6 June 2002 – The bidding for Peru’s Peruvian electricity transmission companies Etecen and Etesur has been won by Colombia’s state-run Interconexion Electrica SA (ISA), the government announced on Wednesday.

ISA paid $241.6m for the two companies after Spain’s Red Electrica failed to present a bid and Canada’s Hydro Quebec did not show, a senior official from the state Pro-Investment agency said.

Luis Ballester, director general of Red Electrica, said the company did not make an offer because it had not received authorization in Spain.

Peru had asked a base price for the companies of $229.6m but said the winner would be required to pay another $20.4m for inventoried and repair materials, meaning bids effectively started at $250m. That makes the total amount ISA must pay almost $262m.

“Our dream is a network connecting (Andean nations) by 2006,” said ISA General Manager Javier Gutierrez. “We’re getting there. We have connections in Venezuela. We are linking Colombia and Ecuador… This is part of that dream.”

Gutierrez said that the company would invest an initial $11m in the first two years of the concession and another $12m later, but declined to say in what timeframe. He said the total investment for the 30-year concession would be $125m.

“There is an obligatory investment in a network with Ecuador for $15m,” said Energy and Mines Minister Jaime Quijandria.

The networks of Etecen and Etesur link electricity transmission from northern to southern Peru. Etecen distributes electricity from the Mantaro hydroelectric project in the central Andes to northern Peru, while Etesur, in Peru’s second city Arequipa, distributes energy to the south.

“This sale implies a big transmission rate cut,” Gutierrez said, adding that ISA would not lay off any workers.

The sale was a key part of President Alejandro Toledo’s plan to raise up to $800m this year by selling off and giving concessions for state assets. But the privatization program has triggered protests from Peruvians fearing rate hikes or layoffs.