How do you analyze the success of the 4G road program?
We have done so much better than we expected because international firms have expressed much more interest in equity than we originally thought. Also, international banks such as Goldman Sachs, Sumitomo, Credit Agricole, Chile’s Itaú Bank and the Inter-American Development Bank have actively participated in our projects, especially in financial close. The fact that all these entities have given us their support we believe is a great guarantee to attract more firms in the future.
We have already awarded 27 projects, which is a large number that I think just a few countries have reached. The average cost of the projects is around $400m of investment and we are able to award a project every two months, approximately. We expect to award the 40 projects of the original portfolio at the end of this year.
The program, though, will not end here because the private sector keeps proposing projects so the pipeline has been extended. At the moment we are evaluating 16 unsolicited road projects plus 10 more transport projects. We hope the rhythm keeps like this so we will be able to close our infrastructure gap.
Are there concerns in Colombia that it could suffer similar problems to acountry like Portugal or Spain, where a P3 boom several years ago has left
the government heavily indebted?
Colombia’s development is in a much earlier stage than countries such as Portugal and Spain. During 15 years, Spanish infrastructure projects were successful due to the backwardness of the existing facilities. Problems arrived with the excess of projects. Right now Colombia is far from having an excess of infrastructure and in fact the majority of the projects will upgrade existing roads to be faster, from 40km per hour to 80km per hour. So, the traffic will be the same as always and the risk of low traffic flow is very little. Overall, I reckon it is very unlikely for our road infrastructure to have the same problems as countries such as Spain or Portugal.
What are the plans for ANI beyond the highway projects?
ANI is also working hard to develop airport projects, as air traffic has increased significantly. In the last five years Colombia has registered an annual increase of 10% including the first quarter of this year, whereas predictions had suggested it would decrease due to the slow performance of the economy, which is currently seeing growth of around 3%. At this stage all airports from big cities are included in expansion programs: some through renegotiations of concessions and some through new P3s, which is the case for the Barranquilla airport.
Other major projects are the second airport for Bogota, the bidding process for which is expected to be launched within 12 months. Bogota airport is the third largest airport in the region after Mexico City and Sao Paulo, and if we don’t cover all the demand the airport will be completely saturated. Cartagena airport also needs to be expanded due to increased international tourism.
The actual concession is due in 2020, so we are already working on the next concession, which will involve works that start next year for a 25-year contract. The next step will be expanding our infrastructure program to social projects such as schools, hospitals and public buildings. The Ministry of Education is currently working on the expansion of schools.
Regarding the urban renovation program, this so far involves the National Administrative Center: a public complex that will include several public buildings. The naval base is also planned to be moved as part of the renovation of the area.
What sort of feedback have you received from international investorsso far, and where you would like to see investment coming from?
I think we are attracting the right investment for Colombia. We are very glad that France, Spain and the UK, as well as Mexico and Brazil have invested in our projects. Now China is starting to show its interest
in Colombia, which is pretty interesting for us because we value China’s experience in infrastructure and also the finance lines of the Chinese development bank. The Colombian finance market is small for such a big infrastructure project; this is generating pressure on our currency.
What has been the role of the multilateral banks in the 4G plan?
We work hand-in-hand with the Inter-American Development Bank, CAF and the World Bank through the IFC. They have been our closest partners throughout the process, for example, CAF helped us with the organizational studies during ANI’s creation, IFC with the structuring of projects and IDB has been key in the last financial close. FDN [Colombia’s public fund] is a new entity. When we started the 4G program
four years ago we knew in advance that we would need finance in pesos according to the volume of our finance system. The FDN’s role is to fill the market gaps that the private sector cannot fill to a maximum of 15% of the project value.
How do you foresee the future of Odebrecht in Colombia and theprojects it is involved in, given its involvement in the corruption scandal engulfing Brazil?
Odebrecht has two big P3 projects in Colombia: the Sun Route Sector II and the navigability of the Magdalena River. The Sun Route reached financial close two years ago and is currently in an advanced stage with more than 50% built. For that we don’t expect any problems in the progress of this particular project. Regarding the navigability of the Magdalena River project, we know that some problems have emerged on the route to financial close. However, from a legal point of view Odebrecht doesn’t have any restrictions to bid and participate in Colombia as its legal problem doesn’t have anything to do with the Colombian government.
What do you think has been ANI’s greatest achievement?
I think our biggest achievement is to demonstrate that Colombia indeed was able to develop big infrastructure projects. We are one of the Latin American countries with the worst infrastructure, according to all the indicators, and no one trusted that this country would be able to start such a big program. We have also created ANI and FDN, which will permit projects to carry on. Also we have eliminated the most important bottlenecks related to laws, financial policies and environmental restrictions.
By P3 Bulletin