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Wednesday, January 20, 2010
Today's News Headlines
* DP World spends US$500mn on Muelle Sur, proposes contract change - Peru
* FEATURE: Piñera's infrastructure plan to focus on multimodal transport - Chile
* Consorcio Vial Chile wins Camino de la Fruta highway concession - Chile
* EDITORIAL COMMENT: Codelco's future under Piñera, more of the same? - Chile
* Watchdog opts for hybrid auction in 850, 1800, 2100 MHz - Costa Rica
* Ensenada studies waste-to-energy project - Mexico
* Codelco workers reject privatization, want greater reinvestment - Chile
* Minera Invierno submits EIS for Isla Riesco coal project - Chile
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* DP World spends US$500mn on Muelle Sur, proposes contract change - Peru
Global port operator DP World has spent over US$500mn on construction and equipment at the Muelle Sur dock in Peru's Callao port, according to transport minister Enrique Cornejo.
This week, the minister inspected the three new gantry cranes and nine RTGs acquired by DP World.
The new equipment, which represents half of all the machinery that will eventually operate at the port, will allow Peru to receive super post-Panamax ships for the first time, Cornejo was quoted as saying by state news agency Andina.
CONCESSION CONTRACT
Following the inspection, DP World general manager Maciek Kwiatkowski proposed modifying the company's concession contract to allow for increased storage at the dock.
The proposal involves expanding the 22.5ha dock by some 3ha, and would cost a few million dollars, according to Kwiatkowski.
DP World hopes the transport and communications ministry (MTC) will approve the proposal shortly, so that the new concession contract can be signed in the next few weeks, the executive said.
The port operator was awarded the concession of Muelle Sur in July 2006 and will invest US$600mn in the terminal. The dock will have the capacity to handle 850,000 TEUs in its initial operating phase, and will eventually reach capacity of 1.45mn TEUs.
TRAFFIC FORECAST
While container traffic at Callao port fell 12% during 2009, national port authority Enapu expects this tendency to be reversed in 2010, Andina reported.
The authority predicts growth in traffic of up to 20% this year, spurred by an increase in world trade as economies recover from the financial crisis.
The port, Peru's busiest, will also benefit from the free trade agreement that is likely to be signed with China later this year, Enapu president Mario Arbulú said.
By Business News Americas staff reporters
Editor's Choice
* FEATURE: Piñera's infrastructure plan to focus on multimodal transport - Chile
Chilean president-elect Sebastián Piñera will focus infrastructure development on multimodal transport projects, an official from Piñera's campaign headquarters told BNamericas.
Improved multimodal systems will diminish truck congestion in ports and increase the country's competitiveness by reducing transport time and costs, the official said.
Better cargo transport infrastructure and services are essential to Piñera's government plan, said the official, adding that infrastructure projects will be designed to help achieve the main goals of this plan. These include: increasing investment to 28% of the country's GDP from the current 22%; guaranteeing a minimum annual economic growth increase of 6% during his 2010-14 term; boosting productivity growth from the current -0.5% to a 1.5% annual increase; and creating 1mn new jobs.
Chile's GDP in 2008 was US$170bn, according to the World Bank. GDP for 2009 has yet to be released, although experts have forecast a decrease of 1-1.7%.
Taking 2008's GDP as a base, however, Piñera's plan contemplates annual investments of up to US$47.5bn.
Piñera's transport plan was drawn up by Ana Luisa Covarrubias, director of the independent research institute Libertad y Desarrollo's environment division.
RAILWAYS
Piñera plans to concession railway services to improve cargo handling. The official, however, declined to comment on the future of state-owned rail firm EFE, whose executives have been lobbying with legislators for months to get their support to have the state take over the firm's debt, currently estimated at over 972bn pesos (over US$1.9bn).
MASS TRANSPORT
The new government aims to improve the performance of Santiago's integrated mass transport system Transantiago.
A law passed in 2009 established a temporary subsidy for Transantiago totaling 550bn pesos and an equivalent subsidy to benefit the rest of the country's regions to be disbursed over the 2009-14 period.
According to Piñera, his government will make sure the capital's transport system does not require an additional subsidy beyond 2014.
To accomplish this, the government will offer incentives to bus operators to improve the efficiency of their services and will build new bus lanes, the official said.
The state, however, will continue to provide an annual subsidy of up to 230bn pesos (US$423mn), which will be readjusted annually according to the consumer price index (IPC).
Every year, the funds will be distributed equally between the metropolitan region's Santiago province and districts Puente Alto and San Bernardo, also served by Transantiago, the rest of the metropolitan region and the country's 14 other regions.
The subsidy will be used to cover student fares and investments such as infrastructure improvements.
NEW TRANSPORT PROJECTS
Piñera said his government will build Santiago's metro's line 3, benefitting the northern zone of the capital.
In the meantime, the development of line 6 will be carried out, which will run parallel to the system's line 1 and will help decongest metro's main corridor. The project was announced recently by current President Michelle Bachelet.
At the same time, the new government will look into mass transport alternatives to be developed throughout Chile. Decisions will be made according to demand to make sure all projects are feasible, the official said.
INTERNATIONAL TRANSPORT
In his government plan, Piñera also referred to the need to improve customs services to upgrade the logistics of international cargo handling and reduce transport costs and time, said the official.
This policy was already being implemented in the last few years with the development of new and improved customs points and agreements with neighboring countries to improve services.
Bachelet hands over power to Piñera on March 11.
By Eva Medalla
Business News Americas
* Consorcio Vial Chile wins Camino de la Fruta highway concession - Chile
Chilean consortium Consorcio Vial Chile submitted the winning bid for the concession of the Camino de la Fruta highway, an official from the public works ministry's (MOP) concessions division told BNamericas.
The consortium, comprising Besalco, Icafal and Belfi, submitted a subsidy request of 688,800 UF (inflation-linked units, around US$28.9mn), said the official.
The bidding rules included a possible state subsidy of up to 1mn UF/year over a period of nine years.
The second bidder, Concesiones Viarias Chile - led by Spanish firm ACS' Dragados - submitted an offer with a 715,715 UF subsidy request, the official said.
MOP must now carry out a number of administrative tasks before signing the concession contract.
The 138km highway, also known as Ruta 66, will require US$360mn in investment. The awardee will be responsible for the construction, maintenance and operation of the highway for 35 years.
Works will take an estimated four years to complete and also involve the construction of four bridges, the improvement of five existing bridges, one overpass and two underpasses, new access roads, and over 30km of secondary roads and bicycle lanes.
Ruta 66 will connect Chile's central metropolitan region and region VI to region V's San Antonio port, contributing to the development of the country's agriculture trade.
By Eva Medalla
Business News Americas
* EDITORIAL COMMENT: Codelco's future under Piñera, more of the same? - Chile
In some of his first public comments since being elected president of Chile on Sunday, Sebastián Piñera appears to have already ruled out an attempt to privatize state copper company Codelco during his four-year stint in government that begins in March.
The center-right candidate, who will take the reins after 20 years of center-left government in the form of the Concertación coalition, had previously hinted that he would like to at least partially privatize Codelco, perhaps floating a stake of around 20% to improve the company's market accountability, transparency and allow the private sector - such as the AFP pension funds - to enjoy a share of the copper giant's profits.
Speaking to foreign correspondents on Monday, however, Piñera recognized that to do so would require a constitutional change, something his government will not to be able to realize without the support of the opposition. In fact, the kind of changes he talked about for Codelco, such as the state providing more capital for the company by allowing it to retain some of its profits and reforming the law that mandates that 10% of its export revenues go to the armed forces, have already been enacted to a certain extent by the current government in the first case and pledged in the second, and hardly amount to the "profound changes" Piñera claimed them to be. It could even be argued that changes brought in by the incumbent administration to make Codelco's board more independent are equally if not more profound than those suggested by Piñera.
Codelco is often criticized, especially in the local media, for being less efficient and productive than some of its private sector counterparts. Piñera even made the mistake of saying the company has lost its place as the world's largest copper producer. To be fair to Codelco, many of its mines, especially the bigger ones, are very old - in the case of Chuquicamata and El Teniente around 100 years - compared to most of those operated by private sector companies, especially in South America, and so productivity is perhaps inevitably going to be lower. In addition, and certainly compared to some of the big state companies elsewhere in the region, Codelco is relatively well run and autonomous politically speaking.
That's not to say, however, that Codelco could not be more efficient, or more profitable. Privatizing the corporation is not necessarily the answer, as that is not going to suddenly mean the company's older mines become more productive, and it would be politically very delicate, as most Chileans still see Codelco as "their" company. Not even the Pinochet dictatorship dared to privatize Codelco. However, selling a minority stake, a la Petrobras in Brazil, could be a major step forward, providing the state with funds to invest in the company and at the same time subjecting it more to market forces, allowing the public to truly know the value of their company and to be able to invest in it via pension funds or even as retail investors. It's a pity that, even before assuming office, it looks like Mr Piñera has decided not to take that road.
* Watchdog opts for hybrid auction in 850, 1800, 2100 MHz - Costa Rica
Mobile spectrum for an upcoming auction in Costa Rica will be spread out over three bands and in three blocks to ensure the same number of new entrants, according to telecoms regulator Sutel.
Each of the three blocks will amount to 60MHz. Two of the blocks will both have two times 15MHz in the 1,800MHz band and two times 15MHz in the 2,100MHz band. The third concession package will consist of two blocks of 5MHz in 850MHz, two times 15MHz in 1,800MHz and two times 10MHz in 2,100.
For greater detail, see end of story.
In a presentation Monday (Jan 18) of various details on the bidding rules, Sutel said each concession license would be granted for an initial period of 15 years and be extendable for a total of 25 years.
The process marks the liberalization of the mobile telephony market, which is one of the requirements of the Central America and Dominican Republic free trade agreement with the US (Cafta-DR). To date, state-owned telco ICE has been the only player in the market.
The program for the concession process is the following:
- February 5: Publication of bidding rules
- March 19: Opening of technical offers
- April 16: Opening of economic offers
- April 20: List of winners sent for signing off by country president.
- May 5: Deadline for presidential signature.
Sutel head George Miley told BNamericas that once the presidential signature has been given to the winners, a 60-day period ensues in which legal appeals can be made. If everything goes according to plan and no objections are made, Sutel would hope to have the contracts legalized by mid-September, Miley said.
Representatives from Telefónica (NYSE: TEF), Cable & Wireless, Tigo/Millicom (Nasdaq: MICC), Digicel and América Móvil (NYSE: AMX) all turned up at the presentation, demonstrating their interest.
The company that showed the greatest interest at the Monday presentation was Cable & Wireless, while Telefónica had the least representatives present, Miley said.
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.
"They have to meet the technical requirements, have a certain number of subscribers, minimum annual revenue and have experience in this field. We don't want companies with money coming to invest in the country that doesn't have the experience, we want companies with a history in this and transparency," Miley said.
He added that the bidders would have to have experience in building Greenfield operations, not merely acquiring operations of other existing operators.
Concession 1
1,800 MHz (2x15 MHz)
Uplink: 1,755-1,770
Downlink: 1,850-1,865
1.9 / 2.1 GHz (2x15 MHz)
Uplink: 1,950-1,965
Downlink: 2,140-2,155
Concession 2
1,800 MHz (2x15 MHz)
Uplink: 1,770-1,785
Downlink: 1,865-1,880
1.9 / 2.1 GHz (2x15 MHz)
Uplink: 1,965-1,980
Downlink: 1,955-2,170
Concession 3
850 MHz (2x5 MHz)
Uplink: 843.7-849
Downlink: 888.7-894
1,800 MHz (2x15 MHz)
Uplink: 1,740-1,755
Downlink: 1,835-1,850
1.9 / 2.1 GHz (2x10 MHz)
Uplink: 1,940-1,950
Downlink: 2,130-2,140
By Patrick Nixon
Business News Americas
* Ensenada studies waste-to-energy project - Mexico
Researchers at Mexico's Baja California autonomous university (UABC) are carrying out studies to evaluate the potential of building a waste-to-energy plant at the Ensenada city landfill, Dr Carolina Armijo de Vega told BNamericas.
The studies are currently in their first phase, which involves establishing how much methane gas is generated at the site. Preliminary results show the landfill has the potential for a small waste-to-energy project, according to Armijo.
"It will definitely have potential, but this will be limited because Ensenada is not a large city and it doesn't generate a lot of waste," Armijo said.
Baja California's Mediterranean climate also limits the scope of the project, as a hot, humid climate is the most favorable for methane generation, according to Armijo.
The Ensenada landfill receives some 475t/d of waste and is currently concessioned to a private operator.
The concession contract will last another 14 years, after which the landfill will be returned to the municipal government of Ensenada.
"At the end of the day, the municipality will be responsible for the CO2 and methane emissions produced, which is why we're exploring the possibility of getting rid of those emissions," Armijo said.
The study is being funded by Mexico's national science and technology council (Conacyt), as well as the Baja California state government.
By Catherine Setterfield
Business News Americas
* Codelco workers reject privatization, want greater reinvestment - Chile
The federation of labor unions (FTC) at Chilean state copper company Codelco reported it disagrees with the incorporation of any private capital into the state miner and called for greater reinvestment of profits to cover Codelco's US$12bn project portfolio.
President-elect Sebastián Piñera promoted during his campaign the idea of selling a minority stake in Codelco to private investors in a bid to make the state giant more efficient and productive.
However, such a reform would require constitutional change and thus support from Piñera's political opposition, which is generally against the idea.
FTC said in a statement that it rejects such a move, noting that Codelco's contributions to the state treasury are much greater than those paid in taxes by private companies.
The federation also noted that congress recently passed a law saying Codelco must be run independently of the government administration in power, theoretically guaranteeing continuity of operations and good management.
Codelco is the world's biggest copper miner. Piñera was elected in a run-off vote January 17 and will take office in March.
By Business News Americas staff reporters
* Minera Invierno submits EIS for Isla Riesco coal project - Chile
Chile's Minera Invierno, a subsidiary of Minera Isla Riesco, has submitted to environmental authorities an EIS for a coal mining operation at the Invierno deposit on Isla Riesco in southern region XII.
The project would cost US$180mn to build and produce 6Mt/y of sub-bituminous coal for a mine life of 12 years, based on current reserves of 73Mt, according to the EIS published by Chilean environmental regulator Conama's project evaluating system SEIA.
Construction is slated to take 16 months and begin in the third quarter of 2010, pending environmental approvals.
The EIS foresees employing 630 people during the construction phase and 830 people when the open-pit mine is in operation.
The Isla Riesco coal concessions, which were privatized in 2008, contain more than 1.0Bt of coal reserves among the Río Eduardo, Elena and Estancia Invierno deposits.
Minera Isla Riesco is a JV between fuel distributor Copec and shipping company Ultramar.
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-/170693586
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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/170693586
* The World Bank Group
http://www.bnamericas.com/company-profile/en/The_World_Bank_Group-World_Bank/170693586
* Ultramar Agencia Marítima Ltda.
http://www.bnamericas.com/company-profile/en/Ultramar_Agencia_Maritima_Ltda,-Ultramar/170693586
* Corporación Nacional del Cobre de Chile
http://www.bnamericas.com/company-profile/en/Corporacion_Nacional_del_Cobre_de_Chile-Codelco/170693586
* Skanska Chile S.A.
http://www.bnamericas.com/company-profile/en/Skanska_Chile_S,A,-Skanska_Chile/170693586
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