Colombia Enters Talks With Ecopetrol for Sale of Power Giant ISA

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Colombia will enter into negotiations with state oil company Ecopetrol SA for the sale of the government’s controlling stake in an electricity transmission utility, which is expected to fetch as much as $4 billion.

Officials in coming days will finalize an exclusivity contract with Ecopetrol under which the two sides will conduct due diligence and formulate the terms of the sale of the 51.4% of shares of Interconexion Electrica SA held by the government, Finance Minister Alberto Carrasquilla wrote in a letter to the company. The ministry provided a copy of the letter to media Saturday.

Ecopetrol, which is also majority owned by the government, last month made a non-binding offer for the utility, known as ISA, which operates electricity transmission lines and highways in countries across Latin America. Chief Executive Officer Felipe Bayon said at the time that the deal would cost $3.5 billion to $4 billion and take around six months to close, if accepted.

The government said it reserves the right to propose adjustments to the price based on its own valuation of the stake. Under the contract, Ecopetrol will have the first half of the year to improve on its offer, according to the letter.

As the government owns 88.5% of Ecopetrol shares, the deal can be carried out through an inter-administrative contract, without the need for a public tender process, which has proved time-consuming in previous government asset sales.

Grupo Energia Bogota SA, a utility majority owned by the city of Bogota, has also expressed interest in bidding for the ISA stake. The board of directors on Friday authorized the company to make an offer, according to a regulatory filing.

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