Latin Finance - March/April 2009 - 58

Colombia infrastructure guarantees and speeding up bidding should help attract private passenger and cargo terminals at Bogotá’s El Dorado airport, bidders and mitigate the problem of scarce funding, adds related to the design of new facilities, are “inadmissible and Grosslich. His fund plans to bid for the Medellín-Turbo road embarrassing” in current circumstances. concession – on the Caribbean coast near the Panama border – Colombia needs a minimum $20 billion of infrastructure investment by 2010 to overcome bottlenecks that may hamper as well as Medellín-Manizales and Medellín to the central Magdalena valley. future growth, according to the National Planning Apart from leaving out of the plan some larger Department. Decades of under investment, partly due to the investments, such as a $2.6 billion concession for the Ruta nation’s five-decade armed conflict, deprived the Andean del Sol tollroad, the nation of railways, roads and deteriorating outlook for bridges needed to connect Major Recipients by Sector (COP trn) cross-border financing has led industrial hubs located in its Energy/mining focus the government to break up mountainous regions to ports some projects, commit more in the Caribbean and Pacific. Sectors Total Public Private public funds and seek a Full execution of the plan Energy and Mining 27.3 13.4 13.9 broader base of investors in should help Colombia reap Housing and Sanitation 14.9 3.3 11.6 countries like South Korea, trade competitive advantages Transportation 5.5 3.4 2.1 Brazil and China. that can be exploited once the Urban Transportation 2.8 1.5 1.3 But it may take Colombia’s global recession recedes. A Telecommunications 3.8 0.6 3.2 Uribe more than friendly recent World Bank study on Irrigation and Rural Water Services 0.4 0.4 0.0 words to kick start the plan. logistics estimates that lack of Education 0.3 0.3 0.0 He threatened to cancel all adequate infrastructure costs Total 55.0 22.9 32.1 Glencore’s mining and energy the country and exporters 18% Source: Colombia National Planning Department (DNP) contracts in Colombia if it of annual sales, says Roberto does not make good on a Albisetti, regional manager at promised $3 billion upgrade of the the IFC in Bogotá. Infrastructure Growth Cartagena oil refinery. The Swiss More public expansion company is looking to sell its 51% Reworking Plans 2008 2009 Growth (%) stake in the refinery project, alleging Among projects listed in this year’s Public 15 23 53% the global credit crunch curtailed infrastructure investment plan are a Private 30 32 7% access to credit. $250 million upgrade of existing ports Total 45 55 22% and the building of new ones such as Source: DNP Aguadulce. Concessions worth 3.4 Shifting Funding Sources trillion pesos will be open for 40 Odinsa, the country’s largest projects to build new roads and fix concession operator, is shifting Investment Plan (COP trn) existing routes. The construction of an funding from the cross-border bond Public/private split 8.8 kilometer tunnel and 24 kilometers market to multilateral loans, the of highway crossing the Andes in the domestic bank market and export Total 55.0 area known as La Linea will require credit agencies, says CFO Mario Dib. Public Investment 22.9 another 210 billion pesos in investment, Fresh funds may also be channeled Private investment 32.1 from private equity funds such as Rentería says. Source: DNP Nexus, and multilateral-backed special To ensure the plan’s execution, it vehicles, such as a new $500 million joint effort by CAF, the must be supported “by good feasibility preparation and IDB and Colombia’s government. structuring to warrant private sector participation,” Albisetti Odinsa is partly mitigating the burden of higher tells LatinFinance. In the current financial crisis, finding borrowing costs, that in the case of cross-border financing, investors and lenders has become much more difficult. The rose by 500 basis points in the past six months for tenors government will do its job in delivering better-structured projects as it acknowledges these conditions, says Rentería. “If longer than five years. The company seeks to incorporate the IDB in the financing structure of El Dorado’s airport we want to place projects in the marketplace at this juncture, project in a $150 million credit scheme, Dib says. And we have to be selective and structure solid plans,” she adds. Nexus plans to replace $100 million worth of syndicated Selectivity should also foster execution, says Albisetti. The loans with commercial banks for multilateral credit, IFC will focus solely on logistics and transport projects and Grossich says. Negotiations with banks over the possible suspend financing of electricity plans for up to two years. It tenors and interest rates are underway, he adds. has determined that Colombia’s complicated geography But companies face pressure from banks to boost the requires more significant investment in roads and ports than equity portion in projects to as high as 40% from 15%-20% electricity, which is currently the target of private equity and at the start of last year, Dib says. And as Colombia’s banks other investment firms. partially took up some slack left by international lenders Partitioning projects, setting aside more government 58 LATINFINANCE March/April 2009
Latin Finance - March/April 2009

Table of Contents for the Digital Edition of Latin Finance - March/April 2009
