Empresa de Energia de Bogota SA, Colombia’s second-biggest electricity distributor, sank the most in two years after Bogota’s mayor-elect Gustavo Petro said he plans a merger with other public companies and questioned the company’s investments in Peru.
Shares of EEB, as the city-controlled company is known, fell 7.5 percent to 1,165 pesos at 4 p.m. Bogota time, the biggest plunge since November 2009.
Petro, a former member of the M-19 Marxist guerrilla movement and ex-senator who won with 32 percent support in an Oct. 31 vote, told El Tiempo newspaper that he plans to merge EEB with the city-controlled companies Empresa de Acueducto de Bogota SA and Empresa de Telecomunicaciones de Bogota SA.
“The mayor-elect’s main objective is to reduce costs for public services, which could be negative for the companies,” said Juan David Ballen, an analyst at Alianza Valores SA. He added that the mayor may seek to use EEB profits to subsidize the rate reductions he promised while campaigning.
Petro said he plans to use a “surplus” of funds from EEB to help cover the “deficits” of the city’s water and sewage company and reduce rates for water service, El Tiempo reported.
EEB plans to use 772 billion pesos ($410 million) raised in a share sale that ended Oct. 27 to help fund an expansion of existing operations in Peru and Guatemala, Monica De Greiff, the company’s president, told reporters on Oct. 7. EEB assets in Peru include natural gas distribution concessions in Lima and other regions.
Petro said that the company should use that money to improve Bogota’s water and sewage service.
The mayor-elect, who is scheduled to take office next month, said he also maintains his “total” opposition to the sale of the city’s 87 percent stake in Empresa de Telecomunicaciones de Bogota SA.
ETB, as the city-run phone company serving Colombia’s capital is known, fell 5.3 percent to 444 pesos, a six-year low.