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Tuesday, January 19, 2010
Today's News Headlines
* Longitudinal del Norte highway stretch ready in Nov - El Salvador
* ANALYSIS: Is China last prospect for Fernández? - Argentina
* IDB board to gather before Cancún meeting to fine-tune capital increase - Regional
* Roundup: Govt moves forward with roadworks - Guyana
* Votorantim gearing up to launch bid for Cimpor - Brazil
* Inco signs contracts for US$2.5bn Ruta del Sol sections 1 and 2 - Colombia
* Private investment in ports could reach US$20bn, says SEP - Brazil
* Domestic cement sales up 5% in 2009 by volume - Peru
* Authorities sign US$11.3bn cooperation agreement for 2014 World Cup - Brazil
* MTC, Iccgsa sign US$83mn highway maintenance contract - Peru
* Cementos Molins buys additional share of local cement firms - Argentina, Uruguay
* Autopistas del Sol to open US$230mn San José-Caldera highway in Jan - Costa Rica
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* Longitudinal del Norte highway stretch ready in Nov - El Salvador
Fomilenio, the El Salvadorian chapter of the US Millennium Challenge Corporation (MCC), expects to finish a 42km section of the Longitudinal del Norte highway in November, Fomilenio's deputy director of infrastructure, Carlos Duque, told BNamericas.
The section runs from the Metapán municipality in Santa Ana department to the Nueva Concepción municipality in Chalatenango department.
The project is divided into three different stretches: stretch 2A is a 22.5km road running from Metapán to Santa Rosa Guachipilín; stretch 2B1 is 7.68km long and joins Santa Rosa Guachipilín to El Matazano; and stretch 2B2 runs 13.4km from El Matazano to Nueva Concepción.
A total of US$56.5mn will be invested in the three stretches which will benefit some 110,462 inhabitants.
"Stretch 2B2 should be finished by April but the completion of all three is scheduled for November," Duque said.
The 2B2 section is being developed by Mexican firm Linares. The second stretch -2B1- is being built by Costa Rican firm Constructora Santa Fe de Centroamerica and is scheduled for completion in October. The last stretch -2A- is being built by Costa Rican construction firm Meco (http://) and will be finished by November.
The 176km Longitudinal del Norte highway will connect northern El Salvador with the rest of the country and is expected to benefit a third of El Salvador's 5.7mn people, according to Duque.
Funding for the highway project comes from a US$461mn donation from the MCC, which was approved for El Salvador in June 2006 to reduce poverty in the northern part of the country. MCC is a US government agency that provides aid to developing countries.
By Indiana Corrales
Business News Americas
Editor's Choice
* ANALYSIS: Is China last prospect for Fernández? - Argentina
Argentine President Cristina Fernández's visit to China at the end of the month could be her last chance to muster financial and technical support to develop much-needed infrastructure projects.
The president will meet with government officials and company executives to discuss bilateral trade and business. At the same time, she will be promoting investment opportunities in Argentina, an official from the presidential office told BNamericas.
Chinese companies and government representatives have expressed interest in infrastructure development in the region, and China is Argentina's second largest trade partner, after Brazil.
Airports, ports and railways are some of the areas Chinese firms have been looking into, both as part of international expansion strategies as well as efforts to improve logistics and reduce the cost of transporting imports from Latin America across the Pacific, according to the official.
The trip could not have come at a more opportune time for Fernández, as she faces mounting criticism over an attempt to remove the head of the central bank from office when he refused to use the bank's reserves to pay the country's external debt.
FINANCIAL CRISIS
Fernandez wanted to use nearly US$6.6bn from central bank reserves and place them in a fund to restructure US$20bn in defaulted debt. By doing this, Argentina would have been allowed to return to international capital markets for the first time since 2001.
Upon his refusal, central bank president Martín Redrado was asked to resign from his post on January 6. After he declined to do so he was fired the next day through a presidential decree.
On January 8, a federal judge ruled against Fernández, preventing her from interfering with central bank reserves and reinstating Redrado.
The crisis that has resulted has taken its toll on the stocks of local banks, which hold a high proportion of government bonds.
Then, on January 11, US judge Thomas Griesa froze US$1.7mn of central bank assets held at the US federal reserve bank. The amount could increase to US$15mn to pay for Argentine state bonds issued in 2001, according to international press reports.
Griesa issued the order at the request of investment firms which lost out when Argentina defaulted on US$95mn in bonds in 2001. According to Griesa, some or maybe all of that money rightfully belongs to creditors owed billions of dollars by Argentina's government.
In 2005, Griesa froze US$105mn in central bank assets kept at the federal reserve. However, the creditors refused to reprogram debt payments at that time because it involved taking a massive discount.
FACING THE CONSEQUENCES
In response to these events Fernández has criticized the opposition for trying to impede the running of the government.
"There are clear, strong, very evident manoeuvres to obstruct the performance of the state powers. It is very clear that the only thing (the opposition) wants is to set obstacles, to make politics with laws and to obstruct the government's management," said Fernandez last week.
The president reiterated the need to use the currency reserves to pay the external debt due this year.
While the final outcome remains to be seen, the events have led to an increase in Argentina's country risk. This will further impede the country's ability to obtain financing and affect development plans even more.
Last year, in what was seen as a desperate move, Fernández nationalized private pension funds to finance infrastructure projects she claimed would create jobs and boost the country's competitiveness. However, little progress has been made.
The outlook for Fernández looks bleak. Financing will continue to be scarce due to the continuing effects of the economic crisis. International entities such as the World Bank and IDB are focusing on mitigating the effects of the earthquake in Haiti and rebuilding the country. Venezuelan President Hugo Chávez is too busy dealing with his own emergencies to dedicate much time to his troubled comrade.
China may well be Fernández's last opportunity to get Argentina back on the development track.
By Eva Medalla
Business News Americas
* IDB board to gather before Cancún meeting to fine-tune capital increase - Regional
IDB's board of governors will meet before the bank's annual meeting in Cancún, Mexico at end-March to fine-tune the details of a proposal for its ninth capital increase, as well as the institutional strategy and results, Susana Sitja, senior modernization of the state specialist at IDB's office of strategic planning and development effectiveness told BNamericas.
Last March the board of governors - IDB's top policymaking body, where all member countries are represented - called for an assessment of the need to add resources to the bank's ordinary capital and the fund for special operations, its source for concessional lending for the region's poorest countries. The capital increase is expected to come close to US$175bn, or more than double the bank's existing capacity.
Last week, IDB completed what it described as a far-reaching public consultation related to its proposed capital increase, a process that began on September 8 last year.
About 500 civil society organizations in the Americas and Europe participated in the consultation process. During the period, management met with organizations in the US, Europe and Latin America and the Caribbean, and conducted face-to-face meetings in seven countries.
"The public consultation focused on three aspects: the bank's institutional strategy, the institution's comparative advantages and IDB's agenda to become a more effective and efficient institution," Sitja said.
Civil society organizations provided suggestions ranging from increased support for the private sector to greater emphasis on urban development, community participation in projects and an expansion of poverty alleviation programs.
"Suggestions and comments made by the civil society regarding the bank's capital increase through eleven public consultations and the bank's website are being systematized in a document that will be sent to the board of executives and the board of governors, so that they are materials for their discussions about the final structure of the capital increase," she said.
IDB hired a non-profit firm with vast experience in dialogue and consultation processes to handle the information. The bank's management has already incorporated several comments made by civil society about poverty and inequality reduction, climate change and renewable energy to its institutional strategy that will be proposed with the capital increase, according to Sitja.
By Jorge Porter
Business News Americas
* Roundup: Govt moves forward with roadworks - Guyana
The Guyanese government's 2010 budget includes the construction of some 600 roads throughout the country, state information agency GINA reported on its website.
From 2009 to March 2010, the government invested in the construction and maintenance of an additional 400 roads, some of which are still being worked on.
A total of G$5bn (US$ 24.3mn) was invested last year in the Berbice region to upgrade physical infrastructure, including G$1.8bn to complete the 86km New Amsterdam-Moleson Creek road.
**
The government plans to spend G$1.4bn (US$6.89mn) to improve the Black Bush Polder road located in eastern Berbice-Corentyne region, GINA reported in a separate release.
The cost would be financed by IDB and the bank is currently studying the proposal.
Authorities expect to launch a tender for the project in February. According to the schedule, the project should be awarded by April.
The project has been under discussion for several years.
***
Guyana's public works and communication ministry has finished construction of the Mahaicony Branch road at a cost of G$175mn (US$861,220), GINA reported in a release.
Construction of the 10km road began in April 2009 and was completed on January 10 this year.
The road, located in the Mahaica-Berbice region, will benefit approximately 500 residents.
By Business News Americas staff reporters
* Votorantim gearing up to launch bid for Cimpor - Brazil
Brazil's industrial conglomerate Votorantim may be the third Brazilian company to join the race for Portuguese cement maker Cimentos de Portugal (Cimpor), Portuguese daily Jornal de Negócios reported on its website.
Votorantim hired a financial and legal team to prepare a bid for Cimpor, the paper said. Cimpor has also been coveted by Brazilian steel producer Companhia Siderúrgica Nacional (CSN) and construction group Camargo Corrêa.
According to the paper, Votorantim has been studying the possibility of a deal with Cimpor for several months.
Earlier this month, Cimpor rejected a hostile US$3.86bn takeover bid from CSN. More recently, Camargo Corrêa proposed to merge its cement unit with Cimpor.
In a statement Saturday, however, Portuguese stock market regulator CMVM said that Camargo must comply with regulations and file a counterbid, or otherwise withdraw its initial proposal.
Last week Camargo proposed to merge with Cimpor in a deal that would give it less than 50% of the resulting company. The offer was subject to the acquisition by Camargo of between 15% and 25% of Cimpor.
According to sources close to the negotiations, Camargo Corrêa valued Cimpor at US$4.267bn, or US$6.35 per share, 10.5% above CSN's bid.
Following CMVM's statement, Camargo reiterated its interest in Cimpor. Camargo was given 10 days to get back to the Portuguese regulator.
http://www.aebrazil.comAgência Estado
* Inco signs contracts for US$2.5bn Ruta del Sol sections 1 and 2 - Colombia
Colombian concessions agency Inco has signed contracts for the first and second sections of the US$2.5bn Ruta del Sol highway, the entity reported in a release.
The contracts were signed by Inco and transport ministry representatives at a ceremony held at the Casa de Nariño presidential palace in Bogotá.
The first highway section was awarded to Consorcio Vial Helios, which is comprised of local firms Conconcreto, Carlos Alberto Solarte and CSS Constructores, and Argentina's Iecsa.
The group submitted a 1.54tn-peso (US$770mn) offer on October 27, and will now be responsible building the new 78km Villeta-El Korán stretch within the next four years, and operating it for another three years once construction is complete.
The second section was concessioned to Concesionaria Ruta del Sol, which submitted a 3.54tn-peso offer. The consortium includes Brazil's Odebrecht and Colombia's Corficolombiana.
The consortium will be responsible for carrying out maintenance and repair work on 528km of highway between Puerto Salgar and San Roque, as well as operating it for a 25-year period.
Inco also received offers for the highway's third stretch in December, but the tender was declared void after the authority rejected a proposal submitted by the sole bidder, Concesión RDS, formed by Colombian firms Inversiones Grandes Vías e Ingeniería and Gas Kapital, in partnership with the China Railway Shisiju Group Corporation.
By Business News Americas staff reporters
* Private investment in ports could reach US$20bn, says SEP - Brazil
Brazil's special ports department (SEP) is expecting to attract up to US$20bn in private investment over the next five years, according to SEP head Pedro Brito, government news service Agência Brasil reported.
Private sector investment will increase if SEP's 677mn-real (US$384mn) port infrastructure budget is approved, Brito said.
The budget is designed to prepare seven of the 2014 World Cup host cities to receive transatlantic passenger ships, and is currently awaiting presidential approval.
Investments will be made in the ports of Salvador (Bahia), Recife (Pernambuco), Natal (Rio Grande do Norte), Fortaleza (Ceará), Manaus (Amazonas) and Rio de Janeiro. Work will also be carried out at Santos port (São Paulo).
Two government projects will also stimulate cargo business at ports. The national dredging plan will allow large vessels to dock at ports and the Porto Sem Papel (ports without paperwork) program will reduce red tape at ports, thus lowering freight costs which will be reflected in the final cost of imports and exports, according to the report.
By Business News Americas staff reporters
* Domestic cement sales up 5% in 2009 by volume - Peru
Cement sales in Peru's domestic market climbed 5.01% during 2009 by volume, according to statistics published by national cement association Asocem.
Cement shipments on the domestic market by the main producers in the country totaled 7.047Mt in 2009 compared to 6.773Mt in 2008.
Exports of cement were 1,851t, which represented a 97% drop compared to 2008, when 62,316t were exported.
Total sales on both national and international markets were up 4.07% overall, reaching 7.049Mt in 2009, according to Asocem.
The figures are based on consolidated results from cement firms Cementos Lima, Cementos Pacasmayo, Cemento Andino, Cementos Yura, Cementos Selva and Cementos Sur.
By Business News Americas staff reporters
* Authorities sign US$11.3bn cooperation agreement for 2014 World Cup - Brazil
Brazil's federal, state and municipal governments from the 2014 World Cup host cities have signed an US$11.3bn cooperation agreement to guide preparations for the sporting event, the federal government said in a release.
"Rather than simply assuming a commitment, we are signing a treaty that will lead us to not only host the World Cup, but to host the best World Cup ever," said President Luiz Inácio Lula da Silva at the ceremony.
The document outlines the role of each level of government in World Cup preparations, the allocation of resources, the projects to be developed and the work schedule.
Federal government will invest US$7.4bn while states and municipalities are contributing US$3.9bn, the release said. State and municipal authorities are responsible for work on sports facilities, while federal government will carry out work at airports and ports.
Federal government will also monitor and report on expenditures and the progress of projects based on information received from the states and municipalities.
FINANCING
National development bank BNDES will provide US$2.1bn for the construction of football stadiums and complementary works. The bank will finance up to 75% of each project with a cap of US$230mn. The loans have 12-year terms, three-year grace periods and interest is set at 1.9%/y.
BNDES has set aside another US$573mn for the renovation and expansion of hotels. The construction of buildings that comply with sustainability standards will have 18-year terms, while remodeling projects will have 12 years.
A total of US$4.3bn from the country's federal unemployment insurance fund (FGTS) will be used for urban mobility projects such as light rail vehicles (LRT) and bus rapid transit (BRT) systems. Resources have a 20-year term, with 30 years for rail transport on rails, and a grace period of four years. Interest is set at 6%/y.
In addition, US$573mn has been set aside for other cities in the north, northeast and center-west regions to finance tourism projects.
The World Cup host cities are Brasilia, São Paulo, Rio de Janeiro, Belo Horizonte, Cuiabá, Curitiba, Porto Alegre, Salvador, Fortaleza, Manaus, Natal and Recife.
By Business News Americas staff reporters
* MTC, Iccgsa sign US$83mn highway maintenance contract - Peru
Peru's transport and communications ministry (MTC) has signed a 256mn-sol (US$82.8mn) contract with local construction firm Ingenieros Civiles y Contratistas Generales (Iccgsa) to carry out maintenance work on a highway connecting the Junín and Ucayali regions.
Iccgsa, which was awarded the contract on December 10, will be responsible for carrying out routine and emergency maintenance work on the 472km highway stretch over a five-year period, according to state news agency Andina.
The road connects the localities of Santa Rosa de Ocopa, Comas, Mariposa, Satipo, Puerto Ocopa, Atalaya, Mazamari, San Martín de Pangoa and Punta de Carretera.
The work will reduce travel times by 50%, and improve safety on the highway, benefitting some 254,000 people, the report said.
The initiative is part of MTC's Proyecto Perú program, which aims to carry out improvements, maintenance and prevention works for three or more years on the roads that connect the coast to the mountains and the mountains to the Amazon.
By Business News Americas staff reporters
* Cementos Molins buys additional share of local cement firms - Argentina, Uruguay
Spanish firm Cementos Molins now owns almost 62% of two Latin American cement companies, after investing 31.7mn euros (US$45.6mn), Argentine paper Clarín reported.
The firm paid Brazilian group Votorantim 23.8mn euros to buy an additional 11.6% of Argentine cement company Cementos Avellaneda.
Molins paid another 7.9mn euros to Votorantim to buy 11.6% of Uruguay's cement company Artigas from the Brazilian group.
Previously, the firms' shares were owned 50-50 by Votorantim and Molins.
Cementos Avellaneda has two cement and five concrete factories. The firm invoiced almost 800mn pesos (US$211mn) in 2008. Artigas' annual sales are around 780mn pesos, according to the paper.
By Business News Americas staff reporters
* Autopistas del Sol to open US$230mn San José-Caldera highway in Jan - Costa Rica
Costa Rica's President Óscar Arias said the highway connecting capital San José to eastern Caldera port in Puntarenas province will be inaugurated on January 27, local paper La Nación reported.
The Autopistas del Sol consortium started work on the highway in January 2008 with a budget of US$230mn. The 77km highway will shorten travel time between the cities to approximately 45 minutes and vehicles will pay a toll of approximately 1,500 colones (US$2.71).
The highway was scheduled to open in March, but will now start operations one week before the presidential elections take place.
The 25-year concession contract includes improvement, rehabilitation, construction, operation and maintenance of the highway. Work was divided into three stretches: San José-Ciudad Colón (14.2km); Ciudad Colón-Orotina (38.8km); and Orotina-Caldera (23.8km), the paper said.
Autopistas del Sol is owned by Globalvía (a subsidiary of FCC Construcción and Caja Madrid), Itinere Infraestructuras (the Sacyr Vallehermoso group's infrastructure subsidiary) and Portuguese construction firm Soares da Costa.
By Business News Americas staff reporters
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In-deph interview
* Railway transport is a feasible solution
Jorge Dublé
General manager
Icil Icafal
Chile, Regional
http://www.bnamericas.com/interviews/infrastructure/Jorge_Duble_,Icil_Icafal,/170504996
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Main companies covered in today's news
* Ministerio de Transportes y Comunicaciones
http://www.bnamericas.com/company-profile/en/Ministerio_de_Transportes_y_Comunicaciones-MTC_Peru/170504996
* Conconcreto S.A.
http://www.bnamericas.com/company-profile/en/Conconcreto_S,A,-Conconcreto/170504996
* The World Bank Group
http://www.bnamericas.com/company-profile/en/The_World_Bank_Group-World_Bank/170504996
* Votorantim Cimentos Ltda.
http://www.bnamericas.com/company-profile/en/Votorantim_Cimentos_Ltda,-Votorantim_Cimentos/170504996
* Departamento Nacional de Infra-Estrutura de Transportes
http://www.bnamericas.com/company-profile/en/Departamento_Nacional_de_Infra-Estrutura_de_Transportes-DNIT/170504996
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