VZCZCXYZ0016
PP RUEHWEB

DE RUEHBO #3824 2951704
ZNR UUUUU ZZH
P 211704Z OCT 08
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC PRIORITY 5122
INFO RUEHPE/AMEMBASSY LIMA 6668
RUEHLP/AMEMBASSY LA PAZ OCT CARACAS 1210
RUEHBR/AMEMBASSY BRASILIA 8445
RUEHZP/AMEMBASSY PANAMA 2533
RUEHQT/AMEMBASSY QUITO 7358

UNCLAS BOGOTA 003824 
 
SIPDIS 
 
FOR EEB/OIA MCULLINANE; EEB PASS TO OPIC WPEARCE AND 
JHANSLEY 
 
E.O. 12958: N/A 
TAGS: EINV ENRG SENV ECON OPIC CO
SUBJECT: COLOMBIA: COMMENTS ON OPIC-SUPPORTED INVESTMENT 
FUNDS IN THE REGION 
 
REF: STATE 103210 
 
¶1. (SBU) SUMMARY: In addition to pursuing increased 
exploration and production in its traditional hydrocarbons 
sector in order to maintain its net energy exporter status 
beyond 2015, Colombia is also increasing renewable energy 
production through new hydroelectric plants, aggressive 
biofuel blending mandates, and exploration of wind, solar and 
geothermal projects.  Based on the preliminary information in 
reftel, the objectives of the OPIC-supported private equity 
investment fund to be managed by VGF Partners I appears 
compatible and complementary to Colombian government 
development programs in the areas of energy efficiency, 
sustainable resource management and emissions reductions. END 
SUMMARY. 
 
¶2. (SBU) According to GOC figures, hydroelectric power 
currently accounts for 78 percent of Colombia's electricity 
generation (13,600 MW) with almost 3,000 MW of additional 
capacity under construction through six new plants scheduled 
for completion by 2018.  In addition to supplying rising 
domestic demand with emissions-neutral, renewable 
hydroelectric power, Colombia aims to sell excess electricity 
to regional neighbors including Brazil.  Colombia currently 
exports a small amount of electricity to Ecuador. 
 
¶3. (SBU) The GOC has also implemented blending mandates of 
renewable biodiesel (5 percent) and ethanol (10 percent) into 
diesel and gasoline transportation fuel supplies, 
respectively, with the mandates scheduled to rise to 20 
percent by 2015.  Colombia currently has five privately owned 
ethanol plants and is scheduled to have six operational 
private biodiesel plants by mid-2009. The GOC has 
aggressively pursued biofuels as a means of reducing 
pollution in major metropolitan areas, generating rural 
employment alternatives to narcotics cultivation, and 
diversifying its transportation fuel supply.  The GOC has 
also publicly pledged to develop the industry without 
destruction of native ecosystems through use of degraded or 
underutilized agricultural lands already in production. 
 
¶4. (SBU) Complementing its emission reduction goals for 
diesel, the GOC has supported the extensive renovation of the 
Cartagena refinery by Swiss-owned Glencore and Colombian 
parastatal hydrocarbons company Ecopetrol to significantly 
improve the quality and reduce the pollutants in diesel 
produced by the plant.  Current diesel supplies account for a 
large portion of metropolitan air pollution in Colombia. 
 
¶5. (SBU) While it is difficult to predict the precise success 
of any activities that VGF Partners I may pursue in Colombia, 
the GOC's energy sector development policies are favorable 
for the type of investment envisioned by the fund.  While 
Colombia has received record foreign direct investment (FDI) 
over the last few years, most of the investment has flowed to 
the traditional hydrocarbons sector.  Given tight GOC fiscal 
constraints and the current focus of FDI on hydrocarbons, new 
sources of capital are needed to develop further renewable 
energy projects in hydropower and biofuels, as well as pursue 
exploratory efforts in wind, solar and geothermal. 
 
¶6. (SBU) Post has no derogatory information regarding the 
prospective fund managers. 
BROWNFIELD