Dispatches from the 7th World Urban Forum in Medellín, Colombia

Huge municipal utility EPM helps Medellín pay for all those social projects

(Christopher Swope/ Citiscope)

As I hear about all these investments Medellín has been making in transit, libraries, museums and schools, I keep wondering: How do they pay for it all?

I’ve asked several Colombians that question this week and the response tends to boil down to two things.

First, the economy in Colombia is strong and growing and hasn’t suffered the slowdowns Europe and the United States have experienced. So they’re not in austerity mode.

Second, and more intriguing, is that Medellín owns a powerhouse of a municipal utility that pumps enormous piles of pesos into the city budget. That utility is called Empresas Públicas de Medellín, or EPM. I stopped by their booth at the World Urban Forum yesterday to learn more.

Roberto Quiutero, a mechanical engineer with EPM, explained it to me. EPM is a huge company — they provide gas, electricity, water, wastewater treatment, phone service, broadband and TV.

EPM doesn’t just serve Medellín. It provides services throughout Colombia. And because a national law caps EPM’s domestic footprint at 25 percent of the country’s customer base, the company has begun branching out internationally. Subsidiaries sell electricity in Chile and Panama and run wastewater treatment in Mexico. The company’s corporate goal is to become one of the 50 largest corporations in the Americas by 2022.

The important thing for Medellín is that EPM turns 30 percent of its profits over to the city budget to be spent largely on social investments. That amounts to roughly $500 million. Oversight comes from the city council, and the mayor is the chairman of the board. I don’t know if that results in political meddling, but at least one person not connected with the company tells me it widely seen as very well run.

More information on this model is available at EPM’s website.