Latin America's Business Information Leader
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Infrastructure Perspectives - a weekly summary
January 9 - January 15 2010
Click to read the online version:
http://www.bnamericas.com/perspectives_home.jsp?idioma=I§or=5&id_email=170287594
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In this issue:
* Weekly Wrap
* Q & A:Railway transport is a feasible solution
Jorge Dublé
General manager
Icil Icafal
Chile, Regional
* Coming Up
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** WEEKLY WRAP **
Colombia's ambitious infrastructure plan has been capturing the attention of foreign investors and fund managers alike. Canadian firm Brookfield Asset Management even said it expects Colombia to be the Chile of the next 15-20 years following the first closing of a US$400mn Colombia infrastructure fund in September last year.
However, many of the country's flagship projects had to be delayed or postponed due to effects of the global financial crisis. Even the "project of the year" - the 5.7tn-peso (US$2.6bn) Ruta del Sol highway - did not go unscathed as the tender process for the concession of the third stretch was declared void last year after concessions institute Inco 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.
It was heartening therefore to hear that Inco plans to launch a new process for this project on January 26 and expects to award the concession in June, or shortly thereafter.
The new tender schedule gives companies about four months to submit enquiries about highway stretch and the bidding rules before presenting their proposals. Inco will take another month to review the technical and financial offers.
In the meantime, a team of specialists is working to make the project more attractive so as many companies as possible participate in the process.
The offers presented for the first two stretches were lower than the official budget allowing authorities to save about 400-500bn pesos. These resources will be used to increase the state counterpart for the third stretch from 1.9tn pesos to 2.3tn pesos (US$1.2bn).
With the winds of recession in remission, this could be what it takes to ensure a more competitive process.
Also this week in Infrastructure:
Bolivia
- The public works ministry is beginning a five-year plan to build modern international airports in each of its nine department capitals. The improvements will cost some US$30mn and the ministry plans to build the facilities by 2015.
- President Evo Morales said he will nationalize the country's rail system during 2010. A team from the transport ministry is working to transfer railways to state ownership and will create a national rail company later this year.
Brazil
- The national transport infrastructure department (DNIT) has released 18.2mn reais (US$10.4mn) to build an intermodal freight terminal on the outskirts of São Paulo city. Construction of terminal will cost 26mn reais, with the remainder coming from local government.
- São Paulo state government is requesting US$650mn from the World Bank to expand the city's metro line 5. The government is also asking IDB for US$481mn to support the project. State government will contribute an additional US$1.39bn, bringing total cost up to US$2.52bn.
Chile
- The public works ministry (MOP) has launched two tenders worth some 10bn pesos (US$20.4mn) to improve connectivity in region IX.
- State rail company EFE plans to invest at least US$120mn this year to improve its rail network and services. The investment is part of the company's 2008-10 development plan, which will total around US$292mn.
- EFE has also launched a tender to determine the detailed engineering required to rehabilitate the Chilean stretch of the Arica-La Paz (FCALP) rail line.
Costa Rica
- The chamber of construction (CCC) has drawn up a document to help the government create a national transport plan for 2010-35. The document includes highway, airport and port projects.
El Salvador
- The La Unión port will start operations in April under the administration of national ports authority Cepa.
- Fomilenio, the local chapter of the US Millennium Challenge Corporation (MCC), expects to announce the awardee of the contract to build section 6 of the Longitudinal del Norte highway the week of Jan 18.
Ecuador
- The Andean Development Corporation (CAF) approved a US$258mn loan to finance roadworks.
Mexico
- The transport and communications ministry (SCT) will work with the private sector to invest 2.3bn pesos (US$182mn) in airport improvements during 2010.
- IDB has approved two non-refundable technical cooperation agreements for a total of US$2.6mn to improve the Pacific corridor highway network.
- Federal district (DF) mayor Marcelo Ebrard presented a 1.3bn-peso (US$102mn) plan to renovate the metro.
Panama
- The public works ministry (MOP) will launch more than 10 tenders during H1.
- The government extended the deadline to receive offers for Panama City's Metrobus system to April 6.
- The government will invest more than US$200mn in infrastructure and water projects in the province of Chiriquí.
Peru
- Private investment promotion agency ProInversión is considering concessioning the new bus rapid transit (BRT) system in Arequipa.
Regional
- The Central American mezzanine infrastructure fund (Camif), which closed late last year at US$150mn, is offering long-term funding to private infrastructure companies in 10 Latin American countries. EMP Latin America is managing the fund.
RESULTS & FIGURES
Brazilian infrastructure firm Triunfo Participações e Investimentos (TPI) said preliminary figures show traffic on its highway concessions in 2009 grew 1.81% compared to last year.
Consolidated traffic volume in 2009 was 64,085 vehicles compared to 62,946 vehicles in 2008.
Individual concessionaires Concer, Concepa and Econorte posted traffic increases of 2.42%, 1.27% and 1.80%, respectively.
Meanwhile, container handling at TPI's Navegantes port went up 73% in 2009. The company's consolidated TEU performance in 2009 stood at 413,968 TEUs. A total of 239,312 TEUs were handled in 2008.
Container traffic at Peru's Callao port fell 12% during 2009. The port, Peru's busiest, handled 1.08mn TEUs during 2009, compared to 1.20mn during 2008.
The Venezuelan government and state-owned development bank Bandes have signed two agreements to provide a total of US$380mn in capital to CAF, to be paid between now and 2017. The funds are part of the 7-year US$2.5bn paid-in capital increase for CAF approved by its board in August.
Mexican airport operator OMA experienced a 9.9% decrease in traffic at its airports in December 2009 compared to the same month in 2008.
Domestic traffic fell 10.5% to 789,243 passengers in the period, while international traffic was down 7.4% to 170,044 passengers.
Mexico's Salina Cruz port in Oaxaca state expects an 18% increase in commercial cargo movement in 2010. The port is expected to handle 15,600 TEUs during 2010 compared to the 13,218 TEUs in 2009.
In 2009, the port exceeded its forecasted cargo movement by 25.2%, equivalent to a 180% increase compared to 2008.
Brazil's national development bank BNDES will disburse at least 20% more for infrastructure projects this year than it did in 2009.
The board of Brazil's federal unemployment insurance fund (FGTS) has approved a 2010 budget of 8bn reais (US$4.5bn) for urban transportation projects in 2014 World Cup host cities. The cities ministry will transfer another 1bn reais from projects that were not carried out in 2009, bringing the total up to 9bn reais.
Mexican cement producer Cemex has issued US$500mn in 9.5% notes due 2016.
By Greta Bourke
Related Companies
* Secretaria de Comunicaciones y Transportes - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=11424§or=0
* Inter-American Development Bank - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12225§or=0
* The World Bank Group - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12283§or=0
* Banco Nacional de Desenvolvimento Econômico e Social - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12404§or=0
* Empresa de los Ferrocarriles del Estado S.A. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=13333§or=0
* Corporación Andina de Fomento - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=13481§or=0
* Departamento Nacional de Infra-Estrutura de Transportes - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=13623§or=0
* Grupo Aeroportuario del Centro Norte S.A.B. de C.V. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=13649§or=0
* CEMEX S.A.B. de C.V. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=13867§or=0
* Ministerio de Obras Públicas - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=14170§or=0
* Agencia de Promoción de la Inversión - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=14544§or=0
* Triunfo Participações e Investimentos S.A. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=695914§or=0
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** Q & A **
* Railway transport is a feasible solution
Jorge Dublé
General manager
Icil Icafal
Chile, Regional
Chilean railway development firm Icil Icafal is taking part in a tender to rehabilitate part of Uruguay's railway network. With 30 years of experience in the industry, the company is also looking to expand operations which are currently between Chile's region I in the north and X in the south.
BNamericas spoke with the firm's general manager, Jorge Dublé, to learn about the company's expansion plans, the contracts it has recently been awarded, and the potential for railway development in Latin America.
BNamericas: I believe you are participating in a tender to rehabilitate a railway stretch in Uruguay. Can you tell us about this process?
Dublé: We took part in an international public tender [held by state-owned rail firm AFE] in which we submitted the best offer for one of the stretches. However, the project's total cost surpassed the budget the government had established for the initiative. Therefore, the Uruguayan state launched a new tender. We submitted a new offer in that process and a final decision is still pending. So, we are waiting.
BNamericas: Where do you see most growth opportunities?
Dublé: The railway industry is important in Antofagasta, Chile's region II, because of mining. Companies such as Codelco and Soquimich are important for the railway industry as we develop the engineering and the construction of their rail projects, and carry out maintenance works.
Towards the south of the country, we recently signed a rehabilitation contract with state-owned rail company EFE for the rehabilitation of a rail stretch connecting region X's San Rosendo to Puerto Montt. The contract involves the rehabilitation of the line connecting district San José de la Mariquina to Puerto Montt in one year, and the maintenance of the line for another 14 years. The railway's rehabilitation requires US$32mn. Maintenance will take much longer and the investment will be gradually made over the contract period.
EFE also recently awarded us a US$10mn contract for works between Concepción and Lirquén.
While we have operations in Bolivia we are kind of walking away from that market because of the [small] size of the cargo volume there.
BNamericas: How do you see the future development of Chile's rail industry?
Dublé: We see tremendous opportunities in many senses. In terms of cargo handling, for instance, we see that in Chile - with all the growth it has experienced and the positive forecasts there are - rail transport is becoming a feasible alternative.
There is also the environmental issue. As you know, throughout the world railways are seen as an effective and efficient way to reduce the contamination caused by highways. So, railway cargo transport has huge potential in Chile.
BNamericas: What is needed to improve the Chilean rail sector's competitiveness?
Dublé: What we need, I think, is to work more on integrating different modes of transport. Chile has evaluated projects separately, looking at railway, maritime and road transport in parallel perspectives. Instead, we need to work on integrating the three systems, given that they can coexist. That has been proved, and I think that is how we must steer development.
BNamericas: Do you think the focus should be more on the transport of cargo rather than passengers?
Dublé: Yes, I think initially it should be cargo. If you look at what has happened in the world, you see that, in general, rail passenger transport is subsidized by cargo. There are very few countries where passenger transport is self sufficient. Everything starts with the development of cargo transport and once you have efficient networks, you can implement socially feasible passenger services.
BNamericas: Are you looking at projects in other countries, aside from Uruguay?
Dublé: Yes. We recently took part in the tender for the construction of the second phase of Peruvian capital Lima's electric train. We participated in the process as a subcontractor of the Brazilian firm Andrade Gutiérrez, but the offer we submitted did not win.
In spite of that, we are always looking at interesting projects in the region in which we could take part. We are looking to countries that are close to Chile such as Bolivia, Peru, Ecuador, etc.
Chile has begun to experience a boost in railway projects. There have been many private initiatives. Soquimich is an example, as it has an investment plan that includes its own rail line. There are also projects associated with EFE and there is now the project to improve the stretch connecting northern port city Arica to Visviri.
That is a project that involves an investment of about 1mn UF [inflation-linked units, around US$42.7mn]. We will participate in that initiative through a subcontract with another company.
BNamericas: Is that how you usually participate in tenders?
Dublé: It depends on the size of the project and on its type. As a company, we have a certain level of capacity and we prioritize accountability. When we take part in a tender, it is because we know we can be in charge of a project until the very end. If we find that it is too large, we participate with other firms.
Also, if a project requires a high level of specialization in many areas, we join up with other firms. That is what we did in the case of Valparaíso's metro system Merval, in which we worked on the fourth phase of the project through a consortium in which three firms that specialized in different areas joined forces to present a competitive offer.
BNamericas: Do you think the low price of the dollar affects Chilean tenders?
Dublé: What has happened is that it has affected them positively, because tenders in Chile tend to be in pesos or UF. This allows companies to purchase foreign supplies at a lower cost. My experience, however, says that it does not affect projects very much. The changes experienced in the last few years do not affect a tender to the point of having to halt the process. The percentage of international supplies for the initiative may be high, but it is not the majority of a project's cost.
BNamericas: Could the dollar value, however, affect foreign investors bidding in a Chilean project?
Dublé: Yes, of course. They lose competitiveness.
BNamericas: How do you think the rail sector is developing in the rest of the region?
Dublé: What I have seen in the last five years is similar to what happened in Europe. As societies progress, they start to need more efficient services. Rail services are ideal as they contribute to a reduction in contamination, to an increase in efficiency and to more security when handling hazardous waste, for example.
Europe, for instance, experienced huge development in terms of railways ten years ago and in the last five years too.
In South America, we have seen something similar in the last five years: Colombia, Ecuador, Peru, Bolivia, Chile are starting to take this path.
I believe we will see significant railway development from Mexico to Chile. Not in terms of integrated rail transport systems between countries where every one agrees to implement one single system, but rather every country is looking - both in terms of reducing contamination as well as energy consumption - at railway transport as an effective solution.
In terms of railways, Brazil, Mexico and Argentina are leading the way, marking the track that the rest of us must follow.
By Eva Medalla
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** COMING UP **
January 17, 2010:Second round of presidential election.
Chile
January 18, 2010:Martin Luther King, Jr. Day, US markets closed.
Regional
January 25, 2010:A contract to carry out a technical feasibility study for an US$850mn rail line between Iquitos and Yurimaguas in Loreto region will be awarded on this date.
Peru
January 26, 2010:Concessions institute Inco plans to launch the concession tender for the third section of the Ruta del Sol highway on January 26.
Colombia
January 27, 2010:New president Porfirio Lobo to be sworn in.
Honduras
February 05, 2010:Financial offers for the tender to concession ferry services in region X must be sumbitted to the public works ministry by this date.
Chile
February 07, 2010:Presidential and congressional elections.
Costa Rica
February 15, 2010:Washington's Birthday/Presidents' Day, US markets closed.
Regional
February 23, 2010:According to ProInversión's new schedule, firms interested in the concession of the second regional airport package now have until February 23 to submit technical and financial offers.
Peru
February 26, 2010:Proposals to supply and operate a new fleet of buses in Panama City must be received by this date.
Panama
March 19, 2010:The DF government expects to award a contract to build line 1 of a trolley system for Mexico City's historical central area. The tender involves building and operating a 10.4km trolley line over a 25-year period, at an estimated cost of 17bn pesos (US$1.3bn). Interested parties have until January 5 to acquire bidding rules from federal procurement website Compranet. Offers are to be presented on March 5.
Mexico
April 02, 2010:Good Friday, most markets closed.
Regional
April 06, 2010:The government extended the deadline to receive offers for Panama City's Metrobus system to this date.
Panama
May 31, 2010:Memorial Day, US markets closed.
Regional
July 05, 2010:US holiday marking Independence Day.
Regional
September06, 2010:Labor Day, US markets closed.
Regional
October 03, 2010:Presidential elections.
Brazil
November 01, 2010:All Saints Day, most Latin American markets closed.
Regional
November 25, 2010:Thanksgiving Day, US markets closed.
Regional
December 24, 2010:Christmas holiday (observed), US markets closed.
Regional
Click here to view the most important conferences and events in your sector of interest. http://www.bnamericas.com/conferences_home.jsp?idioma=I§or=5
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