Background

Through Resolutions No. 40791, 41307 and 41314 of 2018, the Colombian Ministry of Mines and Energy (“MME”) summoned an auction for the awarding of long term Power Purchase Agreements, to be executed between new generation power plants –those not operating before December 31, 2017- and commercializing agents, within the Wholesale Energy Market (the “Auction”).

The MME ordered the Unit for Mining and Energy Planning (“UPME”) to implement and administer the Auction. On those grounds, on January 4, 2019 the UPME made public the Terms of Reference containing the terms and conditions applicable to this procedure (“ToR”).

During January and February 2019, UPME made public addendum 1 (January 24, 2019), addendum 2 (January 29, 2019), addendum 3 (February 11, 2019) and addendum 4 (February 14, 2019) to the ToR, by which it resolved the following:

Addendum No. 1

1. Introduced additional requirements to be considered as qualified bidder, i.e. (i) vendors must present a sworn statement, regarding the absence or existence of any control situation and economic relations between participants of the Auction, in accordance with what the Commission for Regulation of Energy & Gas (“CREG”) provides for this purpose; and (ii) participants must present a bid bond –garantía de seriedad- duly approved by UPME as per the auction schedule deadlines (before it was a requirement for financial prequalification).
2. With respect to the presentation of the bid bond: (i) the stand-by letter of credit was included as an admissible instrument, and it was specified that it must have a minimum validity of 6 months after the delivery of envelope no. 2; (ii) the possibility was also opened for the UPME to request extensions of this bid bond; (iii) the constitution of the compliance and the starting of operations guarantees was added as one of the obligations that the bid bond must cover.
3. Eliminate the requirement to pay participation rights amounting to COP $20.000.000 (Approx. USD $6.400).
4. Failure to be granted a performance bond that covers compliance with the awarded PPA will cause trigger the bid bond. For this reason, the requirement of having a financial entity committing to issue a performance bond for the participants of the Auction was eliminated.
5. Clarified certain legal requirements to be fulfilled by power generators willing to submit power bids for sale.

Addendum No. 2

1. Clarified some formal matters required to complete the procedures related to the Auction by the participants. Among others, the UPME noted: (i) any special power of attorney granted to submit documents must follow authentication procedure before a notary; (ii) for each offer of purchase or sale, an envelope no. 1 and an envelope no. 2 will be presented; (iii) the possibility of challenging the administrative act of awarding was admitted (recurso de reposición).
2. Precisions regarding technical aspects were made by the UPME, for instance: (i) the area coordinates system for the identification of polygons was changed; (ii) the applicable time series for the estimation of availability of the generation resources of the project, were modified.
3. Finally, the UPME replaced Annexes No. 1, 2, 3, 4 and 5; in order to facilitate the completion of the respective forms.

Addendum No. 3

1. It was specified that BBVA Asset Management S.A. is the agent and administrator of the Trust Fund – Fondo Empresarial, and was authorized to grant the necessary guarantees for the utilities companies intervened by the Superintendency of Public Utilities - SSPD.
2. Participants may update their information up to 3 business days prior to the opening of envelope no. 2
3. It was clarified that the bid bond will be established in favor of the UPME and will be payable to the order of the participant affected by the breach of its counterpart.
4. It was also specified that the bid bond in the case of the buyers should cover a sum of COP $135 million multiplied by 50% of the annual average energy declared in envelope no. 2
5. The validity term of the bid bond should start from the presentation of the envelope no. 2.
6. The guarantees of payment or compliance must be approved by the counterparty, in accordance with the PPA contract.
7. Finally, the UPME made some clarifications on the award procedure, and replaced some of the forms included in Annex No. 2.

Addendum No. 4

1. Included form No. 6 - Sworn Statement of Economic Relations for Generators.

Amendments to the Schedule

Furthermore, the Addendum no. 1 and 3 modifies the schedule for the Auction, as follows:

To download, please click the following links:

• Addendum no.1
• Addendum no.2
• Addendum no.3
• Addendum no.4