Beyond the capital city
22 May 2018
A Multi-Latina Group from Bogotá
Based on a private-public ownership model, the company headquartered in Bogotá is currently one of the largest Multi-Latina electric energy and natural gas groups in Latin America.
There are prophets in their own land. This is demonstrated by Grupo Energía Bogotá (GEB), whose development has been closely linked to the progress and modernization of Colombia’s capital city. But the company is also a prophet in other lands, as GEB has become one of Latin America’s largest electric energy and natural gas companies.
Following an expansion process, GEB currently operates in Colombia, Peru, Guatemala and Brazil, where it serves 6.1 million customers, and it is one of the few companies in the region that, through its own subsidiaries and shareholder participation in large companies, is involved in the entire energy chain, including electric energy transmission, generation and distribution, and natural gas transport and distribution.
Through Transportadora de Gas Internacional (TGI), GEB is a leader in the natural gas transport market in Colombia, with a 55% market share, while GEB’s electric energy Transmission Unit covers 15.2% of the domestic market. The company also holds substantial shareholder participation in companies such as Codensa and Emgesa, accounting for a large share of the Colombian energy distribution and power generation market, as well as in Gas Natural, a leading gas distributor in the central and eastern regions of the country.
In Peru, through subsidiaries Cálidda and Contugas, GEB has played a key role in promoting mass consumption of natural gas, and is currently the market leader with an 80% market share in terms of natural gas distribution. GEB also holds a leading position in electric energy transmission in Peru, with a 63% market share through ISA REP and ISA Transmantaro (CTM), companies in which it holds a 40% equity interest.
In Guatemala, through subsidiaries Trecsa and EEBIS, GEB holds a leading position in electric energy transmission. The company’s market share in this country is currently 19.9%, thanks to the largest and most ambitious infrastructure project in Central America to date (the Electric Energy Transportation Expansion Plan - PET) which involves 866 kilometers of transmission networks and 22 substations.
In Brazil, a market that represents over 200 million customers, GEB, through subsidiary Gebbras, holds an interest in Furnas, Brazil’s largest state-owned energy transmission and power generation company. It has close to 1,100 kilometers of transmission lines that carry electric power to the city of Sao Paulo.
In 2017, GEB’s revenues increased by 6% to 3.3 trillion pesos, and the group’s net income exceeded 1.5 trillion pesos, equivalent to a growth of 16.4% compared to 2016, enabling the company to pay out record-high dividends (1.1 trillion pesos).
The company also made progress regarding the construction of 12 transmission network expansion projects, through which it will double its infrastructure in Colombia, covering more than 3,000 kilometers, and which will broaden GEB’s presence throughout the national territory, increasing coverage from 55 to 170 municipalities in the country.
Last year, the group also re-launched its brand through an image that reflects its transformation and its commitment to sustainability, the environment and innovation. GEB also defined a new strategy with the mission of consolidating its position as an energy leader in the region by 2025. “Today we are big, but we have all the potential needed to become giants. This is the reason we set ourselves challenging goals. We expect to further broaden our presence in Latin America, to double our customer base and to become the most profitable non-mining company in the Colombian market”,said Astrid Álvarez, CEO of GEB, who also highlighted GEB’s strengthened corporate governance and its work to bring progress to local communities.
In 2018 the group has taken major strides in advancing towards its goals. GEB won a public bid from UPME to build the first electric transmission project in Colombia to connect the wind farms in La Guajira to the National Interconnected System (SIN). The project is known as theColectoraproject, which will promote the development of non-conventional renewable energy sources in the country. Through this new project GEB consolidates its presence in the Caribbean Coast, and reaffirms its commitment to the development of a sustainable energy matrix.
GEB also continues to evaluate opportunities for expansion both in Colombia and abroad. For example, GEB announced it may participate in the future sale of Argentina’s leading public electric energy transportation utility, Transener S.A., as well as in the bidding process for Regasificadora del Pacifico in Valle del Cauca, which is scheduled to take place in the next few months.
GEB will invest over 1,800 million dollars over the next five years, only counting projects that are currently in progress or that have been approved (not including new opportunities in Colombia or elsewhere in Latin America). This amount is similar to the one invested in the period 2013-2017.
However, one of the group’s critical moves this year will be the sale of 20% of the shares held in the company by the City of Bogotá, which will reduce the City of Bogotá’s stake from 76% to 56%.
This would lead the company’s stock to double its share in the Colcap index and to become a bigger player in the stock market. Last year, its stock price increased by 11.3%. However, the largest effect of this move is that the City of Bogotá will receive around 3.7 trillion pesos, while still retaining majority share in the company.
The public-private ownership model has demonstrated its success, because its corporate governance has de-politicized the company, and enabled it to be managed in a fully business-like manner. This enables the city to join a diversified business that offers stable returns from different industries and geographies, and will undoubtedly lead the City of Bogotá to remain involved in this Multi-Latina company.