Value in
Colombian
Pesos
without value
Answer of a claim
Jaime H. Agudelo T.
Second Circuit
Labor Court
Grounds for Claim
benefits, and
indemnity
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Evidentiary Stage
Low
322
Name of
defendant entity
or individual
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Name of plaintiff
entity or individual
Luis Alfonso García
D. et al.
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
2004-0330
First Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Jhon Jairo Cano
2008-0070
First Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Jorge Luis Pérez P.
2008-0122
First Circuit Labor
Court
Ordinary Labor
Ordinary Labor
José Normán Pedraza
2007-1014
C.
Sixth Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Joint and several full
indemnity for
damages due to
employer’s default
Joint and several full
indemnity for
damages due to
employer’s default
Joint and several full
indemnity for
damages due to
employer’s default
Last Stage
Value in
Colombian
Pesos
Transfer of Second Instance
High
8
131.000.000
Answer of a claim
High
3
Quantum above
than 10 SMLMV,
without value
Answer of a claim
High
3
Quantum above
than 10 SMLMV,
without value
Extralegal
Retirement Pension
Evidentiary Stage
High
4
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Jorge Enrique
Méndez Castañeda
2007-0817
Tenth Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Indexation of
Sanction Pension
Transfer of Second Instance
High
4
Eduardo Alvarez C.
2008-1148
Twelve Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Retirement Pension
Grounds for ruling appeal
High
4
Evidentiary Stage
Low
4
Quantum above
than 10 SMLMV,
without value
Ruling stage
High
4
Quantum above
than 10 SMLMV,
Victor July Díaz B.
2006-0536
First Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Luis Ramón
Arciniegas C.
2007-0354
Fourth Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Interconexión
Eléctrica S.A.
Grounds for Claim
indexation
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Joint and several
employee benefits,
paid holidays,
temporary unfitness
for work, payments
for social security,
indemnity deferral
and indexation
Joint and several
serving a sentence
323
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Name of
defendant entity
or individual
E.S.P. ISA
Name of plaintiff
entity or individual
Dossier
No.
Interconexión
Eléctrica S.A.
E.S.P. ISA et al.
Luz Marina Rivera de
B.
2008-0621
Third Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Jorge Gonzalez
Osorio
2009-0388
Third Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Rogerio Alcides Ruiz
et al.
2009-0474
First Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A.
E.S.P. ISA
Hernán Humberto
Moreno M.
Luz Marina Vasco
de Zuluaga
Nelly Amparo
Gómez
Interconexión
Eléctrica S.A.
E.S.P. ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
2008-0021
First Circuit Labor
Court
Ordinary Labor
Ordinary Labor
2007-0437
First Circuit Labor
Court
Ordinary Labor
Ordinary Labor
200701336
First Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Nelly Amparo Gómez
2008-1336
First Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Grounds for Claim
imposed to
Fundación Progesar
Pension substitution
due to death of an
ISA retiree
Reinstatement and
payment of wages
and employee
benefits without
continuity solution
nor indemnity due to
termination of the
agreement without
fair cause, and
acceptance and
payment of
damages, indexation
Re-liquidation of
severance bonus
and interest,
indemnity for default,
and indexation
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
without value
Answer of a claim
High
4
Quantum above
than 10 SMLMV,
without value
Answer of a claim
Low
3
Quantum above
than 10 SMLMV,
without value
Notification of a complaint
Low
3
Quantum above
than 10 SMLMV,
without value
Ruling stage
Low
3
Ruling stage
Low
3
Answer of a claim
Low
4
Answer of a claim
High
4
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
324
Name of
defendant entity
or individual
Luis J. García M.
Edgar Pachón
Mateus
Julián Ocampo
Gómez
Tulia Rosa
Chaverra R.
Luis E. Mosquera
R.
Marco Tulio
Sánchez
Guillermo A. Yepes
S.
Jairo Leon García
Jesús Aguirre
Tabares
José Adalberto
Vallejo G.
Rocio del S.
Idárrga O.
Adalberto Valencia
G.
Name of plaintiff
entity or individual
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
2007-1328
Third Circuit Labor
Court
Ordinary Labor
Ordinary Labor
2007-1244
Fourth Ancillary
Circuit Labor
Court
Ordinary Labor
Ordinary Labor
2008-0096
Fifth Circuit Labor
Court
Ordinary Labor
Ordinary Labor
2007-1514
Sixth Circuit Labor
Court
Ordinary Labor
Ordinary Labor
2007-1293
Ninth Circuit Labor
Court
Ordinary Labor
Ordinary Labor
2008-0018
Ninth Circuit Labor
Court
Ordinary Labor
Ordinary Labor
2007-0431
Eleven Circuit
Labor Court
Ordinary Labor
Ordinary Labor
2008-0021
Eleven Circuit
Labor Court
Ordinary Labor
Ordinary Labor
2006-1243
Eleven Circuit
Labor Court
Ordinary Labor
Ordinary Labor
2006-1112
Thirteen Circuit
Labor Court
Ordinary Labor
Ordinary Labor
2008-0038
Thirteen Circuit
Labor Court
Ordinary Labor
Ordinary Labor
2007-1179
Fourteen Ancillary
Circuit Labor
Court
Ordinary Labor
Ordinary Labor
Grounds for Claim
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Evidentiary Stage
Low
3
Evidentiary Stage
Low
3
Evidentiary Stage
Low
3
Evidentiary Stage
Low
3
Evidentiary Stage
Low
3
Evidentiary Stage
Low
3
Ruling stage
Low
3
Evidentiary Stage
Low
2
Ruling stage
Low
4
Ruling stage
Low
4
Evidentiary Stage
Low
3
Evidentiary Stage
Low
3
325
Value in
Colombian
Pesos
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Name of
defendant entity
or individual
Fabio de F. Ospina
V.
Gloria Osorio S.
José G. Rojas B.
Gustavo Marín
Victor J. Zapata M.
Dario Ederardo
Urrego
Luis A. Santana M.
July A. Quintero
Luis Domingo Silva
Luis S. González B.
Municipality of
Medellin et al.
Name of plaintiff
entity or individual
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Interconexión
Eléctrica S.A. E.S.P.
ISA
Dossier
No.
Judicial or
Administrative
Court
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
2007-0349
Fourteen Circuit
Labor Court
Ordinary Labor
Ordinary Labor
2007-1214
Fifteen Circuit
Labor Court
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
Ordinary Labor
2008-0020
2006-1600
2007-1282
Fifteen Ancillary
Circuit Labor
Court
Seventeen
Ancillary Circuit
Labor Court
Seventeen
Ancillary Circuit
Labor Court
2006-1127
Second Circuit
Labor Court
Ordinary Labor
Ordinary Labor
2008-0164
Fourth Circuit
Labor Court
Ordinary Labor
Ordinary Labor
2006-1084
Second Circuit
Court of Labor
Decongestion
Ordinary Labor
Ordinary Labor
2007-1175
Tenth Circuit
Labor Court
Ordinary Labor
Ordinary Labor
2008-0247
Twenty Circuit
Labor Court
Ordinary Labor
Ordinary Labor
1999-3802
Administrative
Tribunal
Nullity of acts
Nullity of acts
Grounds for Claim
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Re-liquidation of
extralegal retirement
pension
Nullity Resolutions
330 of 27/08/1999,
226 of 24/08/1999
and 148 of
27/04/1999
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Answer of a claim
Low
3
Evidentiary Stage
Low
3
Evidentiary Stage
Low
2
Ruling stage
Low
4
Ruling stage
Low
3
Cassation
Low
4
Grounds for Ruling Appeal
High
2
Transfer of Second Instance
Low
4
Evidentiary Stage
Low
4
Transfer of Second Instance
High
3
Ruling stage
Low
15
Value in
Colombian
Pesos
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Quantum above
than 10 SMLMV,
without value
Without value
326
Name of
defendant entity
or individual
Municipality of
Facatativa
Municipality of
Sabanalarga
Name of plaintiff
entity or individual
Dossier
No.
Interconexión
Eléctrica S.A. E.S.P.
ISA
2008-0042
Interconexión
Eléctrica S.A. E.S.P.
ISA
2008-0734
Judicial or
Administrative
Court
Administrative
Tribunal of
CundinamarcaFourth Section
Administrative
Tribunal of
Atlántico- Fourth
Section
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Repetition of
undue payment
Nullity and
Redress
Nullity
Interconexión
Eléctrica S.A. E.S.P.
ISA
2009-0085
Judge of
Administrative
Circuit
Repetition of
undue payment
Nullity and
Redress
Interconexión
Eléctrica S.A. E.S.P.
ISA
20020324300
Administrative
Tribunal of
Antioquia
Administrative Ordinary
Nullity and
Redress
Municipality of
Palermo
Dirección de
Impuestos y
Aduanas
Nacionales - DIAN
Municipality of San
Carlos, Antioquia
Dirección de
Impuestos y
Aduanas
Nacionales - DIAN
Dirección de
Impuestos y
Aduanas
Nacionales - DIAN
Interconexión
Eléctrica S.A. E.S.P.
ISA
20010341900
Administrative
Tribunal of
Antioquia
Administrative Ordinary
Nullity and
Redress
Interconexión
Eléctrica S.A. E.S.P.
ISA
20000380900
Administrative
Tribunal of
Antioquia
Administrative Ordinary
Nullity and
Redress
Interconexión
Eléctrica S.A. E.S.P.
ISA
20000424400
Administrative
Tribunal of
Antioquia
Administrative Ordinary
Nullity and
Redress
Grounds for Claim
Nullity of Resolutions
34 and 36 of 2007 of
Municipal Treasury
Secretariat
Nullity of the
Agreement 19 of
2005
Nullity for
presumptive act due
to Administrative
silence concerning
claim for payment of
non-due
corresponding to
industry and
commerce tax from
1998 to 2003
Devolution of default
interest due to
extemporaneous
devolution of 1995
income tax
Under discussion is
the charge for
occupancy and
affectation of public
space tax
Sanction for
amendment in
income of taxable
year 1996
Sanction for
inexactitude in
income data 1995
Last Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Value in
Colombian
Pesos
Notification of a claim
Low
7
244.290.000
Notification of a claim
Low
8
Without value
Notification of a claim
Low
9
438.323.032
9
4.7795.81.814
The proceeding is at the
courtroom for ruling
High
The proceeding is at the
courtroom for ruling
Low
9
183.8872.125
The proceeding is at the
courtroom for ruling
Low
9
126.383.920
The proceeding is at the
courtroom for ruling
Low
9
750.021.000
327
Name of
defendant entity
or individual
Dirección de
Impuestos y
Aduanas
Nacionales - DIAN
Name of plaintiff
entity or individual
Dossier
No.
Interconexión
Eléctrica S.A. E.S.P.
ISA
20050675700
Judicial or
Administrative
Court
Administrative
Tribunal of
Antioquia
Type of
Proceedings at
Ordinary
Jurisdiction
Action´ º
Administrative Ordinary
Nullity and
Redress
Grounds for Claim
Sanction for nonsubmitting magnetic
media’s information
of the corporate
group, year 2000
Last Stage
Evidentiary Stage
Changes of
unfavorable
Estimate
decision
time of
(Resol.
proceedings
356/07 CGR) (In Years)
Low
10
Value in
Colombian
Pesos
217.300.000
328