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Tuesday, January 19, 2010
Today's News Headlines
* Inco signs contracts for US$2.5bn Ruta del Sol sections 1 and 2 - Colombia
* ANALYSIS: Is China last prospect for Fernández? - Argentina
* Private investment in ports could reach US$20bn, says SEP - Brazil
* ProInversión to retool Chilca-Marcona-Caravelí line concession - Peru
* Mobile concession licenses to be awarded May 5 - Costa Rica
* Court puts brakes on govt plans to force TI out, govt threatens nationalization - Argentina
* Autopistas del Sol to open US$230mn San José-Caldera highway in Jan - Costa Rica
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* 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
* 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 own 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
* 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
* ProInversión to retool Chilca-Marcona-Caravelí line concession - Peru
Peru's state agency for promoting private investment ProInversión has suspended the bidding process for the Chilca-Marcona-Caravelí transmission concession project.
The tender was put on hold as it is more technically feasible for the line to run to Montalvo substation instead of Caravelí, according to the agency, which did not provide a new timetable.
Four groups qualified for the original call: Transcobel, ISA, Abengoa and Kepco. Potential bidders had to demonstrate that they operate transmission lines of no less than 1,000km with tensions equal to or greater than 220kV.
The 500kV project aims to reinforce the interconnection between the center and south of the country. The 30-year concession entails the design, finance and construction of the line and associated substations.
Under the original plan, estimated investment was US$300mn and works scheduled to take 30 months.
By Business News Americas staff reporters
* Mobile concession licenses to be awarded May 5 - Costa Rica
Costa Rica's telecoms watchdog Sutel will publish bidding rules for a mobile concession on February 5 and could award three licenses on May 5, local daily El Financiero reported.
In a press conference, Sutel's president George Miley said technical offers would be received on March 19 and prequalified companies would present economic offers on April 16.
To prequalify, potential bidders need to have at least five years of experience in mobile operations in at least three other countries with no less than 3mn subscribers in total. Bidders should also have at least US$700mn in annual revenues and not have had concessions withdrawn in other markets.
Of the 160MHz available, 60MHz belongs to state-owned telco ICE and the remaining 100MHz will be up for grabs in three bands - 850MHz, 1,800MHz and 2,100MHz.
Costa Rica is due to be one of the last countries in Latin America and the Caribbean to liberalize its mobile telephony market as part of the Central America and Dominican Republic free trade agreement with the US (Cafta-DR).
Central American/Caribbean operators Digicel, Cable & Wireless and Millicom (Nasdaq: MICC), as well as América Móvil (NYSE: AMX) and Telefónica (NYSE: TEF), have all expressed interest in entering the market.
By Business News Americas staff reporters
* Court puts brakes on govt plans to force TI out, govt threatens nationalization - Argentina
An Argentine court of appeal has issued a ruling, putting a stop to anti-trust body CNDC's order for European telecoms operator Telecom Italia (NYSE: TI) to sell its 50% stake in Sofora, a holding that controls Telecom Argentina (NYSE: TEO), local newspaper La Nación reported.
With this ruling, the court has suspended a timeline previously set by Argentine authorities for TI to sell its Sofora stake, which would see the Italian group leave Argentina. The court suspended the timeline until it can be determined if the entry of Spanish telecoms giant Telefónica (NYSE: TEF) in TI's shareholder structure affects competition in the local market.
"This [decision] shows that the judicial system in Argentina works," the paper quoted TI CEO Franco Bernabé as saying. "We are not forced to sell. Depending on the offers and the financial propositions presented by interested companies, we will evaluate the possibility of whether to sell," the executive added.
Last week, both TI and its controlling company Telco presented appeals to CNDC's decision, according to press reports.
The CNDC ordered TI last August to sell on the grounds that Telefónica's indirect stake in TI violates Argentina's antitrust laws, given that Telefónica controls Telecom Argentina's biggest rival Telefónica de Argentina (NYSE: TAR).
Earlier this month, the government published in the official gazette that it was giving TI until February 25 to sell its stake in Sofora. Otherwise, it would step in and take action against the telco, with threats ranging from fines to the cancellation of the concession contract.
TI holds a 50% stake in Sofora, while the remaining 50% is owned by Argentina's Grupo Werthein.
Planning minister Julio de Vido has said that the government will appeal the ruling and that full nationalization is possible if justice continues blocking government resolutions towards TI's exit. De Vido said the local telecoms market is under a monopoly scenario where "competition does not exist."
De Vido reportedly said congress could also intervene in this situation. The official added that the government could decide to withdraw TI's license to operate in the local market if necessary.
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
*
Citibank Peru corporate finance VP Alberto Carrera
Peru
http://www.bnamericas.com/interviews/privatization/Citibank_Peru_corporate_finance_VP_Alberto_Carrera-/170505025
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Main companies covered in today's news
* Empresas Municipales de Cali
http://www.bnamericas.com/company-profile/en/Empresas_Municipales_de_Cali-Emcali/170505025
* Swiss Reinsurance Company
http://www.bnamericas.com/company-profile/en/Swiss_Reinsurance_Company-Swiss_Re/170505025
* Conconcreto S.A.
http://www.bnamericas.com/company-profile/en/Conconcreto_S,A,-Conconcreto/170505025
* International Finance Corporation
http://www.bnamericas.com/company-profile/en/International_Finance_Corporation-IFC/170505025
* The World Bank Group
http://www.bnamericas.com/company-profile/en/The_World_Bank_Group-World_Bank/170505025
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