WINNING MOVES

Colombia 2015 | ENERGY & MINING | INTERVIEW

TBY talks to Ricardo Roa Barragán, President of Grupo Energía Bogotá (GEB), on new investments, international expansion, and generating un-conventional energy.

Ricardo Roa Barragán
BIOGRAPHY
Prior to becoming president at GEB, Ricardo Roa Barragán was president at Transportadora de Gas Internacional (TGI). He studied Mechanical Engineering at la Universidad Nacional de Colombia with specialization in engineering systems management, before undertaking a Master’s in Political Studies from the Universidad de Javeriana. He was previously the Director of Energy and Gas at Andesco, General Manager at Electrificadora de Santander ESSA, and Manager of Energy at Grupo Ardila Lulle. He has over 20 years of public sector experience in Electricity and Gas delivery.

Regarding your investment in TGI, why did you decide to purchase the entire stake last year?

It was one of the alternatives when the investment was made in around 2010-11. Citi Venture Capital International entered the business and had the expectation of generating a large amount of profit. The company developed rapidly, as it initially had the capacity to transport 420 mcf and managed to transport 730 mcf/day in the last year. It also extended its existing grid by 300km and completed a 3,970km gas transportation network. As a result of this increase in sales, the financial profile of the company reached an optimal level. Given these conditions, it was appropriate to consider the acquisition of a stake. We analyzed it thoroughly and the shares were bought for approximately $880 million. TGI paid less to reacquire these shares than CVCI originally paid for 32% of the shares.

What is GEB'S strategy to enter Brazil and Chile?

The investment plan of GEB is backed by around $7.5 billion, and is projected until 2018. This plan included the purchase of TGI, which involved an acquisition of resources for around $2.1 billion. This would translate into a $1.1 billion investment per year. We are currently analyzing our capability of acquiring debt and the commitments with the risk-rating companies to carry out this investment plan, in terms of resource availability and the debt that the company could take on without straining cash flow, the current investments, or the maintenance of our current infrastructure. We are evaluating this investment portfolio in transmission projects that are already under way involving distribution of electricity or transport and distribution of gas. These are our main interests; however, we can also evaluate projects in electricity generation, with both conventional and non-conventional sources of energy.

How are you developing strategic alliances with non-conventional producers of energy?

Due to our recognition as a solid energy-related company, we receive one proposal per month from parties that are interested in these non-conventional energy-generating projects in Latin America. We have prioritized and identified the essence of these alternative electricity and gas distribution models, and evaluated these proposals accordingly to build our investment portfolio on a five-year plan. Last year we presented a few initiatives, but only the re-purchase of the TGI shares was concluded. We presented an offer last year to the Peruvian government to build the Peruvian gasoduct, in collaboration with other representative gas transporting companies such as Cempra, IGDF, and others. We also offered to acquire 100% of a gas distribution company in Monterrey called CMG. However, these offers failed to bear any results for the company. GEB was also evaluating the possibility of re purchasing the shares that Ecopetrol has in Empresa Energía de Bogotá (EEB); however, it was not viable as it wouldn't generate additional profit and would compromise around $500 million in valuable resources. We are currently exploring the purchase of the 43% stake that Ecopetrol is selling in Invercolsa. We would have to evaluate how to avoid the restrictions that the company has as the owner of the most important gas transportation company, with the possibility of a strategic alliance in operations. GEB is making an offer for three prime projects of the UPME expansion, which are located in the Caribbean region, Ituango, and the North West region. The project aims to increase the level of national electricity transmission up to 500,000 volts.