Colombia to triple amount dedicated to transport PPPs

In a seminar in London today, Luis Fernando Andrade Moreno – head of the Latin American nation’s National Infrastructure Agency – revealed that Colombia is looking to invest 3% of its GDP in transport infrastructure, up from the current 1%, by 2014. The plans include a $20bn roads PPP programme.

Colombia has announced a big expansion of its public-private partnership (PPP) ambitions with a substantial programme of mainly road and rail projects to be bid out by August 2014, when the current government’s term of office comes to an end. Details of the programme were provided at a seminar hosted by government promotional agency ProExport in the City of London earlier today.

The programme will see Colombia, which has a current annual economic growth rate of around 6 percent per annum, increase the amount dedicated to transport infrastructure from 1 percent of GDP to 3 percent. This will mean a large and rapid expansion of a PPP programme which commenced in the 1990s but has proceeded at a relatively slow pace to date. The Colombian government acknowledges it is playing catch-up. 

Speaking at the event, Luis Fernando Andrade Moreno, president of Colombia’s National Infrastructure Agency (Agencia Nacional de Infraestructura) said the roads element of the programme is alone worth some $20 billion and will result in a 100 percent increase in four-lane highways in the country. It involves 25 PPPs, typically with 20-year contracts, which will seek to connect the main cities with each other and also with the coastal ports.

He outlined a number of examples, including the $700 million Ibague to La Paila section of a road connecting the capital Bogota with Buenaventura. As with many of the road projects, it is expected to be open to bidding by the second quarter of 2013.

Moreno said that around one-third of a typical road project would focus on increasing lane capacity from two to four lanes; while the other two-thirds would be about improving and maintaining the condition of the roads. A typical contract will see 30 percent of payments to the operator come from tolls and 70 percent from availability payments – public contributions made in exchange for assets being available in good condition.

The PPP programme also includes around $3.5 billion worth of rail projects in a move designed to rehabilitate abandoned rail lines and link resource-rich locations for commodities such as coal, coffee and sugar cane with the ports. The rail projects, which are catering to demand from oil and mining companies in particular, are, at least in some cases, expected to be 100 percent-financed by the private sector.

The programme also includes two dredging projects to allow better access to ports in Cartagena and Bueneventura for large Panama Canal vessels; and a $20 million to $30 million PPP at Baranquilla Airport, the fifth-largest airport in Colombia.

Moreno said that the Colombian programme was seeking to attract equity investors, engineering firms and insurance providers from the UK. He said there has already been strong interest from companies in Spain, Brazil, Korea, France, Canada and the US in addition to the UK.

*The April 2012 issue of Infrastructure Investor magazine will include an exclusive interview with Luis Fernando Andrade Moreno, in which he reveals more about the programme – including plans for a new bond product to help address the long-term financing challenge.