THE RESOLUTION THAT ESTABLISHES THE PROCESS TO GRANT TEMPORARY OCCUPATION PERMITS FOR OFFSHORE WIND POWER PROJECTS HAS BEEN PUBLISHED

On May 4, the Ministry of Mines and Energy (“MME”) and the General Maritime Bureau (“DIMAR”) published, for the information and comments of the general public, the draft joint resolution that will define the conditions for the competitive process under which Permits for the Temporary Occupation of maritime areas in which offshore wind energy projects will be developed.

The competitive process may be carried out by DIMAR directly, or through a third party appointed by it, and will be implemented by means of rounds for the allocation of areas. For the first round, which will award Temporary Occupation Permits within the first eight (8) months after the Resolution’s effective date, the projects to be considered will:

1. 1. Have an installed capacity equal to or greater than 200 MW.
   2. Have a projected start date of “a maximum of 7 years after the date in which the Temporary Occupation Permit is first in force”.

The competitive process will consist of the following five (5) phases, which will take place in a successive manner after the publication of the Terms and the “Bases of the ‘Specific Conditions of the Process”:

(i) Technical, legal and financial qualification of the bidders. In general terms, the qualifying requirements for bidders who wish to participate in the competitive process are:

• Technical qualification:

1. Accredit experience, in the last ten (10) years, in at least three (3) of the following “development areas of an offshore wind energy project of at least 200 W” (that is already fully installed and in operation): (i) planning; (ii) design; (iii) selection and contracting of suppliers; (iv) execution; (v) quality control. This experience can be accredited with respect to projects that, having been developed anywhere in the world, have met local requirements and supply power “to the grid”.
2. Accredit experience, in the last ten (10) years, in at least three (3) of the following areas of development of a substation that connects an offshore wind farm of at least 50MW (that is already fully installed and in operation): ( i) planning; (ii) design; (iii) selection and contracting of suppliers; (iv) execution; (v) quality control. This experience can be accredited with respect to projects that, having been developed anywhere in the world, have met the local requirements.
3. Have an HSE certificate under an internationally recognized accreditation standard accepted in OECD countries.
4. Have a risk management certificate under an internationally recognized accreditation standard accepted in OECD countries.

• Financial Qualification:

1. Credit Facility or standby letter of credit for an amount equal to or greater than $600 million dollars, certified by a suitable domestic or international financial institution.
2. Credit rating of BBB- or higher, according to Standard & Poor’s and Fitch’s standard, or Baa3 or higher, according to Moody’s standard, or an equivalent based on the rating of another internationally recognized firm.

• Legal Qualification:

1. Evidence of the legal capacity of the Bidder, and that its term is at least equal to “the term of the Concession and three more years”.
   1. In case it is an associative scheme, documents of the incorporation thereof.
   2. In the event that it is a future company, a document that promises to establish the company with an effective date prior to the granting of the Permit, and a term of, at least “the term of the Concession and three more years”.
2. Certificate of the Bidder’s domicile in Colombia (or of one of the members of the associative schemes).
3. Sworn statement on the economic ties of the Bidder and its members, “in which the control situations are expressly stated”.

(ii) Nomination of areas, to be done by the qualified bidders, in case the project is intended to be developed in areas other than those defined by DIMAR. In any case, said areas cannot exceed 270 km2.

(iii) Filing of bids by the proponents, based on the technical conditions established by the Resolution.

(iv) Evaluation and selection of offers, according to the qualification criteria established by the Resolution.

(v) Selection of the successful bidder and “formalization” of the award of the respective Permit for the Temporary Occupation of maritime areas for the development of the wind project.

On the other hand, the draft Resolution establishes the characteristics, content, scope and obligations of the Temporary Occupation Permits that will be awarded, which will have a maximum duration of five (5) years, during which their holder will have the exclusive right to carry out the authorized activities on that maritime area.

These activities will be those related to “measurement and data collection and information to establish the viability of the project and, if such is the case, the activities necessary to obtain licenses and permits for the construction of the offshore wind power generation project” .

Temporary Occupation Permits may become a Maritime Concession when the holder files the relevant application with the DIMAR, accrediting compliance with the obligations of the Permit. These Concessions, in turn, are those that, with a duration of thirty (30) years -extendable-, must be obtained by the developers of the offshore wind projects, to carry out the activities of construction, operation, maintenance, dismantling and generation of power of the project.

In this sense, the draft Resolution also defines the content, scope, obligations and requirements to obtaining the Maritime Concessions, and establishes that after the enactment of the Resolution, it will be the applicable regulation regarding that procedure and, consequently, DIMAR will proceed to repeal “the regulations applicable to the maritime concession process, in particular Resolution 794 of 2020.” In this regard, it clarifies that, if necessary, a transition regime may be established, “in respect to the applications that have obtained pre-feasibility during the term thereof.”

The projected document also includes provisions regarding guarantees, follow-up, organization of the competitive process, among other aspects related to it, which must be reviewed by potential bidders. In terms of guarantees, the draft Resolution sets forth that, for the process, the Bidder must successively establish, in favor of the Nation and through an authorized entity domiciled in Colombia:

• A bid bond, the amount of which will be determined in the Terms, which will cover the events in which the Bidder revokes the offer or tries to unilaterally modify it.
• A performance bond in respect of the Temporary Occupation Permit, which will cover delays and defaults in the S curve and the schedule of the offer, and, in general, of any of the obligations of the Permit, according to the amount and validity conditions established by the DIMAR.
• A performance bond in respect of the Maritime Concession, which will cover delays and defaults in the S-curve, density, the installed capacity offered, or in the schedule of the offer regarding the activities “that precede the commercial start of the project”, and, in general, of any of the obligations of the Permit, according to the amount and validity conditions established by the DIMAR.
• A dismantling guarantee, which will cover the dismantling and removal of the infrastructure associated to the project, according to the amount and validity conditions established by the DIMAR.

The draft Resolution will be open to comments from the general public until next Thursday, May 19, 2022. Comments must be submitted in the form provided for those purposes by the Ministry and the DIMAR, and sent to the email pciudadana@minenergia.gov.co.

Should you require further information, please do not hesitate to contact us:

Álvaro José Rodríguez
alvaro.rodriguez@phrlegal.com

Mariana Sánchez
mariana.sanchez@phrlegal.com